For a Benihana franchise, what personnel besides the General Manager must sign covenants not to compete?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
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, franchisees must obtain covenants not to compete from their General Manager, any other personnel who have received or will have access to Benihana's training before employment, and any holder of a beneficial interest in the franchisee (except for limited partners). These covenants apply even after the person's relationship with the franchisee terminates.
These covenants are designed to protect Benihana's trade secrets, confidential information, and overall business interests. The agreement specifies that Benihana is a third-party beneficiary of these covenants, giving Benihana the independent right to enforce them. Franchisees must provide Benihana with copies of all executed covenants within five days of hiring the relevant personnel.
Benihana retains the discretion to decrease the time period or geographic scope of the non-competition covenants or even eliminate them altogether for any party required to sign. This flexibility allows Benihana to tailor the restrictions based on specific circumstances and potentially reduce any undue burden on the franchisee's personnel. Prospective franchisees should carefully review the form of the restrictive covenant agreement (Exhibit F) and understand the specific obligations it imposes on their employees and owners.