Loob Holding Sdn Bhd will give up the Chatime franchise following the dispute with the franchisor La Kaffa International Co. Ltd of Taiwan and create its own brand for its 165 outlets.
KUALA LUMPUR: The dispute between Chatime brand owner La Kaffa International and outgoing franchisee Loob Holding Sdn Bhd has taken a new twist over allegations of outstanding payments and the usage of unapproved raw materials.
The Taiwan-based La Kaffa had on Friday alleged Loob breached the exclusive master franchise agreement. It claimed that a substantial amount of money “is owed to La Kaffa for a considerable period of time, with some amounts outstanding for more than a year”.
As for product quality, La Kaffa alleged Loob used and supplied raw materials that were not part of the approved recipe without the former's approval.
This unapproved usage of raw materials, claimed La Kaffa, had breached the master franchisee contract.
“It is a serious violation within the agreement where the ingredients used could and might in the future, jeopardise the brand’s image and is a violation that we at La Kaffa take very seriously,” it said.
Last month, Loob announced it would rebrand its 165 outlets by March 6 following the dispute after La Kaffa terminated the franchise agreement with Loob on Jan 5.
Loob’s agreement with La Kaffa was meant to last until 2041. However, it was terminated because of the Taiwanese firm’s disagreements on the business direction of Chatime in Malaysia.
Chatime Malaysia’s 165 outlets accounted for more than half of the turnover recorded by the franchisor’s reported 800 outlets worldwide.
In the latest development, La Kaffa pointed out that as the owner of Chatime brand, its main priority is to protect Malaysia’s Chatime consumers’ interests and that of Chatime franchisees and their employees’ rights.
“After trying to contact Loob Holding on various occasions with no response, the company decided to appoint a global legal team to handle the legal process.
“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.
“For the record, La Kaffa International will continue supporting Chatime Malaysian consumers’ equity, assuring sub-franchisees continue to receive support from La Kaffa,” said La Kaffa.
