The Bubble Tea Battle between Chatime and Tealive (Part I) : “Franchise Dispute in the Kuala Lumpur High Court, Malaysia”

Written by Ni Made Anggre Astari, S.H.

Member of Asian Society of International Law

Associate Lawyer at Law Office Ramly and Associates

Bali, Indonesia.

 

On June 27, 2018 The Kuala Lumpur High Court Malaysia has granted an interim injunction against Tealive from continuing its business operations after rival Chatime filed an appeal saying that the former’s business in Malaysia was stolen from them.

Chatime is non-local brand managed by Taiwan-based La Kaffa International Co. Ltd while Tealive is managed by Malaysian-based Loob Holding Sdn Bhd. At first to operate their Chatime business, La Kaffa International Co. Ltd made a Franchise agreement with Loob Holding Sdn Bhd. But in the middle of the ongoing agreement, Loob Holding breach some of the terms of their agreement and made Chatime quality not good as the first. La Kaffa then appointed Will Group its licensor of Chatime in Malaysia while Loob Holding created its new brand: Tealive.

In the judgment by Justice Hamid Sultan Abu Backer, the leader of three-man panel said that the injunction was based on breach of post-franchise terms. The Loob Holding Sdn Bhd carrying a similar business with La Kaffa (Chatime). Loob having had benefit of Chatime franchise business proceeded to set up a rivalry business which it is not permissible under the franchise terms as well as the Franchise Act Malaysia 1998.

By this court decision, Loob with their new brand Tealive will have to stop their business activities which they have to close their 161 outlets as well as firing their 800 employees.