In addition to the Kyū / Dan system, only the most elite of all black belt students in the Budo Ryu Kai earn the right to be ranked in the Menkyo system. Menkyo (免許) is a Japanese term meaning "license." It refers to the official license within a specific ryū, in order to maintain the correct transmission.

The Menkyo system dates back to the 8th century and was the old way of receiving rank in the classical samurai traditions.  Although one cannot physically see the difference in fighting ability between a really high ranking Dan level student and a Menkyo student, there are significant differences within the Kuden (oral transmission) as well as the addition of the Hiden (secret transmission) that is not presented to Dan level students.

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There are four levels in traditional menkyo training. You have to pass the first level and receive the menkyo and scroll, before you can proceed to the next level of training. The four level of Menkyo training are as follows:

Menkyo Shoden (免許初伝) translates out as: “Initial Transmission”.  This is the fist level of training. After the completion of this area of training, the budoka will also receive the mokuroko (目録) / catalog scroll of all of the techniques and teachings within the Shoden level. 

Menkyo Chuden (免許中伝) translates out as: “Middle Transmission”.  This is the second level of training. After the completion of this area of training, the budoka will also receive the mokuroko (目録) / catalog scroll of all of the techniques and teachings within the Chuden level.

Menkyo Okuden (免許奥伝) translates out as: “Great Inner Transmission” or “Secret Transmission”. This is the third level of training.  After the completion of this area of training, the budoka will also receive the mokuroko (目録) / catalog scroll of all of the techniques and teachings within the Okuden level as well as various densho and makimono.

Menkyo Kaiden:  (免許皆伝) translates out as: “License of Total Transmission." This is the last level of training.  It is granted by the Soke / Grandmaster acknowledging that the student has learned everything there is to know within the specific ryū. In the Menkyo system of licenses, the Menkyo Kaiden is the highest level of license that exists in the Japanese fighting arts.  It is usually, but not always, giving to the next successor or grandmaster of the art. The budoka will receive a copy of all densho, makimono and mokuroku of the ryu as well.

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