Can Benihana reduce the scope of any covenant in Section 18.5 of the franchise agreement without the franchisee's consent?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 18.6 Franchisee understands and acknowledges that BNC has the right, in its sole discretion, to reduce the scope of any covenant set forth in Section 18.5, or any portion thereof, without Franchisee's consent, effective immediately upon Franchisee's receipt of written notice thereof; and Franchisee agrees that it will comply forthwith with any covenant as so modified.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, Benihana has the right to reduce the scope of any covenant in Section 18.5 of the franchise agreement without the franchisee's consent. Benihana can do this at its sole discretion.
This means that Benihana can modify the restrictions placed on the franchisee regarding competitive activities, solicitation of employees, or operation of competing businesses. The change is effective immediately once the franchisee receives written notice. The franchisee must then comply with the modified covenant.
This clause gives Benihana significant flexibility to adjust the competitive landscape for its franchisees. For a prospective franchisee, this means that the non-compete obligations could change during the franchise term. It is important to understand the potential implications of these changes and how they might affect the franchisee's future business activities should the franchise agreement end.