The multinational Coffee Bean & Tea Leaf chain has given its Israeli concessionaire City Food until Sunday to close down all 11 branches in Israel, because of alleged violations of their franchising agreement. Also, for months City Pass hasn't been making its franchise payments and now owes hundreds of thousands of dollars, the international company says.
If the shops are not closed by Sunday, steps will be taken, the local legal representative of the chain said.
For months City Food hasn't reported on revenues at the branches, in violation of their agreement, Coffee Bean charges. It hasn't reported on opening new branches or closing existing ones, leaving the home office in the dark as to the state of affairs at Coffee Bean in Israel, it says, let alone knowing if it's even profitable.
The international company is concerned about damage to its good name, explains Eyal Flom, one of the local legal representatives of the chain. The local outfit has been notified that from August 8, the franchise agreement is terminated and therefore, they have to close down all stores from that day.
Coffee Bean is unhappy about City Food's moves to unite local Coffee Bean outlets with other brands, which contravenes their policies. In some places City Food opened sushi bars inside Coffee Bean outlets, and at the main outlet in Netanya, the Coffee Bean was merged with a Sbarro outlet, it says.
Among the many alleged violations, City Food opened branches without obtaining prior permission and tried to sell half its franchise to the Abulafia family, also without the global company's blessing, claims the latter.
City Food did not respond for this report.
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