Aroma Franchisee Sues for 5 Million Shekels Over Licensing and Operational Disputes

Eran Hirschfeld, who operated an Aroma coffee shop franchise in Wadi Ara for nearly 20 years, has filed a 5 million shekel lawsuit against Aroma Israel. The suit, submitted on July 19 to the Haifa District Court, reveals details about the franchise licensing costs and the challenges Hirschfeld faced in transferring his franchise rights. Hirschfeld claims Aroma failed to secure a necessary special-use permit for the location, which prevented him from selling the franchise and caused significant financial harm.

Hirschfeld obtained the franchise license in 2005 for a branch at a Paz gas station near Kfar Ara and Harish, investing about 2 million shekels to establish the store. He alleges that Aroma misrepresented the property’s suitability and that the responsibility for permits was wrongly attributed to Paz. Despite a 2014 court case threatening closure due to permit issues, a new lease was signed in 2022 between Aroma and Paz, with Hirschfeld involved and personally guaranteeing Aroma’s commitments. However, in July 2024, Aroma declined to renew the lease option, citing "planning uncertainty," effectively ending Hirschfeld’s franchise after two decades.

In August 2024, Aroma accused Hirschfeld of serious breaches, including inadequate service and cleanliness, though Hirschfeld presented a high cleanliness rating from a laboratory inspection. After Hirschfeld’s departure, Aroma reopened the branch under its own management in September 2025. Hirschfeld alleges Aroma misled him by ceasing his franchise while continuing operations themselves, benefiting from his prior investments.

The lawsuit also exposes Aroma’s franchise financial model: a 2005 license cost 100,000 shekels plus monthly royalties starting at 4% of revenue, increasing with higher sales. Consulting fees were 50,000 shekels. According to statements attributed to CEO Danny Mishel, franchise transfers are valued at 4.37 times the annual net profit, meaning Hirschfeld’s franchise, which earned 880,000 shekels annually, could have been sold for about 3.8 million shekels. Hirschfeld claims losses totaling 5 million shekels for lost profits, equipment value, reputational damage, and distress. Aroma has yet to file a defense, and the case will proceed in court.