Why Israel’s Aroma Espresso Bar owes $10 million to their original Canadian franchisor—but they’re not paying (yet)

The popular Israeli chain of Aroma Espresso coffee bars is tied up in a three-and-a-half year legal fight with the Toronto business partners who originally brought the brand to Canada in 2007.

Aroma’s foray here had been considered an international success story for the Israeli brand: at its peak, founder Earl Gorman and manager Anat Davidzon grew the branch to 45 franchise locations in and around Toronto. That was the most anywhere outside of Israel, where Aroma has about 160.

There were plans to open many more here, but by 2017 Aroma’s Canadian venture was in serious financial trouble. Two years later, Israel terminated the contract, and took over the operations, amidst a whole lot of bad feelings on both sides. And multimillion dollar losses.

Now, the whole dispute over who owes what, and to whom, is before the Ontario Superior Court of Justice.

And all of this story might have remained unknown, including an arbitrator’s ruling that the contract was ended “illegally” resulting in Aroma Israel owing the Canadians more than $10 million in damages, plus legal costs and interest. But now the Israelis have gone to court to set aside the results, so it’s a matter of public record.

On today’s The CJN Daily, we hear from some of the players about what went wrong.

What we talked about:.

• Read the arbitrator’s ruling on Aroma’s dispute.
• Read the Aroma Israel motion to set the award aside
• See Aroma Canada’s website

Credits   The CJN Daily is written and hosted by Ellin Bessner (@ebessner on Twitter). Zachary Kauffman is the producer. Michael Fraiman is the executive producer. Our theme music is by Dov Beck-Levine. Our title sponsor is Metropia. We’re a member of The CJN Podcast Network. To subscribe to this podcast, please watch this video. Donate to The CJN and receive a charitable tax receipt by clicking here.