From whom must a Benihana franchisee obtain all food and beverage items, ingredients, supplies, materials, fixtures, furnishings, equipment, and other products?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
ail) of any changes.
Authorized Suppliers
You must obtain all food and beverage items, ingredients, supplies, materials, fixtures, furnishings, equipment (including point of sale, computer hardware and software), and other products used or offered for sale at the BENIHANA Restaurant solely from suppliers who demonstrate, to our continuing reasonable satisfaction, the ability to meet our thencurrent standards, or otherwise in accordance with our standards and specifications. We do not make our supplier evaluation criteria available to you or any supplier. We will provide you with a list of approved suppliers, and our list of approved suppliers is subject to change over time.
If you wish to purchase, lease or use any products or other items from an unapproved supplier, you must submit a written request for approval, or must request the supplier to do so. We must approve any product or supplier in writing before you make any purchases of that product or from that supplier. Your written request must: (a) identify the name and address of the proposed supplier, (b) contain all information we request (which may include reasonable financial, operational and economic information regarding the supplier's business), and (c) identify the authorized products desired to be purchased from the supplier. We may also require that samples from the supplier be delivered to us or to a designated independent testing laboratory for testing prior to approval and use. You must pay us a fee to cover all costs of the test (see Item 6). Our supplier approval procedure does not obligate us to approve any particular supplier. However, we will notify you within 45 days after we complete the inspection and evaluation process of our approval or disapproval of any proposed supplier.
We are not required to make available to you or to any supplier our criteria for product or supplier approval. We have and may continue to develop for use in the BENIHANA System certain products that are prepared from confidential, proprietary recipes and other proprietary products bearing the Marks. Because of the importance of quality and uniformity of production and the significance of those products in the BENIHANA System, it is to your and our benefit that we closely oversee information related to the production and distribution of those products. Therefore, you will use only our proprietary recipes and other proprietary products, and you will purchase solely from us or from a source designated by us all of your requirements for those products.
Purchasing Arrangements
We may negotiate purchase arrangements, including price terms, with designated and approved suppliers on behalf of the BENIHANA System. These arrangements may include preferred vendor programs with suppliers that are willing to supply some products, equipment, or services to some or all of the BENIHANA Restaurants in the BENIHANA System. If we do establish those types of programs or arrangements, we may limit the number of approved suppliers with whom you may deal, we may designate sources that you must use for some or all products, equipment and services, and we may refuse to approve proposals from franchisees to add new suppliers if we believe that approval would not be in the best interests of the BENIHANA System. We or our affiliates may negotiate supply contracts with our suppliers under which we are able to purchase, or have available for franchisees to purchase, products, equipment, supplies, services and other items at prices that will benefit us or our franchisees.
As of the issuance date of this Disclosure Document, we have arrangements with approved suppliers of certain unique, proprietary products. You must purchase these items directly from the designated suppliers.
Our Right to Derive Revenue on Account of Franchisee Purchases
We may derive revenue, compensation, payments, or other material benefits in consideration of purchases by you or other BENIHANA Restaurants of the System and on account of any suppliers' dealings with us, you, or other BENIHANA Restaurants in the System. These benefits may include, by way of example, rebates, commissions, or other forms of compensation.
We sometimes negotiate arrangements with certain vendors to pay rebates or apply price discounts on account of purchases by company-owned and franchised restaurants. As of the issuance date of this Disclosure Document, certain approved suppliers make payments to us based in part on franchisee purchases. Some suppliers make payments to us on a per-unit basis, ranging from $0.50 to $5.50 per unit purchased, depending on the supplier, the specific product, and the total unit volume purchased that. Another supplier provides payments in the nature of rebates of 5.0% of net purchases. During our fiscal year ending March 31, 2024, we received $29,709.25 from these suppliers on account of franchisee purchases. We remitted to franchisees 100% of those payments made by suppliers on account of franchisee purchases. We are not contractually obligated to remit any payments to franchisees and reserve the right to retain all such payments in the future.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 28–33)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, franchisees must obtain all food and beverage items, ingredients, supplies, materials, fixtures, furnishings, equipment, and other products used or offered for sale at the Benihana Restaurant solely from suppliers who demonstrate the ability to meet Benihana's current standards. These suppliers must be approved by Benihana. The FDD states that Benihana does not make its supplier evaluation criteria available to franchisees or any supplier. The list of approved suppliers is subject to change over time.
If a franchisee wishes to purchase items from an unapproved supplier, they must submit a written request for approval, or request the supplier to do so. The request must include the supplier's name and address, any information Benihana requests, and the authorized products desired from the supplier. Benihana may also require samples for testing, with the franchisee covering the costs. Benihana will notify the franchisee of approval or disapproval within 45 days after completing the evaluation process.
Benihana may develop proprietary products with confidential recipes and other proprietary products bearing their marks. Franchisees must use only Benihana's proprietary recipes and products, and purchase all requirements for those products solely from Benihana or a source designated by them. Benihana may also negotiate purchase arrangements with designated and approved suppliers on behalf of the Benihana system, potentially limiting the number of approved suppliers or designating specific sources that franchisees must use. As of the issuance date of the 2024 Disclosure Document, Benihana has arrangements with approved suppliers of certain unique, proprietary products, which franchisees must purchase directly from the designated suppliers.
Benihana estimates that purchases from approved suppliers or those that meet their specifications represent approximately 65% to 90% of the costs to establish a Benihana Restaurant and approximately 30% to 55% of the non-occupancy expenses to operate a Benihana Restaurant. Benihana also has the right to designate any geographical area for purposes of establishing a purchasing program. If a Purchasing Program is established in the area encompassing your Benihana Restaurant, the franchisee must immediately participate in the Purchasing Program.