Is Benihana required to post a bond to obtain an injunction against a franchisee violating the non-compete agreement?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 18.6 Franchisee acknowledges and agrees that any failure to comply with the covenants and agreements in this Article 18, or with the covenants and agreements in Article 6 hereof with respect to the Marks, shall result in irreparable injury to BNC for which no adequate remedy at law may be available, and, therefore, BNC shall be entitled, in addition to any other remedies which it may have hereunder, at law or in equity, to obtain specific performance of, or an injunction against the violation of, the requirements of this Article 18 and such requirements of Article 6, without the necessity of showing actual or threatened damage and without the necessity of posting bond.
Franchisee agrees to pay all court costs and reasonable attorney's fees incurred by BNC in obtaining specific performance of, or an injunction against violation of, the requirements of this Article 18 or Article 6.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, Benihana National Corp (BNC) has the right to seek injunctive relief against a franchisee without needing to post a bond or security. This applies to conduct or threatened conduct that could cause loss or harm to Benihana. This right is protected under usual equity rules and includes the ability to obtain restraining orders, preliminary and permanent injunctions, and orders for specific performance to enforce the franchise agreement.
Additionally, Benihana can seek injunctive relief to prevent any action or inaction by the franchisee or their employees that violates applicable laws, is dishonest or misleading to the public, or could damage the goodwill associated with Benihana's trademarks or the Benihana system. This provision strengthens Benihana's ability to protect its brand and operational standards.
Furthermore, the franchisee acknowledges that failing to comply with the non-compete agreements within the franchise agreement or with trademark-related agreements will cause irreparable harm to Benihana. Therefore, Benihana is entitled to obtain specific performance or an injunction against any violation of these requirements, without needing to demonstrate actual or threatened damage or post a bond. The franchisee is also responsible for covering all court costs and reasonable attorney's fees incurred by Benihana in obtaining these injunctions or specific performance orders.
This clause emphasizes the importance of adhering to the franchise agreement and protects Benihana's interests by allowing them to quickly and effectively address any breaches without financial barriers such as posting a bond. For a prospective franchisee, this means understanding that Benihana can act swiftly to enforce the agreement, and the franchisee will bear the legal costs if they are found in violation.