After leaving employment with a Benihana franchisee, for how long is an employee restricted from engaging in a Competing Business within a specified radius?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
For purposes of this Agreement, a "Competing Business" shall mean a Japanese teppanyaki style or sushi restaurant or food service business.
I agree that I will not, for a period of two years following the date on which I cease to be employed by Franchisee, for myself, or through, on behalf of, or in conjunction with any person, persons, partnership, corporation or limited liability company, own maintain, engage in, be employed by, or have any interest in any Competing Business, which business is located within a five (5) mile radius of any BENIHANA Restaurant location in existence as of the date of such termination, transfer or expiration.
I agree that each of the foregoing covenants shall be construed as independent of any other covenant or provision of this Agreement.
If all or any portion of a covenant in this Agreement is held unreasonable or unenforceable by a court or agency having valid jurisdiction in an unappealed final decision to which BNC or Franchisee is a party, I expressly agree to be bound by any lesser covenant subsumed within the terms of such covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of this Agreement.
I understand and acknowledge that BNC will have the right, in its sole discretion, to reduce the scope of any covenant set forth in this Agreement, or any portion thereof, without my consent, effective immediately upon receipt by me of written notice thereof; and I agree to comply forthwith with any covenant as so modified.
BNC is a third-party beneficiary of this Agreement and may enforce it, solely and/or jointly with the Franchisee.
I am aware that my violation of this Agreement may cause BNC and the Franchisee irreparable harm; therefore, I acknowledge and agree that the Franchisee and/or BNC may apply for the issuance of an injunction preventing me from violating this Agreement, and I agree to pay the Franchisee and BNC all the costs it/they incur(s), including, without limitation, legal fees and expenses, if this Agreement is enforced against me.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, a former employee of a Benihana franchisee is restricted from engaging in a Competing Business for a period of two years. This restriction begins on the date the employee ceases to be employed by the franchisee.
The term "Competing Business" is defined as a Japanese teppanyaki style or sushi restaurant or food service business. The restriction applies within a five-mile radius of any Benihana Restaurant location that exists as of the date of the employee's termination.
Benihana (BNC) is a third-party beneficiary of this agreement and may enforce it, either independently or jointly with the franchisee. If an employee violates this agreement, Benihana and/or the franchisee can seek an injunction to prevent further violation. The employee may also be responsible for covering all costs incurred by Benihana and the franchisee, including legal fees and expenses, if the agreement is enforced against them.
This non-compete agreement is a standard practice in the franchise industry to protect the brand and business interests of the franchisor and its franchisees. Prospective franchisees should be aware of these restrictions and ensure that their employees understand and comply with them.