Does the Benihana franchise agreement state that the franchisee's observance of the covenants in Article 8 will cause undue hardship?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 18.9 Franchisee acknowledges and agrees that the length and term of the geographical restrictions contained in Section 18.4 are fair and reasonable and do not impose a greater restraint than is necessary to protect the goodwill associated with the Marks or other business interests of BNC. Franchisee agrees that Franchisee's full, uninhibited and faithful observance of each of the covenants contained in this Article 8 will not cause any undue hardship, financial or otherwise, and that the enforcement of each of the covenants in this Article 18 will not impair Franchisee's ability to obtain employment commensurate with Franchisee's abilities and on terms fully acceptable to Franchisee or otherwise to obtain income required for the comfortable support of Franchisee, Franchisee's family and the satisfaction of Franchisee's creditors. Franchisee agrees that Franchisee's special knowledge of the business of a BENIHANA Restaurant (and anyone acquiring knowledge from Franchisee) would cause BNC and other BENIHANA System franchisees serious injury and loss if Franchisee (or anyone acquiring knowledge from Franchisee) were to use this knowledge to the benefit of a competitor or were to compete with BNC or any BENIHANA System franchisees.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the franchise agreement explicitly states that the franchisee's adherence to the covenants outlined in Article 8 will not result in undue hardship. The agreement emphasizes that the length and geographical scope of the restrictions are deemed fair and reasonable to protect Benihana's goodwill, trademarks, and business interests.
Benihana's franchise agreement also confirms that enforcing the covenants in Article 18 will not impair the franchisee's ability to secure suitable employment or income to support themselves, their family, and their financial obligations. This suggests that the restrictions are designed to be reasonable and not overly burdensome, allowing franchisees to maintain their livelihood even after the franchise agreement concludes.
The franchise agreement highlights the potential harm to Benihana and its franchisees if a franchisee were to use their specialized knowledge gained from the Benihana system to benefit a competitor. This underscores the importance of protecting trade secrets and confidential information within the Benihana franchise network. The agreement aims to prevent unfair competition and maintain the integrity of the Benihana brand and system.