Moreover, even if Mr. Max had in his heart about Mr. Shimshon, it is not clear why he canceled the franchises in front of the other defendants as well. It is true that they joined the joint journey with Mr. Shimshon's encouragement, and we are still talking about independent businessmen, who are standing on their own feet. What was actually done was a kind of "collective punishment" that has nothing to do with compliance with the contractual duty of good faith, and certainly not in compliance with the increased duty of good faith, which governs the franchise relationship before us.
- I will conclude by saying that from all that has been said so far, the conclusion arises that Max and Mr. Max have not been able to meet the burden of proof imposed on them to prove the "Straw Man" fraud, and we certainly do not have before us "an abundance of references to solid evidence" that Mr. Shimshon was an active partner in the establishment and activity of the competing Superstock chain, as stated in the cancellation letters.
A note regarding the investment of Mr. Shimshon's brother
- It turns out that Mr. Shimshon's claim that all he did was to give a loan to his brother, and he first assisted him in examining the investment transaction in the Superstock chain.
- However, even this version can give rise to a difficulty. A good question is whether such a state of affairs is not equivalent to an indirect breach of the non-competition clause, which prohibits any of the franchisees from competing "directly or indirectly, by himself and/or through others" in the Max Stock chain (see the presentation of the above conditions in paragraph 3(d)). It is clear that the money from the loan that Mr. Shimshon gave to his brother will be used to purchase the shares of a competing company - that is, to inject funds into its coffers.
It should be noted that Dr. Mofkadi, the expert on behalf of the defendants, noted that it is clear that a purely financial investment, which does not include involvement in the management of the competing chain, does not constitute a violation of the non-competition clause "from a business and economic point of view" (p. 9 of his opinion). Still, the matter is not so simple in Y's eyes. This is not a general investment portfolio, according to the example presented there, but rather indirect economic support for the establishment of a competing business, by financing the purchase of shares of a third party.