The Taiwan owner of popular bubble tea chain Chatime has now given its side of the story as to why it terminated its agreement with Malaysian company Loob Holding, which brought the brand to this country.
According to the Taiwanese firm La Kaffa, the Malaysian firm had sourced for raw ingredients that were not included in the original recipe, which La Kaffa said was unacceptable due to the possible harm this might do to the brand.
The firm told the Channel News Asia portal that Loob Holding was also behind on royalty payments for the franchise.
When Channel NewsAsia reached out to Loob Holding for its response, the company said that it felt “ambushed” by the decision and had lodged a police report over the “unlawful” termination of the agreement.
Malaysia is Chatime’s biggest market outside Taiwan and according to Loob Holding’s CEO, under his company, outlets in Malaysia make up more than 50% of Chatime’s global revenue.
The Malaysian company also said that it would unveil a new brand to replace Chatime at all 165 outlets.
La Kaffa, meanwhile, has launched its own legal action, alleging that Loob has been uncooperative.
“We decided to appoint a legal firm to handle the legal process because Loob Holding decided not to respond to our requests to sit down and discuss the matter.
“We are convinced that Malaysia is a country with a high degree of rule of law and a country that is absolutely committed to commercial integrity,” it said.
As the dispute drags on, Malaysian consumers could still get their Chatime drinks in future as La Kaffa is looking for new partners in Malaysia.
“La Kaffa International will continue supporting Chatime
Chatime outlets in Malaysia used unapproved ingredients – Taiwan franchisor
Malaysian consumers’ equity.
“We are also looking for partners to work with in Malaysia,” the firm said.