In addition, Mr. Shimshon did not perform due diligence for the Superstock chain. His brother Michael was interested in the investment, and he asked for the letterof attorney, and he saw preliminary data (a number of "excels") and referred him to the professionals he worked with (BDO CPA and Adv. Doron Ariel) to conduct due diligence with them. The process began, but was later abandoned by Michael, and hence no due diligence was carried out, and the latter chose to invest the funds without it.
- In addition, no improper use of commercial information was established. Shimshon was not part of the management of the stores at all, and therefore was not exposed to such information.
- Max harmed the defendants unjustly. H. Yaniv Zvihai and Ofir Shiror abandoned their previous occupations and brought the stores they managed to dizzying success. And now, Max took unilateral actions against them and the other defendants. Thus, it stopped supplying goods to the stores and left their shelves empty. Against this background, the defendants were forced to rebrand the stores in Bat Yam andSderot, and to establish the Big Stock chain. They also claimed that Max opened additional branches in these cities, thus violating the franchise agreements according to which it should have given them the right of way.
In any case, the store in Bat Yam was unable to compete and it closed. As for the branch in Sderot, Max Stock opened a huge branch in the city, which led to the Sderot branch becoming a loss.
- All of this leads to the fact that Max's franchise claim should be rejected. It is the one that grossly breached the agreements. During his interrogation, Mr. Max explicitly waived the financial remedies in the franchise claim, and repeated it several times.
- Competition with the Max-Stock chain was also not established. The plaintiff knew very well that the Super-Stock chain at the relevant times of the cancellation letter was a failed and "dead" chain. Max knew the owners of the chain (Mr. AvandTabul) and knew about the financial difficulties he encountered. In addition, in the plaintiff's prospectus (P/5) she noted that other "Stock" stores were not in competition with her, and did not mention the Super-Stock chain or the Big Stock chain at all.
- In these circumstances, there is nothing wrong with the defendants opening branches in the Big Stock chain. This is a necessary step that was required following the breach of the franchise agreements on behalf of Max. In any event, Mr. Shimshon's activity, which is in essence a passive investor, does not constitute competition in the Max-Stock chain.
- As for Ashdod's claim, there is no room to make use of the mechanism in clause 11 of the Ashdod Agreement. This is a purchase at a punitive price, which is significantly lower than the real share price of Max-Ashdod. Therefore, the section lists seven specific events that can only be triggered when they occur, and these did not take place in our case. In any case, the provisions of the said section should be interpreted narrowly, in light of its draconian consequences. Hence, not every breach of the agreement establishes the ability to make use of its separation mechanism. A condition for the operation of the clause is the possibility of correcting the act or omission, for which it can be invoked. Such a possibility of correction has never been given to the defendants.
As far as clause 11(a)(6) of the agreement is concerned, it applies to a "seller" as defined in the clause, and the seller can only be one of the parties to the agreement - in our case Top-Team. Only if it performsa breach of trust can its provisions be enforced. The plaintiff does not attribute breach of trust in her claim to Top-Team but to its shareholder. The agreement does not regulate such a situation, and in any case the attribute to Mr. Shimshon is not true on its merits. In addition, breach of trust does not include competition, since this matter is regulated elsewhere in the agreement.