Under what conditions can Benihana eliminate the non-competition covenants altogether?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
quires the covenants set forth in this Article 18 in order to protect BNC's legitimate business interests and the interests of other franchisees in the BENIHANA System.
- 18.2 Franchisee covenants that during the Franchise Term, except as BNC otherwise approves in writing, Franchisee shall devote full time, energy, and best efforts to the management and operation of the Restaurant.
- 18.3 Franchisee shall not, during the Franchise Term or thereafter, communicate, divulge, or use for the benefit of any other person, persons, partnership, association, limited liability company or corporation any confidential information, proprietary information, knowle
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 57–58)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, during the franchise term, franchisees must devote full time, energy, and best efforts to the management and operation of the restaurant, unless Benihana approves otherwise in writing.
Benihana requires these covenants to protect its legitimate business interests and the interests of other franchisees within the Benihana system. These covenants are a condition of training the franchisee, sharing confidential information, and granting the license to operate under the Benihana system and use its intellectual property.
The FDD does not specify any conditions under which Benihana would completely eliminate the non-competition covenants. It only states that Benihana can approve exceptions to the full-time effort requirement in writing. Because the document does not list any conditions for eliminating the non-compete entirely, a prospective franchisee should discuss this point directly with Benihana to understand if any flexibility exists and under what specific circumstances it might be considered.