What does a Benihana franchisee agree regarding the use or exploitation of special knowledge of the Benihana restaurant business in competition with BNC or BNC franchisees?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 18.11 Franchisee agrees that Franchisee's use or exploitation of the special knowledge of the business of a BENIHANA Restaurant (and anyone acquiring knowledge from Franchisee) in competition with BNC or BNC franchisees would cause BNC and other BNC franchisees irreparable injury and loss.
- 18.12 If, following expiration, termination, or transfer of this Agreement, Franchisee violates the post-term covenants set forth in this Article 18, Franchisee acknowledges and agrees that the post-term period of two (2) years will be extended to begin on the date Franchisee first complies with such covenants so as to provide BNC with the full benefit of the post-term covenant period uninterrupted by Franchisee's interference.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to the 2024 Benihana Franchise Disclosure Document, franchisees acknowledge that using or exploiting special knowledge of the Benihana restaurant business in competition with Benihana or its franchisees would cause irreparable injury and loss to Benihana and its franchisees. This agreement highlights the importance Benihana places on protecting its proprietary knowledge and business methods.
This clause means that a franchisee cannot use what they learn about running a Benihana restaurant to start or operate a competing business. This restriction extends to anyone who gains knowledge from the franchisee, preventing them from indirectly competing with the Benihana system. The agreement emphasizes that such competition would cause significant harm to Benihana and its other franchisees.
Benihana includes this provision to protect its brand, trade secrets, and the investments of its franchisees. By preventing franchisees from using their acquired knowledge to compete, Benihana aims to maintain a consistent standard and protect its market position. This type of clause is common in franchise agreements to safeguard the franchisor's business model and the network's overall integrity.
Furthermore, the FDD states that if a franchisee violates the post-term covenants after the agreement expires, terminates, or transfers, the two-year post-term period will be extended to begin when the franchisee first complies with the covenants. This ensures Benihana receives the full benefit of the post-term covenant period without interference from the franchisee's non-compliance.