Top Franchise Legal Players: Mackenzie Dimitri and Richard Bayer, Einbinder & Dunn LLP

Honorees: Mackenzie Dimitri and Richard Bayer
Roles: Partners, Einbinder & Dunn LLP

Mackenzie Dimitri and Richard Bayer are partners at Einbinder & Dunn LLP, each bringing unique strengths to the firm’s comprehensive franchise law practice. 

Dimitri is an experienced litigator and franchise attorney whose practice is divided between judicial proceedings and transactional work. She drafts and negotiates commercial contracts, franchise agreements and franchise disclosure documents (FDDs), and represents clients in trials and dispute resolution forums nationwide. Dimitri is recognized for her nuanced understanding of how business objectives relate to goals in litigation, and her active involvement in the American Bar Association’s Forum on Franchising and the International Franchise Association.

Bayer leads the firm’s franchise regulatory practice and provides business law counsel to a wide range of clients, from startups to publicly traded corporations. He specializes in corporate structuring, mergers and acquisitions, and represents franchisors and franchisees in various stages of franchise development and growth. Bayer is known for his extensive experience in representing franchisors during all stages of development, including international franchising projects. He is a co-author of the New York chapter of the Franchise Desk Book, ABA Forum on Franchising. 

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

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

Mackenzie Dimitri: Review your documents holistically and regularly. From a litigation standpoint, we hear from franchisees often who say their franchise agreement or contract says one thing, but the franchisor rarely or ever enforces that. Lack of enforcement or arbitrary enforcement can potentially lead to the franchisor losing the ability to enforce their agreements, leading to a loss of control over their brand. Having a relationship with your counsel where you can hop on a call and advise them of issues in real time, followed by regular meetings to ensure your documents are protecting you, is crucial.

Richard Bayer: We also advise clients to be diligent with identifying trade secrets and confidential information. When disclosing such information, mark it as confidential and advise recipients of their responsibility to protect it. Trade secret protection is a frequent issue in our litigation practice, and many franchisors fail to communicate the importance of confidentiality to their franchisees and strategic partners. If franchisors don’t treat their trade secrets as confidential, it becomes difficult to protect that information later. Designate trade secrets early, require confidentiality agreements, and limit disclosures to those who need to know.

1851: How important is the information in Item 19 of the FDD?

Dimitri: For franchisors, Item 19 is a chance to showcase successful systems, but you can’t hide from bad data. What is missing from Item 19 is as important as what is included. If you’re omitting data from low-performing locations, it may be better not to make any disclosures at all.

Bayer: When I started preparing FDDs nearly 20 years ago, about 30% of franchisors included financial information in their Item 19s. Today, I estimate that number is over 60%. Prospective franchisees expect financial performance disclosure, and if a franchisor omits Item 19, prospects might assume they are hiding poor performance. However, prospective franchisees must scrutinize the information reported in Item 19 and be mindful of what might be missing.

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

Dimitri: Failing to communicate with franchisees. In systems where franchisees are viewed as partners, you see continued growth, fewer lawsuits and a commitment to evolving. Where trust has eroded, you’ll find franchise associations forming, litigation by franchisees and resistance to changes, all of which impact the franchisor’s ability to grow.

Bayer: I agree with Mackenzie. Additionally, franchisors should be forward-thinking and build flexibility into their agreements to adapt to changes in technology and market trends. However, just because a franchisor has the contractual right to take certain actions, it may not always make long-term business sense to do so. Strong communication and trust between franchisors and franchisees are key to navigating challenges successfully.

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

Dimitri: We are practical, available and care deeply about our clients’ business success. We spend the time developing long-term relationships with our clients, many of whom come back to us repeatedly, often hiring us as outside general counsel for ongoing support.

Bayer: We are probably an outlier in the franchise industry in that we represent both franchisors and franchisees. This allows us to see issues from both perspectives and take a practical approach that often cuts through to the heart of the matter, hopefully expediting resolution and preventing issues from becoming significant problems.

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

Dimitri: Always consider the client’s greater goals and overall business objectives in any representation. If a client is facing a minor dispute but is also approaching a major acquisition, they want to resolve the dispute quickly and move on. Our long-term relationships with clients help us put issues in context based on our knowledge of their overall objectives.

Bayer: We were given two ears and one mouth, so do twice as much listening as speaking. Before offering counsel, I try to understand the client’s problems or goals and how our actions will fit within the client’s big picture. The more we know about a client’s operations, strengths, and weaknesses, the better we can tailor our advice to help them achieve their goals.

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