A 5 million shekel explosion: The conflict that entangled Max Stock
The District Court ruled on a stormy conflict that lasted eight years, rejected the chain's claims, and determined that it will compensate the franchisee with millions of shekels following the unlawful cancellation of an agreement.
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A massive drama in the retail world has come to an end after eight years of a stormy conflict: the Max Stock company lost a complex legal battle against its franchisees and will pay compensation in the amount of approximately 5 million shekels, alongside a payment of about half a million shekels for legal expenses. The prolonged legal dispute ignited after the chain's management unlawfully cancelled the franchise agreements, claiming that the franchisee attempted to compete with it secretly.
According to a report in TheMarker, the chain had previously signed franchise agreements for operating branches. At the center of the affair was franchisee Naftali Shimshon, who was accused of violating a non-compete obligation after he transferred a loan of 5 million shekels to his brother, who established a competing chain. Conversely, the franchisee argued that this was legitimate family assistance and that he himself remained a passive investor.
Judge Gershon Gontovnik of the District Court rejected Max Stock's claims. He harshly criticized the company's reliance on an incomplete transcript from a private investigator, and clarified:
«Cancellation of a franchise cannot be done based on feelings and senses — however sharp they may be.»
He further noted that the anger of CEO Ori Max does not justify the cancellation of long-term agreements.
Approximately 5 million shekels in compensation and legal expenses were awarded to the franchisees. Max Stock will not be able to prevent the franchisees from operating a new brand, and will be required to purchase their shares in the Ashdod branch. The verdict can be appealed.
