What specific actions are Benihana franchisees prohibited from doing that would be considered injurious or prejudicial to the goodwill associated with the Marks and the Benihana System?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
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;
(b) employ or seek to employ any person (or induce such person to leave his or her employment) who is, or has within the one (1) year prior to any such expiration or termination been, employed by BNC, any of its affiliates, including, without limitation the "Haru," or "RA" Restaurants ("Affiliated Company"), or any other franchisee operating under 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 restricted from actions that could harm the goodwill associated with the Benihana brand. Specifically, during the franchise term and for two years after its expiration or termination, a franchisee cannot divert or attempt to divert business or customers of the Benihana restaurant to a competitor. This includes any direct or indirect inducement or any other action that could be detrimental to the goodwill of the Benihana brand and system.
Additionally, franchisees are prohibited from employing or attempting to employ individuals who are currently or were employed by Benihana, its affiliates (including Haru or RA Restaurants), or any other Benihana franchisee within one year prior to the termination or expiration of the franchise agreement. This restriction aims to prevent the poaching of trained staff who possess knowledge of the Benihana system, which could be used to benefit a competitor.
These restrictions are designed to protect Benihana's brand reputation, customer base, and proprietary knowledge. Benihana requires franchisees to ensure that their General Manager and other personnel who receive training from Benihana sign a restrictive covenant agreement, reinforcing these obligations. The franchisor is identified as a third-party beneficiary of these covenants, granting them the right to enforce these agreements independently. These measures ensure that franchisees and their employees remain committed to upholding the standards and goodwill of the Benihana system, even after their association with the franchise ends.