A Restaurant Lawyer Explains Why These Red Flags on ‘The Bear’ Totally Triggered Her

“It got too triggering, I had to stop.” “I don’t need to go home and watch an equally stressful version of my real life on TV.” These are the answers I get from my chef clients when I ask if they’ve watched The Bear. 

I get it. For years before I was a lawyer for chefs, I worked in the industry, starting as a hostess and moving up to food running and expediting. When I was old enough to open and pour wine, I moved into serving gigs which I held up until the point I was graduating from law school. To this day I still say “behind” when walking behind anyone in a restaurant, or even my husband in my own kitchen. That said, since I mostly worked front of house, little of The Bear‘s drama hit too close to home for me to enjoy it. That is, until I finished Season 3 of the hit FX show.

As someone whose sole job is to represent and protect the legal interests of those in the hospitality industry, it became too hard for me to accept as believable several of the major conflicts around those legal issues, business structure, and that operating agreement that the restaurant’s sous chef, Sydney, was (rightly!) avoiding signing. If you’re in the position to be an owner of a restaurant yourself, there are ways to learn from their mistakes. 

In Season 2’s “Sundae” episode when Sydney makes the rounds of Chicago spots before her own restaurant opens (or should I say, the restaurant that she was told she was a partner in, but given no substantial details), a chef named Nayia asks her, “What’s your profit share?” 

Sydney responds, “Oh, not like that, we’re just, um, working together. Yeah.” With a cautionary tone, Nayia responds, “Listen to your gut.”  

At that point I thought, “I hope she finds a good lawyer next season.” Sydney goes on to Avec where real-life restaurateur Donnie Madia tells her, “Make sure you have a great partner, someone you can trust.” He shares a story about a partner running off with funds to Hawai’i and that, “It happens all the time.”

Well, that’s theft, fraud, and a whole host of other tort claims, perhaps even criminal securities fraud, and something that I’ve never seen or ever heard of happening in my 20 years of practice, but I digress. 

Think of the relationship like a marriage

Those first two folks were talking and thinking about the right things, most of which went by the wayside once Season 3 came around. I frequently tell people who come to me looking to open new restaurants (this can apply to anyone starting any business) that this relationship is a marriage and their operating agreement is their prenup. I begin by asking a lot of questions about how long the partners have known each other and how long they’ve worked together to gauge compatibility and temperament. I try my best to instill how big a responsibility it is to take other people’s money for a new venture. How many personal financial ones are involved with signing a lease. I explain what a nightmare and how lengthy the licensing and buildout processes are. 

After that, if these people are still determined to move ahead, before they raise a single dollar, we sit down and have long conversations and document on paper how this relationship is going to work in practice. What are their obligations to each other? Can we confirm that they have shared intentions about this project and commitment to their roles? Can they agree who has a say in major company decisions, and how they’re going to separate and divide assets if things start to fall apart or conflicts arise that cannot be resolved. 

Red flags abound on the menu

Season 3 showed us none of those things happened. We saw only an operating agreement sent to Sydney for her signature. Her avoidance of it signals her unease with this “marriage,” due to chef-partner Carmy’s lack of transparency and communication about the partnership. There is the quick acknowledgement that a lawyer needs to review it for her — and that the lawyer to do that will be his brother-in-law Pete. There are many, many people pressuring her to, “Just sign the document!” Those were red flags one after another. 

Don’t rush into anything

If I’m going to be generous, this pressure on Sydney is not just about creating that conflict for her — and us as viewers. It’s because she had previously agreed to work without pay for six months and recoup that retroactively when the restaurant opened. Her doing so without being an owner of the restaurant is a violation of many labor laws (and why unpaid stages for chefs are generally illegal) with penalties being so punitive that any claim by her or on her behalf by the Department of Labor would certainly bankrupt the restaurant. I don’t think we can assume that offscreen they’re panicking about having violated the Fair Labor Standards Act, but maybe something in a future season will surprise me. 

Communal Table

The mere pressure to sign a document without being presented the document first for review and comment doesn’t sit well with me and shouldn’t sit well with anyone reading who faces the same predicament. I could start throwing legal jargon around like “coercion” and “duress,” but at its heart, if this is a person you value and respect, this isn’t the way to demonstrate that. The show focused more on Sydney’s anxiety and not the bad acts and ill-intentions of nearly everyone else around her so I’m here to say: That’s not normal and think thrice before signing anything under pressure especially without a review from someone who knows what should and shouldn’t be in those documents. 

Who actually has say in the matter?

But what is Sydney even going to be an owner of? The overarching structure of this relationship remains cloudy. Cicero (a.k.a. Uncle Jimmy) agreed to fund the restaurant but there was a set payback timeline, (securitized by the restaurant and the lot/property). That is a loan, not a capital contribution to the company which would give him any equity. Yet, Uncle Jimmy seemed to have the ability to shut down the restaurant with the snap of his fingers and contributed to the pressure on Sydney to sign, which implies that he’s not just a lender to the restaurant. It seemed as if the operating agreement may give controlling voting power (and/or a majority of the equity) to Cicero. This is generally not how restaurant investments work. Also, if you own real property, you have so many better options for funding than agreeing to put up an extremely valuable asset to fund a restaurant via a shady family investment. 

Season 4 didn’t offer much more sunlight on this, save for the fact that the beef stand has the potential to keep the restaurant afloat, which means the operating entity owns both the ventures or at least the cash is flowing freely between them. This is yet another misstep, as you should always separate lines of businesses within their own companies and you shouldn’t mix (or in legal terms, “comingle”) that cash otherwise you risk bringing liabilities from one into the other and losing whatever limited liability protection you have by using a corporation or LLC.

And I have beef with The Beef

Side note: The Beef — the side of the restaurant devoted to serving the Italian beef sandwiches that the restaurant was originally known for — has so many of its own issues. If the team wants to expand, it needs to protect its trademark and “The Beef” is quite weak and possibly unprotectable as a name. Ebraheim (the longtime employee tasked with its day-to-day operations) is putting a heartbreaking amount of work into growth but sadly seems to have no actual equity here so it’s not clear he benefits from any of it. As friendly as his newly-appointed mentor-for-hire Albert is, what proof do we have that he actually knows what he’s doing and has experience in successfully expanding fast-casual concepts? And what will he want in exchange? So much of that feels so dicey to me. 

What sweat equity actually means

In reality, the folks who put in the sweat equity by working and bringing to the table their creative reputations — chefs, general managers, beverage directors or sommeliers — typically do so in exchange for at least half the restaurant ownership with the remainder of the equity going towards those who put in the cash to build the place. (Note, I’m using the 50%-50% here for ease, but those ratios will vary based upon the experience of those involved, their past success or lack thereof, the amount of money being raised, and the savvy of the investors.)

Sweat equity partners are often underpaid for the massive effort and time required to get a restaurant open, but they take that risk in the hopes that their income from the restaurant’s success (that 50% or more of the restaurant’s profit) will over time outweigh whatever salaries they’ve forgone. That Carmy, Natalie, and Sydney had been working without a paycheck all this time is unfortunately pretty common in real life, even though I always advocate that my clients raise enough money to pay themselves during the pre-opening period. 

All this said, I’ve never seen an instance of a partner being given the kind of terms Cicero has guaranteed for himself here; they’re not common and I would never recommend any client accept terms so one-sided. Especially with such a tight timeline for “repayment.” There are many ways to build a restaurant and this one seems like a very bad one for everyone but Cicero. Restaurant investments are risky, but Cicero probably benefits if the thing fails, which isn’t the type of investor you want. 

Conflicts of interest are at play

After all this, possibly the greatest sin here and the most uncomfortable to me as a licensed attorney, are the conflicts of interest that Computer (Cicero’s accountant) and Pete have which make the review of this agreement essentially impossible for either of them. Computer drafted the document so perhaps he’s also a lawyer. At any rate, we know who his allegiances are to and the document was surely drafted in Cicero’s favor. That means Carmy, Natalie, and Sydney all need their own lawyers to review this document for them — and it seems Pete just reviewed it once for all of them? Or that Natalie and Carmy just trusted Computer to do what he does and signed as is. When Natalie told Carmy she didn’t know about his surrender of his equity to Sydney in the Season 4 finale, she blamed “attorney privilege” which implies that Pete wasn’t her attorney at all, suggesting the latter case.

Any attorney looking to keep their license in good standing would disclose any conflicts they had. Any client would have to sign a waiver saying they were acknowledging those conflicts. If Natalie and Carmy have different terms than those offered to Sydney, Pete’s marriage to Natalie is a conflict. Pete’s really only allowed to represent Natalie here, and that’s presuming he doesn’t have any independent conflicting business with Cicero himself. If the client wanted to move ahead, they’d sign a retainer letter. Only after that is a lawyer allowed to offer advice, at which point they’d comprehensively break down the risks and benefits of the arrangement, and what it means when all the legal jargon is broken down. Then they’d have a real discussion about the consequences of signing that document. 

Yet Pete still told Sydney he reviewed the document for her and that the salary is “pretty good,” and that she’s eligible for healthcare. This seemingly puts a positive spin on the arrangement without discussing any of the real consequences of signing that agreement or being formally engaged to provide any advice at all. Pete’s subsequent editing of the document at Carmy’s request, and sending Sydney a link to sign without discussing it with her is also a failure of Pete’s legal responsibilities. Pete could face sanctions if his advice to sign the document ends up causing harm to any of the folks he was claiming to represent. For example, even though forming a company to run a business does shield the members from many liabilities, certain things which vary from state to state (like unpaid sales taxes or some labor law violations) can be sought from individual members. That could mean Sydney, Natalie, and now their mâitre d’ Richie — who will be part of the new ownership team — could be on the hook for those debts, and they may have a malpractice claim against Pete as a result.

What’s the liability?

If I were to nitpick, I’d also ask whether Cicero is an accredited investor, which is a requirement for those investing in a restaurant. Even if he is, it seems his private dealings might put him afoul of anti-money laundering rules and regulations. I’d tell Carmy that he can’t name this restaurant “The Bear,” a name that has personal significance to him, if he doesn’t have complete control over this restaurant — which he does not, and in fact, seems to no longer even own any part of if the events of the Season 4 finale stick. I’d ask about any trailing tax liability of the sandwich shop, which would absolutely carry over to this new venture and become its responsibility, and I would never advise that Sydney take ownership in an entity before doing careful due diligence about those existing liabilities and what of that she might be responsible for in a worst case scenario.

Transparency is the key ingredient

Understanding that The Bear is a drama (unless you’re submitting for that Emmy) and the name of that game is conflict, these legal lapses are part of the art. What do I hope you can take away from watching The Bear‘s legal circus?

I’m obviously biased on this point but there are benefits to hiring a lawyer to help. Operating agreements that you download from an online source are either catered to someone else’s needs, or they likely follow the default laws in your state which often dictate a “majority rule.” That can be fine, but when two partners are equal partners, that’s a recipe for disaster. 

Transparency in communication is key. That everyone remains on the same page about their roles and responsibilities is an important step towards meeting each other’s expectations and keeping the relationship healthy. Proper planning and agreement about how much money you need, and why, and where it’s being spent should be done before you put a single dollar into anything. 

Putting all of this on paper is a must. In the best case scenario, you can put your operating agreement in a drawer and it collects dust while everyone happily succeeds. But in the unfortunate event that skies aren’t always sunny ahead, you have a clear plan of action that will help you resolve issues and part amicably and fairly in the way that all parties previously considered and agreed upon. If you’ve done all this, signing the agreement is something that shouldn’t require pulling teeth. If everyone involved knows what’s in there, there’s no need to fear it. 

While Season 4 clarified the parties involved in the ownership of the restaurant, questions remain related to how much all these folks own, and even more importantly, what kind of control they do (or don’t) have. Sydney can’t save The Bear if she doesn’t have the authority to make the decisions required to make the restaurant thrive. Right now it seems Cicero is king and that still leaves Natalie, Sydney, and now Richie owning a thing that Cicero can take away at the ticking down of a timer. I hope Season 5 shows Sydney and Richie with their own lawyers having reviewed and negotiated their own stakes and rights in, starting on more equitable footing with more of the operating partners’ needs met than what has been presented in The Bear thus far.

The content of this article represents the author’s personal opinions and insights and should not be construed as legal advice. While every effort has been made to ensure the accuracy and relevance of the information provided, it does not substitute for professional legal counsel. For specific legal advice or assistance, please consult a qualified attorney licensed in your state who can address your particular situation.