Does Benihana provide franchisees with specific financial information related to Advertising Contribution expenditures or a periodic accounting of these expenditures?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
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 does not provide franchisees with specific financial information related to advertising contribution expenditures, nor does it offer a periodic accounting of these expenditures. Benihana co-mingles advertising contributions with its general funds, and the receipt of these contributions does not constitute a trust fund dedicated exclusively to advertising or promotion. Benihana retains sole discretion in how it uses advertising contributions, generally intending to use them for brand advertising, public relations, and local, national, or regional advertising.
Benihana is not obligated to spend amounts equivalent or proportionate to the advertising contributions paid by franchisees or to ensure that franchisees directly benefit on a pro rata basis from these expenditures. In the last fiscal year, Benihana's expenses for marketing, advertising, trademark maintenance, and public relations exceeded the amount of advertising contributions received from franchisees. Benihana may also use advertising contributions to solicit new franchise sales.
In addition to the advertising contribution, franchisees must spend at least 4% of gross sales annually on local marketing and promotion. This local spend can include advertising via television, radio, digital media, magazines, newspapers, direct mail, billboards, promotional brochures, point-of-sale materials, or other approved advertising. All advertising, marketing, and promotional activities must be conducted in a dignified manner and conform to Benihana's standards, requiring written approval from Benihana before use. Benihana retains the right to revoke approval of any advertising plans or materials with written notice.