Top Franchise Legal Players: J. Michael Dady, Dady & Gardner, P.A.

Honoree: J. Michael Dady
Role: Founding Partner, Dady & Gardner, P.A.

J. Michael Dady, the founding partner at Dady & Gardner, P.A., is regarded as one of the most prominent franchisee attorneys in America. His firm, based in Minneapolis, is dedicated to helping franchisees and dealers preserve and enhance the value of their businesses. 

Dady & Gardner represents over 350 franchise and supplier organizations and 32 national franchisee and dealer associations, earning a reputation as the top franchisee law firm in America, according to Chambers USA in 2012. Dady’s other accolades include being listed in the Best Lawyers in America, membership in the Million Dollar Advocates Forum and recognition as one of Minnesota's Top 100 Super Lawyers.

1851 Franchise reached out to Dady to learn about how franchisors can protect their brand and avoid legal mistakes. Check out his insights below.

1851 Franchise: What do you see as the most important things a franchisor should do to protect their brand?

J. Michael Dady: Franchisors should have their own test stores up and operating, successfully, at both their top line revenue numbers and their bottom line cash flow numbers, before they ever try to sell a franchise to a prospective franchisee. Franchisors should continue to operate a reasonable number of stores on a continuing basis, so that they can know, and live, the difference between just generating more top line revenues, at the expense of bottom line cash flows, versus generating more of both (as franchisors without operating stores themselves tend to focus on the former, at the expense of the latter).

1851: How important is the information in Item 19?

Dady: Franchisors should live by the rule that they may only talk to prospective franchisees about revenues, expenses and cash flows if they put complete answers to those topics in Item 19. Thereafter, they should only say what is in their Item 19 disclosures to their prospective franchisees, as franchise laws in most jurisdictions prohibit franchisors from discussing revenues, expenses, or cash flows not included in Item 19 of the franchise disclosure document. This legal obligation is “honored in the breach” too often, which causes real heartache for both franchisees, who rely on what they’ve been told and then end up in a failing concept, and for franchisors, who end up being sued and losing for violating this fundamental legal principle.

1851: What is the single largest mistake brands make legally?

Dady: Violating the law related to what franchisors — including the franchise sales agents many franchisors hire to sell — are prohibited from saying to their prospective franchisees about revenues, expenses and cash flows that are not also set forth in Item 19 of the franchise disclosure documents provided to their prospective franchisees.

1851: How do you stand out as a franchise law firm?

Dady: By being precisely accurate in our factual presentations to franchisors and their lawyers — and by being known to be that — and by being known to do our best to resolve all of our disputes for our franchisee clients with their franchisors by:

1. Dealing directly with the franchisors and their lawyers, to try to negotiate a mutually-satisfactory resolution.
2. Engaging good mediators to engage in meaningful mediations, requiring key decision makers to be present at our mediations from both sides, such that these facilitated negotiations are successful far more often than not.
3. Being known to be particularly skilled and persistent advocates for our franchisee clients every step of the way, including through trials and arbitrations on the merits.

For additional information on what we think causes us to stand out as a preeminent law firm for franchisees, see our website at www.dadygardner.com.

1851: What is the best business advice you have received in your career?

Dady: Be honest and respectful to everyone, including, of course, both our clients and our adversaries. Do our best to use all the gifts we have been given to do our best for our deserving clients, to maximize their chances for being successful in achieving their stated business objectives just as effectively and efficiently as possible. Be a lifelong learner and continuously improve our skills in our chosen profession, helping those who need and deserve professional help. These lifelong lessons were given to me, both directly and by example, from my best friend in law school, former Federal Judge Diana Murphy, of the United States District Court for the District of Minnesota.

Every great franchisee had help buying a franchise. Want to learn more about how 1851 helps franchisees find the right franchise opportunity? Visit www.1851growthclub.com and start your journey.