La Kaffa Wants Loob To Cease All Operations Of Tealive Outlets. Here's Why

The Taiwanese company filed an injunction against Loob Holding on 17 February at the Kuala Lumpur High Court.

Cover image via Jean Khoo

Chatime owner, La Kaffa has filed an injunction against former Chatime franchisee, asking them to discontinue selling products similar to theirs

The Taiwanese company's director, Chen Zhao, filed the suit at the Kuala Lumpur High Court (Commercial Division) on 17 February, citing the fact that both companies still has a pending case at the Singapore International Arbitration Centre.

They want Loob Holdings Sdn Bhd to not continue under its new rebranded image. Following the highly publicised dispute between the two companies, Loob renamed its Chatime stores as Tealive.

Despite the fact that Loob's CEO Bryan Loo said that the termination of contract will serve as a way for them to be more adventurous with their menu, La Kaffa has come forward to say that "there is a real risk that Loob Holdings will use and disclose our proprietary information".

"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," said Chen, as reported by The Star today, 2 March.

Chen's affidavit states that Loob had breached the terms of the franchise agreement between the two companies

Image via Jane D. Chua

"We began doubting them in January last year (2016) when they reduced the order of raw materials," said Chen.

Chen said that the reduction in raw materials order was a surprise to La Kaffa, as the number of Chatime stores in Malaysia and its growth in sales revenue was increasing rapidly.

In their efforts to investigate the matter, La Kaffa had apparently sent numerous letters to Loob, asking them to explain the drop in raw material orders.

However, Chen claimed that Loob had allegedly responded to the letters by seeking La Kaffa's permission to start sourcing for raw materials locally in a meeting in September 2016.

"This showed they were aware they had violated the contract," said Chen, as reported by Free Malaysia Today (FMT) on 1 March.

Adding to that, it was also reported that Loob owes La Kaffa USD713,273.72 (approximately RM3.1 million) for raw material purchases

The arbitration process between the two companies is currently ongoing in Singapore. When disputing parties choose to arbitrarily settle their issues, it means that they have all agreed to solve the matter in a private dispute solution instead of going to court.

Chen has also accused Loob of issuing "misleading statements" to members of the press on the details surrounding the dispute between La Kaffa and them.

"They denied that they had used unapproved raw materials. It is a false statement," added Chen.

If the court grants the injunction filed by La Kaffa, Loob, which is currently operating a total of 161 Tealive outlets in Malaysia, will have to cease operations immediately

Image via Jean Khoo

"But if the court thinks that monetary compensation is adequate to remedy the damage caused, then there is no need for the injunction," said La Kaffa's lawyers from Messrs Skrine, as reported by The Star.

Meanwhile, Loob has confirmed that they are indeed aware of the injunction filed against them and that their lawyers, Messrs Cheang & Arif, are currently in litigation.

It was reported that the Kuala Lumpur High Court has set 29 May as the date for the hearing of La Kaffa's injunction against Loob Holding.

Prior to this, La Kaffa had accused Loob of using "unapproved raw ingredients" in the local Chatime outlets:

Curious to find out the real story behind the dispute between La Kaffa and Loob, we asked Loob Holding CEO Bryan Loo to shed some light on the disagreement:

On 6 January, La Kaffa terminated Loob Holding as the master franchisee for all Chatime outlets in Malaysia.

Shortly after, Loob announced that they will be rebranding under a new name:

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