What is Benihana's policy regarding defending its trademarks against encroachment by others?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
ctly, to infringe upon, harm or contest the rights of BNC in the Marks or in any other symbols, logos, trademarks, or names that incorporate the Marks. Franchisee shall not take any action to apply for the registration of the Marks. Franchisee shall execute any documents BNC deems necessary to obtain protection for the Marks or to maintain their continued validity and enforceability.
- 6.7 If Franchisee learns of any claim or infringement of any of the Marks or any claim of unfair competition or other challenge to Franchisee's right to use any Marks, Franchisee shall immediately notify BNC. BNC shall have the sole and exclusive right, in its sole discretion, at its own cost and expense and
for its own use and benefit, to institute suit or take such other action as it may deem proper to restrain any such infringement and defend any other such claim, and Franchisee agrees to cooperate with BNC in the prosecution of any such claim.
- 6.8 BNC has the right to require, in its sole discretion, that Franchisee discontinue, modify, or substitute any of the Marks in connection with any pending or threatened litigation involving Franchisee's use of the Marks.
- 6.9 BNC reserves the right to modify the Marks and to substitute different Marks for use in identifying the BENIHANA System and BENIHANA Restaurants. Franchisee shall comply with all such modifications and/or substitutions.
ARTICLE 7. ROYALTIES AND ADVERTISING CONTRIBUTIONS TO BNC
- 7.1 Franchisee shall pay to BNC in full upon the acceptance and execution of this Agreement by BNC an initial non-refundable franchise fee ("Franchise Fee") in the amount of Forty Thousand Dollars ($40,000).
- 7.2. During the Franchise Term, Franchisee will pay to BNC on a monthly basis for the use of the Marks a recurring, non-refundable royalty of five percent (5%) of Gross Sales (as defined below) of the Restaurant ("Royalties"). Royalties are due and payable by Franchisee on the fifteenth (15th) day of each calendar month based upon Gross Sales at the Restaurant for the preceding month. If the 15th day of any month is a Saturday, Sunday, or national holiday, Royalties will be due and payable on the first business day following the 15th day of the month.
- 7.3. During the Franchise Term, Franchisee will pay to BNC for the use of the Marks a recurring, non-refundable advertising fee ("Advertising Contributions") of two percent (2%) of Gross Sales. Advertising Contributions are due and payable on the fifteenth (15th) day of each calendar month based upon Gross Sales at the Restaurant for the preceding month. If the 15th day of any month is a Saturday, Sunday, or national holiday, Advertising Contributions will be due and payable on the first business day following the 15th day of the month.
- 7.4 Franchisee agrees to participate in BNC's specified program or procedure for sales reporting and payment of Royalties, Advertising Contributions, and other fees, whether it is electronic fund transfer or some successor program.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, Benihana retains the sole and exclusive right to take action against any infringement of its trademarks. If a franchisee becomes aware of any infringement or claim against the use of Benihana's marks, they must immediately notify Benihana. Benihana then has the discretion to institute a lawsuit or take other actions to restrain the infringement. The franchisee is obligated to cooperate with Benihana in the prosecution of any claim.
Benihana also has the right to require a franchisee to discontinue, modify, or substitute any of the marks in connection with pending or threatened litigation involving the franchisee's use of the marks. Benihana also reserves the right to modify its marks and substitute different marks for use in identifying the Benihana system and restaurants, and the franchisee must comply with these changes.
These stipulations are typical in franchising, as the franchisor must protect its brand identity. It is important for prospective franchisees to understand that they cannot independently pursue legal action to protect the brand; instead, they must rely on Benihana to take appropriate measures. Furthermore, franchisees must be prepared to make changes to signage and marketing materials if Benihana deems it necessary to protect its trademarks.
Benihana also states that they devote substantial resources to the establishment and protection of their brands. However, the actions they take may be inadequate to prevent imitation, challenges to registrations, or violations of trademarks. Any disputes could force Benihana to incur costs related to enforcing their rights. The use of similar trademarks in some markets may also keep Benihana from entering those markets.