Is Benihana obligated to conduct any advertising?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
We do not have any specific obligations to apply Advertising Contributions in any specific manner other than in our sole and absolute discretion, we intend as a general matter to use Advertising Contributions for expenses related to brand advertising, public relations, and in-store, local, national or regional advertising placed by us. We have no obligation to make expenditures for you that are equivalent or proportionate to Advertising Contributions paid by you under this Agreement or to insure that you benefit directly or on a pro rata basis from expenditures of Advertising Contributions. As of the date of this Disclosure Document, in our last fiscal year, our expenses for marketing, advertising, trademark maintenance, and public relations exceed the amount of Advertising Contributions we received from franchisees. We do not make available for review specific financial information related to Advertising Contribution expenditures, and you will not receive a periodic accounting of Advertising Contribution expenditures. We may, in our sole discretion, use the Advertising Contributions principally to solicit new franchise sales.
In addition to the Advertising Contribution paid to us, you must spend in each of your fiscal years an amount ("Local Spend") that is not less than 4% of Gross Sales for local marketing and promotion.
Local Spend may consist of advertising via: television; radio; digital media; magazines or newspapers; direct mail; billboards; promotional brochures and literature; point-of-sale materials; or other approved advertising. All advertising, marketing, and promotional activities must be conducted in a dignified manner and must conform to our standards and requirements. You may not use any advertising, marketing or promotional plans or materials as part of your Local Spend unless and until you have received written approval from us. If you do not receive written disapproval from us within fifteen days of the date of our receipt of such samples or materials, we shall be deemed to have approved them. We may revoke our approval of any such plans or materials at any time effective upon written notice to you.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 36–47)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, Benihana is not obligated to apply advertising contributions in any specific manner. Benihana intends to use advertising contributions for expenses related to brand advertising, public relations, and in-store, local, national, or regional advertising placed by them. Benihana does not have any specific obligations to make expenditures for franchisees that are equivalent or proportionate to advertising contributions paid by them or to ensure that franchisees benefit directly or on a pro rata basis from expenditures of advertising contributions.
Benihana's expenses for marketing, advertising, trademark maintenance, and public relations exceeded the amount of advertising contributions they received from franchisees in their last fiscal year. Benihana does not make available for review specific financial information related to advertising contribution expenditures, and franchisees will not receive a periodic accounting of advertising contribution expenditures. Benihana may, in its sole discretion, use the advertising contributions principally to solicit new franchise sales.
In addition to the advertising contribution paid to Benihana, franchisees must spend an amount not less than 4% of gross sales for local marketing and promotion each fiscal year. Local spend may consist of advertising via television, radio, digital media, magazines or newspapers, direct mail, billboards, promotional brochures and literature, and point-of-sale materials. Franchisees may not use any advertising, marketing, or promotional plans or materials as part of their local spend unless and until they have received written approval from Benihana. If franchisees do not receive written disapproval from Benihana within fifteen days of the date of their receipt of such samples or materials, Benihana shall be deemed to have approved them. Benihana may revoke its approval of any such plans or materials at any time effective upon written notice to the franchisee.