Colowide runs various types of restaurants from izakaya, sushi chains and karaoke shops.
"There would be no future if Ootoya is taken over by Colowide," Ootoya President Kenichi Kubota said at a media briefing on Monday.
Colowide this month offered to buy Ootoya at 3,081 yen ashare in a deal that would boost its stake in the company to51.32% from 19.16%.
Ootoya's shares rose 39% to 2,934 yen on Monday from July 8, the day before the offer was made.
Ootoya's Kubota said the company is not planning to take any measures to counter the bid. He asked shareholders not to tender their shares to Colowide as the takeover could damage Ootoya's corporate value and brand.
Hostile bids had been rare in Japan but as corporate growth slows, some companies started seeking a bigger control in their affiliates to streamline their operations.
While Colowide seeks more efficiencies in Ootoya by using centralized kitchens, Kubota said he wants to differentiate the company by preparing meals at an individual kitchen.
Colowide was not immediately available for comment on the stance taken by Ootoya, which had flagged its opposition to the bid last week.
(Reporting by Junko Fujita; Editing by Simon Cameron-Moore)