What is the duration of time prior to the expiration or termination of the Benihana franchise that restricts the franchisee from employing individuals from Benihana or its affiliates?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
18.4 Franchisee covenants that, during the Franchise Term and for a period of two (2) years after the expiration or termination hereof, Franchisee shall not, directly or indirectly:
(b) employ or seek to employ any person (or induce such person to leave his or her employment) who is, or has within the one (1) year prior to any such expiration or termination been, employed by BNC, any of its affiliates, including, without limitation the "Haru," or "RA" Restaurants ("Affiliated Company"), or any other franchisee operating under the BENIHANA System;
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, a franchisee is restricted from employing individuals who are or have been employed by Benihana, its affiliates, or other Benihana franchisees. This restriction applies during the franchise term and for a period of one year after the franchise expires or is terminated. This includes employees of affiliated companies such as "Haru" or "RA" Restaurants.
This provision is designed to protect Benihana's investment in its employees and to prevent franchisees from poaching trained staff who could potentially use confidential information or knowledge gained while working within the Benihana system to benefit a competing business. It also helps maintain the consistency and quality of service across all Benihana locations by reducing employee turnover and ensuring that franchisees do not gain an unfair advantage by hiring staff already trained in the Benihana system.
For a prospective Benihana franchisee, this means that they cannot actively recruit or hire current or recent employees of Benihana or its related entities for one year after the franchise agreement ends. This restriction could impact staffing strategies, particularly if the franchisee is looking to quickly build a skilled team. It is important to note that this restriction applies regardless of whether the employee voluntarily left their previous position or was terminated.
Franchisees should be aware of this restriction and plan their staffing accordingly to avoid any potential legal issues or breaches of the franchise agreement. It is also important to ensure that any new hires are not in violation of this clause, which may require some due diligence in the hiring process. This clause is a fairly standard practice in the franchise industry, as franchisors seek to protect their brand, trade secrets, and employee base.