Does Benihana reserve the right to modify the non-competition covenants?

According to the 2024 Benihana Franchise Disclosure Document, Benihana, referred to as BNC in the document, retains the right to modify the scope of non-competition covenants. Specifically, BNC has the authority to reduce the scope of any covenant outlined in the agreement, or any portion thereof, without requiring the consent of the individual bound by the covenant. This modification becomes effective immediately upon the individual receiving written notice from Benihana. The individual is then obligated to comply with the covenant as it has been modified.

This provision primarily affects individuals who have been employed by a Benihana franchisee and have signed an agreement containing non-competition clauses. These clauses typically prevent them from engaging in or being employed by a competing business within a specified radius of a Benihana restaurant for a certain period after their employment ends. A "Competing Business" is defined as a Japanese teppanyaki style or sushi restaurant or food service business.

For a prospective Benihana franchisee, this clause has implications for managing employees and ensuring the enforceability of non-competition agreements. While the franchisee can initially establish non-competition terms with employees, Benihana reserves the right to alter those terms, potentially reducing their scope. This could impact the franchisee's ability to protect their business interests if Benihana chooses to narrow the restrictions on former employees. Franchisees should be aware of this right and factor it into their employee management and business protection strategies.