Coffee Bean to withdraw from Israel?
Franchisees refuse to relinquish stores after global chain sends letter demanding their closure due to unpaid royalties, contract violations
The worldwide Coffee Bean and Tea Leaf chain has demanded that its franchisees in Israel shut down mall stores, but the latter are refusing to do so, it was announced over the weekend.
City Food, which owns the rights to the chain in Israel, received a letter from the chain's offices last week in which it demanded the stores be closed due to unpaid royalties and various contract violations (such as neglected profit reports and notifications on the closing down of stores in Israel).
But franchisees claim that Coffee Bean is demanding to withdraw from the country because of an internal dispute with City Food's CEO, Danny Werner, from whom they had purchased the rights to open chain stores in Israel, and that they did not plan to let this get in their way.
Many believe that the chain will opt to replace Werner rather than duck out of the country altogether, and that the demands were made to pressure the tycoon, who has recently run into financial difficulties, to give up the rights.
"We received no message from the global chain," said Reli Ashkenazi, who owns the Coffee Bean in Herzliya. "We purchased the franchise rights from Werner for more than $60,000 and we have the right to use them. The branch is good and profitable."
Others hoped the reports would not damage their reputation, saying customers had asked if they would be closing soon.
Attorney Eyal Pelem, who represents the worldwide chain in Israel, told Mamon Magazine the chain had not yet filed a suit against Werner, and that its withdrawal from Israel was far from certain.
But even if it decides to file a lawsuit, Coffee Bean will have to get in line. Werner, who encountered financial difficulties after investing in hotel ventures abroad, has been vilified for ceasing to pay royalties to the Sbarro fast-food chain as well.
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