For how long after the expiration or termination of the Benihana franchise term are the franchisee and its principals restricted from employing or seeking to employ certain people?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
18.5 Franchisee and its principals covenant that, during the Franchise Term and for a period of two (2) years after the expiration or termination hereof, neither Franchisee nor any principal will directly or indirectly:
(b) employ or seek to employ any person (or induce such person to leave his or her employment) who is, or has within the one (1) year prior to such expiration or termination been, employed by BNC, any of its affiliates, including, without limitation HARU® or RA SUSHI® Restaurants ("Affiliated Company"), or any other franchisee operating under the BENIHANA System;
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, a franchisee and its principals are restricted from employing or seeking to employ certain people for a period of two years after the expiration or termination of the franchise agreement. Specifically, this restriction applies to individuals who are, or have been within one year prior to the expiration or termination, employed by Benihana, its affiliates (including HARU® or RA SUSHI® Restaurants), or any other Benihana franchisee.
This provision is designed to protect Benihana's interests by preventing franchisees from poaching employees who have knowledge of the Benihana system or access to confidential information. It ensures that departing franchisees cannot unfairly compete by leveraging the expertise of individuals previously associated with the Benihana brand. The restriction extends not only to direct employment but also to actively seeking to employ such individuals or inducing them to leave their current positions.
For a prospective Benihana franchisee, this means that upon leaving the Benihana system, they must avoid recruiting from Benihana's existing talent pool for two years. This could potentially limit their access to experienced staff if they choose to open a competing restaurant. It is important for franchisees to understand this restriction and plan their future business ventures accordingly, ensuring they do not inadvertently violate the terms of the franchise agreement.
This type of restriction is relatively common in franchising to protect the brand and the network. Franchisees should carefully consider the implications of these post-term covenants and how they might affect their future business opportunities.