Does Benihana require franchisees to ensure their employees with access to confidential information sign specific covenants?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
unication by others. Franchisee shall divulge the Confidential Information only to such of Franchisee's employees as must have access to it in order to operate the Restaurant.
- (b) As a condition of employment, Franchisee shall require Franchisee's General Manager and any personnel having access to any Confidential Information to execute covenants that they will maintain the confidentiality of information they receive in connection with their employment at the Restaurant. Such covenants shall be in the form attached to this Agreement as Exhibit F, which form includes specific
identification of BNC as a third party beneficiary of such covenants with the independent right to enforce them. Franchisee shall provide BNC with a copy of all executed covenants within five days after hiring any such General Manager and/or employees.
- 18.4 Franchisee covenants that, during the Franchise Term and for a period of two (2) years after the expiration or termination hereof, Franchisee shall not, directly or indirectly:
- (a) divert or attempt to divert any business or customer of the Restaurant to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the BENIHANA System;
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, franchisees are required to have their General Manager and any personnel with access to confidential information sign covenants to protect that information. These covenants must be in the form attached as Exhibit F to the Franchise Agreement. Benihana is explicitly identified as a third-party beneficiary of these covenants, granting them the independent right to enforce them.
Specifically, franchisees must ensure that their General Manager and any other personnel who receive training from Benihana execute a restrictive covenant agreement, similar to those outlined in Article 18 of the agreement. This agreement must also identify Benihana as a third-party beneficiary with the right to enforce the covenants.
The franchisee is obligated to provide Benihana with copies of all executed covenants within five days of hiring the General Manager or any employees who have access to confidential information. This ensures Benihana has a record of these agreements and can take action if a breach of confidentiality occurs. This requirement is designed to protect Benihana's trade secrets and maintain the integrity of the Benihana system.