Can Benihana grant additional licenses for the use of its trademarks beyond those already granted to existing franchisees?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
The license to use the Marks granted to you under the Franchise Agreement is nonexclusive to you. We have and retain certain rights in the Marks including the following:
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- To grant other licenses for use of the Marks in addition to those licenses already granted to existing franchisees;
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- To develop and establish other systems using the Marks or other names or marks and to grant licenses or franchises in those systems without providing any rights to you; and
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- To engage, directly or indirectly, at wholesale, retail or otherwise, in (a) the production, distribution, license and sale of products and services and (b) the use of the Marks and all trademarks, trade names, service marks, logos, insignia, slogans, emblems, symbols, designs, and other identifying characteristics we may develop for that purpose.
Source: Item 13 — TRADEMARKS (FDD pages 49–55)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, Benihana retains the right to grant additional licenses for the use of its trademarks to other parties, even beyond those already granted to existing franchisees. This means that while a franchisee is granted a license to use Benihana's trademarks, this license is nonexclusive. Benihana can authorize others to use the same trademarks.
This has significant implications for prospective franchisees. The franchisee's territory is not protected concerning the use of Benihana's trademarks. Benihana could license its trademarks to other businesses, potentially including competitors, without providing the franchisee any recourse. This could intensify competition within the market and dilute the brand's presence, possibly affecting the franchisee's revenue and market share.
Furthermore, Benihana also reserves the right to develop and establish other systems using the trademarks or other names/marks and grant licenses or franchises in those systems without providing any rights to the existing franchisees. Benihana can also engage directly or indirectly in the production, distribution, licensing, and sale of products and services using the trademarks. These rights retained by Benihana could lead to the introduction of new business models or products that compete with the franchisee's operations.
Therefore, while a Benihana franchise offers the benefit of using established trademarks, prospective franchisees should carefully consider the non-exclusive nature of the trademark license and the potential for increased competition or brand dilution due to Benihana's retained rights. It is essential to assess the potential impact of these factors on the profitability and long-term viability of the franchise.