This is a fundamental and gross violation of both the prohibition of competition and the duty of confidentiality and use of information set forth in the concession agreement.
Therefore, notice of the immediate termination of the concession agreement is hereby given.
In addition, and for the same reason, Max Stock also sent a letter on the same day (January 31,2018) to Top Team (Appendix 5 to the counterclaim), which is a shareholder in Max Ashdod, in which it demanded that the forced separation mechanism set forth in the Ashdod Agreement be enforced. The letter noted the remarks attributed to Mr. Shimshon, and it also stated that Max Stock had learned that one of the shareholders in Top Team was "a person who until recently served as a senior officer of [Max Stock], whose employment was terminated, inter alia, against the background of concerns and his refusal to sign a non-compete undertaking towards the company" (paragraph 5 of the letter). Against this background, Max Stock demanded that the mechanism for the purchase of Max Ashdod's shares from Top Team be activated, in accordance with the provisions of Section 11(a)(6) for "breach of trust".
- No agreements were reached and the lawsuits were soon filed.
The Legal Proceedings
- Following the cancellation of the franchise agreements, the franchise owners in the branches in Bat Yam and Sderot, as well as Top Team, filed an opening incentive in this court (Opening Motion (Tel Aviv District) 39415-02-18) in which they petitioned for declaratory remedies, according to which the franchise agreements continue to be valid and binding Max Stock, and that there is no reason to carry out a process of purchasing the shares held by Top-Team, as stated in the Ashdod Agreement.
The claim was clarified before my colleague the Honorable Judge, as he was then called, the late Jakoel. During the hearing on the application for temporary relief on February 26,2018, the Honorable Justice Jakoel expressed his opinion that the parties should act for a "separation of powers", and examine the possibility that by April of that year the relevant branches would cease to operate under the trademark of the Max Stock chain. The parties agreed that they would continue to talk to each other, and that in the meantime the opening incentive would be deleted without an order for costs, while maintaining mutual claims. The dialogue continued, but no agreements were reached.
- In July 2018, Max Stock filed the first lawsuit before me (Civil Case (Tel Aviv District) 47423-07-18 (hereinafter: the franchise claim)). This lawsuit focused on the branches in Bat Yam and Sderot. The company claimed that throughout the period that elapsed from January 2018, when it sent the cancellation letters, and until the date of filing the lawsuit, the branches continued to be operated under the company's trademarks and misled the public.
Against this background, the plaintiff petitioned:
- Order the defendants, who are the franchisees in both branches, to cease and refrain from making use of its trademarks, and to issue a permanent injunction prohibiting them from making use of these marks and any visual mark that may mislead the public and link the branches to the Max-Stock chain.
- to compensate it for all the damages caused to it in the amount of ILS 2 million (for the purposes of fees); and alternatively to the maximum statutory compensation set forth in section 13 of the Commercial Torts Law, 5759-1999 (hereinafter: the Commercial Torts Law).
- to receive the remedy of providing accounts, and to appoint an auditing accountant to examine the sales made by the defendants after the determining date (April 15,2018).
- Alongside the lawsuit , Max-Stock filed a motion for interim relief instructing the defendants to stop using its trademarks and to act in a manner that is liable to mislead the public.
A hearing on the application was held before me (on October 11,2018). Prior to the hearing, the defendants stated that they had decided to establish a new brand - "Big Stock" - and that under it the stores in Bat Yam and Sderot would continue to operate. According to them, the rebranding required time. At the hearing, it was agreed that the defendants would stop using Max-Stock's trademarks until October 25,2018. It was further agreed thatthey would continue to sell the current inventory purchased from the plaintiff until the stock ran out.