‘A family fight over the business,’ according to reports, has led to the sudden closure of several locations of a restaurant chain in Michigan.
After 52 locations closed, Lefty’s Famous Cheesesteaks, Hoagies & Grill is down to 20 locations nationwide.
The first restaurant in this fast food franchise opened in 2012 in Detroit, and by 2020, there will be eleven.
The next year, it swiftly expanded to more than 50 locations across several states thanks to a franchise deal.
However, there is currently only one site in Ohio, two in Florida, and seventeen in Michigan for the company as a whole.
The owners’ involvement in a court struggle prompted this significant adjustment, according to MLive.
Being a recent cancer survivor, restauranteur Sam Berry initially registered all holdings under his mother’s name, Nayfe Berry, and founded the first Lefty’s.
Sam spoke with Allie Mallad, a businessman based in Florida and his mother’s cousin, in early 2020. To assist with franchising, Mallad became a minority owner of the chain.
As part of the business agreement that was set up on April 17, 2020, Mallad was to get 20% equity ownership of the chain in addition to 20% “off the top” commissions as he expanded Lefty’s nationwide.
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Court records show that Lefty’s expanded to 52 sites in six states in only two years, including Texas, Ohio, California, Florida, and Michigan.
Nonetheless, Berry is now claiming that Mallad failed to do his share and left the company.
The out-of-state locations that Mallad did not open, according to Berry, were set up by him.
According to MLive, Mallad might construct up to twenty additional Lefty locations in 2020 without personally paying any fees or royalties as per the deal.
Although he started with 18 of his locations that did not charge royalties, he eventually shut down 11.
Two restaurants in California and one in Ohio were among the nine that Mallad shuttered in Michigan.
As reported by MLive, the business reportedly removed seven more locations from its website last year.
This year, three additional locations in Michigan shut down, for a total of eighteen closures. The chain’s website currently only lists 20 locations.
Mallad sued, claiming the right to purchase the Berrys’ stake in Lefty’s and an undisclosed sum of money for lost revenues.
In court papers seen by MLive, he asserted that supplier product quality issues, and not bad sales, were to blame for the closures.
According to the Detroit Free Press, he further claimed that the Berrys did not fairly distribute the funds that were due to him as a minority owner.
Court filings indicate that the owner further asserted that Berry’s actions—which reportedly encompassed posting videos of himself cursing and flaunting wealth while donning Lefty’s apparel—damaged the company.
Berry claimed that Mallad displayed “a pattern of dishonesty and bad faith” in a now-dismissed countersuit.
