Loob takes La Kaffa to task over claims of unapproved raw materials in Chatime products

KUALA LUMPUR: Former Malaysian Chatime master franchisee Loob Holding Sdn Bhd has hit back at allegations by Taiwanese franchise owner La Kaffa International Co Ltd that the "raw materials" used here "were not part of approved recipes".

On Monday, Loob lambasted La Kaffa in a point-to-point rebuttal and said its allegations about "raw materials" implied that the quality of Chatime products in Malaysia were compromised.

"This is entirely untrue. This is not part of La Kaffa's contentions, at any time," said Loob.

Last Friday, La Kaffa alleged Loob used and supplied raw materials that were not part of the approved.

This unapproved usage of raw materials, claimed La Kaffa, was in breach of the master franchisee contract.

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 the Taiwanese firm disagreed on Chatime's business direction in Malaysia.

On Monday, Loob stated it was sincere in ensuring the success of Chatime in Malaysia, and the 165 outlets here accounted for more than half of the turnover recorded by the franchisor's reported 800 outlets worldwide.

"The company (Loob) made early substantial investments to secure an aggregate 30-year tenure ending in 2041. This is evidence of the company's firm intent for a long-term franchise. The company would not commit any act to jeopardise its investments," said Loob.

Loob CEO Bryan Loo said: "We vehemently deny all the false and malicious allegations set out in La Kaffa's media statement issued last Friday.

"We continue to reserve our rights to take all action, and to explore all avenues, to protect our rights in this matter. This would include availing ourselves to all the remedies under the terms of our franchise agreement," he said, adding Loob was awaiting the legal process to take its course.

Loob pointed out it has 10 brands under its management and had always and would continue to place the highest priority on the quality of its products.

"It has been accredited by five franchisors from four countries, including well-known international partners. It has fully earned its sterling reputation as a 'master franchisee' for these brands in Malaysia and will continue to maintain this reputation," it said.

Loob pointed out the master franchise agreement had stipulated that disputes arising from the same were to be arbitrated at the Singapore International Arbitration Centre.

As for allegations by La Kaffa that a substantial amount of money was owed for a considerable period of time, with some amounts outstanding for more than a year, Loob in turn said it also had outstanding claims against the former.

"Any amounts alleged to be due from the company to La Kaffa, if established, will be set off against the former sums," it said.

Loo assured all its customers that Loob would continue to innovate its products through "product localisation" for all its brands.

"The Loob team has always prided itself on the fact that we had built up the business in Malaysia and we will never compromise on the quality of our products," he added.

He said the company would now focus all its energy and resources on moving forward in its growth story with its 1,000-strong workforce now already serving two million customers each month.

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