It does not matter whether you are a casual bubble tea drinker, a hardcore fan of the drink, or even someone who never had a sip of the concoction; there is a good chance you have heard of the ongoing legal battle between Tealive (Loob Holding) and Chatime (La Kaffa).
But first, let’s refresh our memories on what has happened so far, leading up to the latest development in the legal battle between both companies.
1. La Kaffa terminating Loob Holding are master franchisor
That meant that Loob Holding can no longer operate the brand in Malaysia.
- Third party involvement: It was suspicious that the revenue for Chatime Malaysia stores were increasing but the purchase of raw materials from the main branch was decreasing.
- The request to see books were denied: La Kaffa was not allowed to exercise their rights to inspect and audit the books.
- Outstanding royalty due: There is an outstanding sum of a whopping USD713,273.72 (RM3,174,000) but the amount was later reduced to USD644,536.32 (RM2,870,000).
- Non- competition: The Section 27 of the Franchise Act 1998 prohibits against similar business. (colour schemes, ingredients, packaging and logo).
2. Loob Holding created Tealive
La Kaffa filed an injunction to stop Loob Holding from selling products that are similar to theirs.
- La Kaffa’s injunction was dismissed by the High Court in May 2017, which enabled Tealive to operate as usual.
- A year after the decision, The Malaysian Court of Appeal, approved La Kaffa’s second injunction in June 2018, which requires Tealive to cease operations in Malaysia for two years.
- Immediately after that, Loob Holding announced that they will apply for a postponement of the decision, so they can approach the Federal Court in order to overturn this decision.
3. Loob Holding’s bid to keep its Tealive outlets open while they make an appeal to the Federal Court was rejected
- Because of this decision, it is believed by many, that the Tealive outlets will now be required to shut down.
4. But Loob Holding is not giving up just yet!
On Wednesday (4 July), Loob Holding responded that they will appeal to the Federal Court, to reverse the decisions made by the Court of Appeal.
Loob Holding was quoted by NST Online stating that, “The company has instructed its lawyers to file for leave to appeal to the Federal Court against the Court of Appeal’s decision on June 27 2018 and it has been informed that the application has been filed yesterday (4 July).”
“Its lawyers have been further instructed to make the necessary application to the Federal Court, to maintain status quo and the said application was filed this morning,” Loob added.
At the moment, no one can tell what’s the outcome but it is pointing towards Tealive being in a position where the brand will have to close down for an unknown period of time.
Before we make any decisions and assumptions of our own, let’s wait for the Federal Court ruling on this matter. Hopefully Malaysians could enjoy their bubble tea calmly soon!
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