Does a Benihana franchisee have the right to acquire additional Benihana franchises within their Restaurant Area?

According to Benihana's 2024 Franchise Disclosure Document, a franchisee does not have the right to acquire additional Benihana franchises within their Restaurant Area. The FDD clearly states that franchisees have no options, rights of first refusal, or similar rights to acquire additional franchises. This means that even if a franchisee successfully operates their Benihana restaurant, they are not guaranteed the opportunity to expand their business by opening additional locations within their designated area.

This policy has significant implications for prospective franchisees looking to grow their business. Unlike some franchise systems that offer existing franchisees the first opportunity to open new locations, Benihana retains the right to open company-owned restaurants or license other franchisees within or outside the Restaurant Area, potentially creating competition for the existing franchisee. The Restaurant Area for franchises offered under the 2024 Disclosure Document may be a zero to three-mile radius from the franchisee's Benihana Restaurant, depending on market circumstances.

Furthermore, Benihana and its affiliates reserve the right to operate other types of restaurants within the Restaurant Area, including Asian-style fast food, sushi restaurants like RA Sushi, and bars, which may use Benihana's trademarks or trade names (excluding "Benihana" or "Benihana of Tokyo"). They can also sell or license others to sell food products using these trademarks on a wholesale or retail basis in the Restaurant Area. This broad reservation of rights means that Benihana can introduce competing concepts or products within the franchisee's territory, adding another layer of competitive risk.

Prospective franchisees should carefully consider these factors and evaluate the potential for competition from both other Benihana restaurants and related concepts when assessing the overall investment opportunity. It is important to discuss with Benihana the specific criteria used to determine the Restaurant Area and the potential for future development in the surrounding market.