PETALING JAYA – Chatime brand owner La Kaffa International filed for an injunction to stop outgoing franchisee Loob Holding Sdn Bhd from continuing under its rebranded image.
The suit filed at the Kuala Lumpur High Court (Commercial Division) by La Kaffa through its director Chen Zhao sought an injunction on grounds that the estranged companies had a pending case before the Singapore International Arbitration Centre.
It also cited bad faith by Loob Holding over allegedly misleading media statements by the company’s chief executive officer Bryan Loo and the Malaysian company’s capacity to continue operating by rebranding its Chatime stores.
“The defendant (Loob) has not only breached contractual obligations under the regional exclusive representation agreement (RERA), but is now attempting to gobble up the market share established by the plaintiff (La Kaffa) franchise,” claimed Chen, referring to the RERA that gave Loob the know-how and technology to run the bubble tea franchise.
Shortly after the feud went public, Loob announced a new brand – Tealive – to replace its 161 Chatime outlets in Malaysia.
According to the supporting affidavits obtained by The Star, La Kaffa stated that the dispute and eventual termination of their RERA had been brewing for a year with La Kaffa claiming that Loob owed it US$644,536.32 (RM2.866mil) in outstanding payments.
La Kaffa realised in January 2016 that Loob was cutting down on orders of raw materials from La Kaffa despite booming business, prompting them to request justification and an audit (which was denied) in May.
La Kaffa began building its case against Loob and in a letter dated Aug 2 threatened to terminate the RERA should Loob continue to purchase raw materials from third party.
The 333 pages of supporting affidavits revealed the scope of La Kaffa’s investigations, including 30 undercover videos taken of Malaysian Chatime stores using the third party cups, media statements by Loo, plus records of e-mails, letters and meetings in Taiwan between the two companies over breach of contract.
La Kaffa’s lawyers from Messrs Skrine said that if the injunction was granted then Loob would have to stop operations immediately.
“But if the court thinks that monetary compensation is adequate to remedy the damage caused, then there is no need for the injunction.
“The main dispute will be heard in Singapore,” said the lawyer, referring to the arbitration.
Loob confirmed that its lawyers, Messrs Cheang & Ariff, were aware of the injunction application and already in litigation.
The injunction was fixed to be heard before High Court Judge Wong Kian Kheong on May 29.