Under what conditions can Benihana decrease the period of time or geographic scope of the non-competition covenants?

According to Benihana's 2024 Franchise Disclosure Document, Benihana has the authority to modify the non-compete agreements. Specifically, Benihana, at its sole discretion, can reduce the scope of any covenant within the agreement without requiring the franchisee's consent. This modification becomes effective immediately once the franchisee receives written notice. The franchisee is then obligated to comply with the covenant as it has been modified.

This clause provides Benihana with considerable flexibility to adjust the non-compete terms as they see fit. This could be in response to changing market conditions, legal considerations, or specific circumstances related to the franchisee or the location of the Benihana restaurant. The franchisee has no ability to negotiate or reject these changes, and must comply as soon as they receive notice.

For a prospective Benihana franchisee, this means that the initial non-compete terms outlined in the franchise agreement could be altered by Benihana at any time during or after the franchise term. While the initial terms might seem reasonable, Benihana retains the right to make them more lenient, potentially increasing competition in the area, or more restrictive, further limiting the franchisee's future business activities. Therefore, it is important for a potential franchisee to consider this possibility and its potential impact on their investment and future career options.

This level of franchisor control over non-compete agreements is not uncommon, but franchisees should carefully evaluate the potential implications. It is advisable to seek legal counsel to fully understand the scope of these provisions and to assess the potential risks and benefits before entering into a franchise agreement with Benihana.