Franchisees File $3M Suit Against Cafe Santa Fe

Two former franchisees filed a lawsuit April 24 in Washington County Circuit Court against CSF Franchise Group of Fayetteville.

Phil Bronson and Sad Haleema claim the company, which currently operates five Cafe Santa Fe restaurants, owes them more than $3 million in damages related to breach of contract and fraud.

The suit — which also names Tom Flores, Emad Damien and Sherry Ingram individually as defendants — states that Bronson and Haleema are owed $1.9 million for breach of contract damages, at least $536,000 for actual fraud damages and $1 million for punitive damages.

“They have no basis,” said Flores, who is president of CSF.

“It’s unfounded. Now, they’ve opened the door, and we’re going to countersue for twice that much … They owe us a bunch of money from franchise rights and marketing fees … I’ll take them on. They’ll wish they had never done that.”

The lawsuit claims CSF terminated the franchise rights of the plaintiffs in violation of the franchise agreement.

Abu-Haleema Enterprises, which consisted of Haleema and his wife Frances, both of West Fork, owned two Cafe Santa Fe restaurants in Fayetteville and one each in Rogers and Bentonville. Bronson was a partner in each of those restaurants except the one at 25 Center St. in downtown Fayetteville.

Haleema closed the restaurants Sept. 20, one day before filing for Chapter 7 bankruptcy protection. He listed $1.65 million in total assets and $4.07 million in liabilities, which included $330,000 in debt to CSF.

CSF reopened three of the restaurants immediately afterwards.

With Abu-Haleema’s bankruptcy, the original Cafe Santa Fe at 25 E. Center St. in Fayetteville was closed for the first time since it opened in 1982. But Flores said he is going to reopen that restaurant this summer, and it will be operated by the corporation.

Flores sold that restaurant to Haleema in 1997.

CSF currently operates Cafe Santa Fes in Fayetteville, Springdale, Bentonville, Hot Springs and Neosho, Mo.

The lawsuit alleges that CSF continued to operate the restaurants previously owned by Haleema “but failed to pay vendors, federal taxes, state taxes, local taxes, liquor taxes, mortgage holders and others.”