Cheesesteak Chain Closes 18 Michigan Restaurants Amid Family Legal Fight

Beloved Detroit-Based Chain Shuts Doors

The renowned Detroit-based fast-food chain, Lefty’s Famous Cheesesteaks, Hoagies & Grill, has closed several locations across Michigan due to an ongoing legal dispute. Once having 52 locations across the country, the chain has now been reduced to a mere 20, with 17 locations in Michigan, two in Florida, and one in Ohio.

The controversy stems from a legal battle between founder Sam Berry and minority owner Allie Mallad, who is accused of attempting to squeeze Mallad out of the business. Mallad has lodged a lawsuit, seeking an unspecified amount of damages for lost profits and the right to buy out the Berrys’ share of the company.

Meet The Founders

Lefty’s was founded in Livonia in 2012 by Sam Berry, who had recently survived testicular cancer. The franchise, which initially held all interests in Berry’s mother’s name, offers traditional cheesesteaks and other fast-food favorites like the Southpaw, Spicy Chicken Hoagie, BBQ Banger, loaded fries, and cheesesteak eggrolls. By 2020, Sam Berry had established 11 locations in metro Detroit without a franchising system.

In 2020, Sam Berry partnered with Allie Mallad, the founder of Massage Green Spa and a seasoned franchisee with other reputable brands. The agreement was to convert Lefty’s into a franchise and expand it nationwide, with Mallad receiving a 20% equity ownership of Lefty’s Holdings LLC.

Into Franchising

Once the franchising agreement was implemented, Lefty’s rapidly grew from 11 to 52 locations across Michigan, California, Ohio, Florida, and Texas. Despite this success, Sam Berry alleges that Mallad neglected Lefty’s and allowed the business to suffer while he pursued other interests. He also maintains that Mallad shut down 11 Lefty’s locations, leading to considerable business losses.

Legal Complications

According to Mallad, various business closures were the result of product quality issues with suppliers. However, Sam Berry alleges otherwise, stating that it was due to Mallad’s mismanagement. In addition, Sam claimed that Mallad violated the non-compete clause of their agreement by opening restaurants that sold similar food items and directly competed with Lefty’s.

Regardless of the allegations from both sides, it is a fact that 18 Lefty’s locations have been closed in Michigan, severely impacting local jobs and the state’s economy.

The Road Ahead

With Sam Berry’s countersuit dismissed and Mallad’s case still in appeals, the future of Lefty’s Famous Cheesesteaks remains uncertain. For now, Sam Berry continues to operate most of the Michigan locations, while NFL quarterback Deshaun Watson, who owns a 15% stake in the company, owns and operates the single Lefty’s location in Ohio. As the legal battle wages on, loyal customers and stakeholders are left to wait and watch for its resolution and how it impacts the future of this beloved restaurant chain.