These suspicions were also verified retroactively, in the framework of the present proceeding, and a sufficient evidentiary basis was presented to substantiate them. Thus, for example, it became clear that Mr. Shimshon had conducted a due diligence examination for the establishment of the competing chain, the Superstock chain, and his attempts to claim that these checks were carried out for his brother should be rejected.
- Although the burden of establishing the justification for canceling the agreement rests with Max-Stock, in light of the evidence presented, great significance should be attributed to the defendants' choice not to call relevant witnesses, including Mr. Shimshon's brother. Against this background, their arguments that Mr. Shimshon made do with the loan he lent to his brother should be rejected.
- At the same time, Mr. Shimshon breached the prohibition of competition and the duty of confidentiality in the agreements. These are fundamental breaches, and hence Max had the right to cancel the franchises, which it did. There is no basis for the defendants' claim that Mr. Max knew about Mr. Shimshon's involvement in Superstock and accepted it, and there is no basis for their claim that Mr. Max knew that the competing chain - Superstock - was not successful, and did not constitute real competition.
- There is no basis for Mr. Shimshon's argument that a distinction must be made between passive and active franchisees, so that the contractual limitations apply only to the latter. There is no trace of this distinction in the agreements, it contradicts the letter ofthe agreement, and it is the agreements that bind. The stipulations bind not only the direct parties to the agreements but also those who control the relevant companies. Therefore, Mr. Shimshon will not be able to hide behind Emily Sderot with regard to the Sderot branch, and behind Top Team with regard to the Ashdod branch. And from the moment Mr. Shimshon breachesthe obligations he has assumed, he must bear the consequences.
- Due to those violations, Max has the right to demand the realization of the separation mechanism in the Ashdod Agreement, since this is a breach of trust in accordance with paragraph 11(a)(6) of the agreement. Therefore, Top Team must be enforced by its separation mechanism (in clause 11(b)).
Today it is clear that Mr. Shimshon and Mr. Haimovich are involved in the Big Stock chain. Mr. Haimovich is also a shareholder in Top-Team, which is controlled by Mr. Shimshon. Therefore, it is clear that Top-Team cannot be a shareholder in Max-Ashdod, in view of the competing activity of its owners. This is reflected in the ongoing conduct surrounding the Ashdod branch, and in Top-Team's desire to replace Mr. Max as a director of Max-Ashdod. Therefore, an additional ground arose for enforcing the separation mechanism, in accordance with clause 11(a)(4) of the Ashdod Agreement.