For how long after the Benihana franchise term expires or terminates is the franchisee prohibited from diverting business or customers to a competitor?

According to Benihana's 2024 Franchise Disclosure Document, a franchisee is restricted from diverting business or customers to a competitor for a period of two years following the expiration or termination of the franchise agreement. Specifically, during the franchise term and for two years after its end, the franchisee cannot directly or indirectly attempt to redirect any business or customers of the Benihana restaurant to a competitor. This includes any action that could harm the goodwill associated with the Benihana brand and system.

This post-term non-compete clause is a standard practice in franchising to protect the brand and customer base that Benihana has established. It prevents a former franchisee from leveraging the knowledge and experience gained while operating a Benihana restaurant to unfairly compete with the brand shortly after leaving the system. The restriction applies to any direct or indirect attempts to divert business, ensuring a broad scope of protection for Benihana.

For a prospective Benihana franchisee, this means that upon exiting the franchise system, they must avoid any activity that could be construed as taking Benihana customers to a competing establishment. This could limit their business opportunities in the restaurant industry for two years post-termination, especially in the same geographic area as their former Benihana location. Franchisees should carefully consider this restriction and its potential impact on their future plans before investing in a Benihana franchise.