Can Benihana license others to operate Benihana Restaurants within Special Distribution Opportunities, and what are some examples of these opportunities?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
We and our affiliates have the right to: (i) own and operate, or license others the right to own and operate, competing restaurants other than a BENIHANA Restaurant at any location, regardless of the proximity to your Restaurant, including but not limited to restaurants using the trademarks RA SUSHI and HARU; (ii) own and operate, or license others the right to own and operate, BENIHANA Restaurants outside the Restaurant Area, even if these BENIHANA Restaurants might compete with the Restaurant or draw customers from the Restaurant Area; (iii) engage, directly or indirectly, at wholesale, retail, or otherwise, in the production, distribution, license, and/or sale of any product or service under the Marks, or other marks, anywhere, regardless of the proximity to, or the competitive impact on, your Restaurant, through alternative channels of distribution (by way of example only, grocery stores, conveniences stores, internet sales, catalog sales, telemarketing, or other direct marketing); (iv) license others to use the BENIHANA System and the Marks for the operation of BENIHANA Restaurants within Special Distribution Opportunities (as defined below); (v) advertise and promote the BENIHANA System within the Restaurant Area; and (vi) purchase, acquire, be acquired by, merge or affiliate with, or engage in any transaction with other businesses (whether or not these businesses are competitive with the Restaurant), including competing franchise systems with units operating in the Restaurant Area, and to convert and operate, or license others the right to operate, these units under the Marks and the BENIHANA System.
"Special Distribution Opportunities" mean captive venue locations, generally available only in connection with third-party food service provision contracts, including, without limitation, airports and other public transportation facilities, turnpikes and toll-roads, entertainment and sports complexes, hotels, casinos, convention centers, and military facilities.
Source: Item 12 — TERRITORY (FDD pages 47–49)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, Benihana retains the right to license others to operate Benihana Restaurants within what it defines as "Special Distribution Opportunities." These opportunities are typically found in captive venue locations that are generally available through third-party food service provision contracts.
Examples of Special Distribution Opportunities include locations within airports and other public transportation facilities, turnpikes and toll-roads, entertainment and sports complexes, hotels, casinos, convention centers, and military facilities. These venues often have a built-in customer base, which can provide a consistent stream of revenue for a Benihana Restaurant operating in such a location.
This provision means that a prospective Benihana franchisee may face competition from Benihana Restaurants operating in non-traditional locations, even if those locations are within the franchisee's general market area. However, these Special Distribution Opportunities are not typically available to individual franchisees and are instead managed directly by Benihana or its licensees. This strategy allows Benihana to expand its brand presence in unique venues without granting additional traditional franchises.