Espresso Cafe-Italia (formerly Hubar Israel) alleges its franchise partner for Lavazza-Espresso Point, Eden Springs, illegally withdrew millions of shekels from the franchise. Espresso Cafe-Italia owns 30% and Eden Springs 70% of the franchise.
In its court petition, Espresso Cafe-Italia states it markets espresso machines under an agreement with Italy's Lavazza. Espresso Cafe-Italia alleges that Eden Springs principle shareholder Roni Naftali and CEO Nir Dor decided to restructure the company, thereby seriously affecting its operations, causing heavy costs and losses to its sister companies
Espresso Cafe-Italia also alleges that in 1999, Eden Springs began presenting various figures in its and Espresso Cafe-Italia's financial statements that did not meet accounting regulations. The statement alleges that customer recruitment expenses were spread out over several years, thereby inflating Eden Spring's and Espresso Cafe-Italia's profits that year.
Yehoshua Hazenfratz CPA of Shiff-Hazenfratz & Co., who had served the franchise since it was founded, refused to approve this tactic in the 1998 financial report. When he reiterated his refusal in 1999, Eden Springs ceased working with him, and transferred to Kesselman and Kesselman - PricewaterhouseCoopers Israel.
The respondents have not yet filed a statement of defense.
Published by Globes [online] - www.globes.co.il - on July 25, 2002