Franchise Conflict Shuts Down Syracuse Location

A Haraz Coffee House location near Syracuse University has closed its doors following a legal dispute between the franchise operators and the corporate franchising company. The cafe, which opened less than a year ago on Marshall Street, became the center of a lawsuit filed by Michigan-based Haraz Coffee House Franchising LLC in September. The conflict highlights important lessons for coffee consumers about how franchise operations work and what can happen when agreements break down.

What Led to the Closure

coffee brewing equipment counter
Photo by René Porter

According to court filings, Haraz Coffee House Franchising LLC accused the local operators, Coffee Bean Syracuse LLC and its owners Mohammed Alsaidi and Emad Alzokari, of violating multiple terms of their franchise agreement. The primary complaint centered on purchasing practices. The franchisee allegedly obtained coffee, tea, milk, syrups, packaging and other products from suppliers that were not approved by Haraz, despite contractual requirements to use only designated vendors or Haraz-affiliated companies. Company founder Hamzah Nasser stated in court documents that 39 different product lines came from unauthorized sources.

Beyond sourcing issues, Haraz claimed the operators failed to pay outstanding invoices and royalties owed to the parent company. The franchising company also reported that the local operators removed Haraz’s access to the store’s point-of-sale system, preventing the franchisor from monitoring sales data as required by their agreement. When Haraz notified the operators of these violations in April, the issues remained unresolved. The company formally terminated the franchise agreement on July 30.

The Financial Terms Shoppers Should Understand

The franchise agreement signed in June 2024 reveals the financial structure behind coffee shop operations. The initial franchise fee was set at 50,000 dollars, with ongoing costs including a 4 percent royalty based on weekly gross sales and a 1 percent contribution to an advertising fund. These costs are typical for established coffee chains and explain why franchisees must carefully manage their purchasing and sales to maintain profitability. When operators deviate from approved suppliers or fail to pay royalties, they create serious legal exposure, which is exactly what happened in Syracuse.

Haraz is pursuing multiple post-termination provisions through the courts, including requirements that the operators remove all Haraz branding, return proprietary business materials, and cooperate with transferring the cafe’s lease back to Haraz if the company chooses to pursue that option. Most restrictively, the lawsuit seeks to enforce a two-year non-compete clause preventing the former operators from running any competing coffee business within five miles of the original location. This type of provision is standard in franchise agreements but demonstrates how disputes can limit former franchisees’ ability to continue in the coffee business.

What This Means for Coffee Shoppers

franchise business meeting discussion
Photo by Campaign Creators

For consumers, franchise disputes like this one underscore why quality control matters in coffee retail. When franchisees purchase from unauthorized suppliers, the coffee quality, consistency and brand standards can suffer. Shoppers who visited the Syracuse location may have noticed inconsistencies in their drinks compared to other Haraz locations. The dispute also shows that rapid expansion comes with risks: when growth happens too quickly, operational issues and conflicts between corporate and local operators can emerge.

If you’re looking for reliable coffee options, choosing established chains with strong operational standards can reduce the likelihood of encountering such disruptions. For those who prefer exploring different coffee roasts and types, the best ground coffees for every budget offer consistent quality you can depend on at home. Similarly, instant coffee options provide convenient alternatives when coffee shops close unexpectedly.

Haraz’s Expansion Plans

Haraz Coffee House, founded in Dearborn, Michigan in 2021, is among several Yemeni coffeehouse chains rapidly expanding across the United States. The company’s website claims more than 60 existing locations with plans for over 240 additional locations, though the exact breakdown between company-owned and franchised operations remains unclear. This expansion strategy, common in the franchise model, creates both opportunities and risks for local operators and consumers alike. Success depends on careful vetting of franchisees, clear communication of standards, and strong ongoing relationships between corporate offices and store operators.

The Syracuse closure serves as a reminder that the coffee industry is experiencing significant growth and consolidation, with new chains opening regularly and franchise disputes occasionally making headlines. For shoppers and potential franchisees alike, understanding how these business relationships work helps explain why some coffee shops close suddenly despite appearing to have community support.