Is the Benihana franchise license granted to the franchisee exclusive or non-exclusive?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
rance, and customer service that are a critical part of the BENIHANA System, and Franchisee acknowledges the necessity of operating the BENIHANA Restaurant franchised under this Agreement in conformity with the BENIHANA System, including the BENIHANA Standards.
- G. Franchisee seeks a license to use the Marks and the BENIHANA System in connection with the operation of a BENIHANA Restaurant at a single location specified in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE 1. GRANT OF FRANCHISE AND FRANCHISE TERM
- 1.1 The INTRODUCTION paragraphs set forth above are hereby incorporated in this Article 1 by reference as if set forth fully herein.
- 1.2 BNC grants to Franchisee, and Franchisee accepts, a non-exclusive franchise license to operate a single BENIHANA Restaurant (the "Restaurant") at the specific location approved by BNC and identified in the Contract Data Sheet attached as Exhibit A hereto (the "Location"), using the Marks and the BENIHANA System in accordance with the BENIHANA Standards and the terms of this Agreement. Franchisee expressly acknowledges that the franchise license granted under this Agreement is non-exclusive and that any geographic limitation on BNC's rights to use or license the Marks under this Agreement relates solely to the operation of a BENIHANA Restaurant at the Location.
- 1.3 Unless sooner terminated under with the provisions of this Agreement, the franchise license granted to Franchisee will begin on the Effective Date set forth in the Contract Data Sheet and end fifteen (15) years from the date the Restaurant opens for business to the public (the
"Franchise Term"). Franchisee agrees to operate the Restaurant in accordance with this Agreement at the Location for the entire Franchise Term.
- 1.4 The grant of a franchise license under this Agreement is specifically limited to operating the Restaurant at the Location, and it does not grant, or imply the grant of, rights regarding any other BENIHANA Restaurant at any other location. Other than with respect to the Restaurant at the Location, Franchisee has no right under this Agreement or otherwise to use, license, sublicense, or franchise others to use the Marks or the BENIHANA System, and Franchisee is not granted any options, rights of first refusal or development opportunities.
- 1.5 During the Franchise Term, if Franchisee is in full compliance with the provisions and conditions of this Agreement, and subject to BNC's rights set forth in Section 1.6 of this Agreement, BNC will not operate or license any person or entity other than Franchisee to operate, a BENIHANA Restaurant at any location within the "Restaurant Area" specified in the Contract Data Sheet attached to this Agreement.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the franchise license granted to a franchisee is non-exclusive. Benihana grants the franchisee a non-exclusive franchise license to operate a single Benihana Restaurant at a specific location approved by them.
This means that Benihana retains the right to operate or license other Benihana Restaurants, potentially even in the same general area as the franchisee's location, subject to the Restaurant Area specified in the Contract Data Sheet. Benihana also has the right to own, operate, or license competing restaurants other than Benihana Restaurants, such as RA® SUSHI or HARU®, within the Restaurant Area.
Furthermore, Benihana reserves the right to produce, distribute, sell, or license the sale of any product or service using the Marks through alternative channels of distribution, such as grocery stores or internet sales, regardless of proximity to the franchisee's Restaurant. They can also license others to use the Benihana System and Marks for operating Benihana Restaurants within Special Distribution Opportunities, even within the Restaurant Area. This non-exclusive arrangement allows Benihana to maintain control over its brand and expand its presence through various channels, which may or may not directly benefit the franchisee.
For a prospective franchisee, this non-exclusive license means that while they have the right to operate a Benihana Restaurant at their specific location, they do not have territorial exclusivity. They should be aware that Benihana could potentially license other restaurants or pursue alternative distribution methods that might compete with their business. It is important for potential franchisees to carefully review the terms of the franchise agreement and understand the scope of their rights and limitations, particularly regarding the Restaurant Area and potential competition from Benihana or other franchisees.