Does the Benihana Franchise Agreement require Principals to personally manage the Benihana Restaurant?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
The Franchise Agreement does not require your Principals to personally manage or operate the BENIHANA Restaurant. When you sign your Franchise Agreement, you must designate and retain in your employment at all times an individual to serve as the "General Manager." If you are an individual, we recommend that you be the General Manager. You must also retain other personnel as are needed to operate and manage the BENIHANA Restaurant. The General Manager must satisfy our educational and business criteria as provided to you in the Manual or other written instructions and must be individually acceptable to us. In addition, the General Manager must be responsible for the supervision and management of the BENIHANA Restaurant and must devote full time and best efforts to this activity. The General Manager also must satisfy our applicable training requirements. If you are a legal entity, the General Manager may, but is not required to, have an ownership interest in you. If you no longer employ the General Manager, you must promptly designate another person as General Manager, and that person must meet all criteria for a General Manager and be acceptable and approved by us.
You must also obtain covenants not to compete, including covenants applicable on the termination of the person's relationship with you, from your General Manager and any of your other personnel who have received or will have access to our training before employment, and any holder of a beneficial interest in you (except for any limited partners). You must have all your management personnel sign covenants to maintain the confidentiality of information they receive or have access to based on their relationship with you (see Item 14). We reserve the right, in our discretion, to decrease the period of time or geographic scope of the non-competition covenants contained in the attachments or eliminate the non-competition covenants altogether for any party that must sign an agreement as described in this paragraph. (See Item 17.)
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 57–58)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the Franchise Agreement does not mandate that the Principals personally manage or operate the Benihana Restaurant. Instead, franchisees must designate and retain a General Manager for the restaurant. If the franchisee is an individual, Benihana recommends that they serve as the General Manager.
The designated General Manager must meet Benihana's educational and business criteria, be acceptable to Benihana, and be responsible for the supervision and management of the restaurant. This individual must also devote their full time and best efforts to these activities and satisfy Benihana's training requirements. If the franchisee is a legal entity, the General Manager is not required to have an ownership interest in the entity.
Should the General Manager's employment end, the franchisee must promptly appoint a replacement who meets all the criteria and is approved by Benihana. Furthermore, franchisees must obtain covenants not to compete from the General Manager and any other personnel who receive Benihana's training, as well as from any holder of a beneficial interest in the franchisee (excluding limited partners). These management personnel must also sign covenants to maintain the confidentiality of information they receive.