Taiwan-based La Kaffa International Co Ltd, the parent company of popular bubble milk tea Chatime, has terminated its Chatime master franchisor contract with Loob Holding Sdn Bhd with immediate effect starting today.
According to a The Edge Markets report, La Kaffa terminated the contract with its sole Malaysian franchisee due to a disagreement on royalty and ingredient sources.
Chatime was founded in 2005 with over 800 retail outlets across countries like Taiwan, Malaysia, China, India, Macau, Vietnam, Singapore, Hong Kong, Thailand, Korea, Philippines, Indonesia, Australia, Dubai, Vietnam, Canada, UK and the US.
To date, there are 116 Chatime beverage outlets in Malaysia alone. Malaysia is Chatime’s largest international market in terms of revenue and Malaysian stores accounted for half of Chatime’s revenue from international markets, according to La Kaffa chairman Henry Wang.
Upon making the announcement at a press conference today (Friday, 6th January), Henry Wang said that the company will take over the business operations and development of all Chatime stores in Malaysia. “Food and beverage products can easily be substituted. Businesses must continue to reinvent themselves by introducing new brands and products based on market demand to attract customers,” he explained.
He also added that La Kaffa has plans to set up its first regional operation centre in Malaysia within the first quarter of 2017.
UPDATE (23rd January, 8pm):
Following Taiwan-based La Kaffa International Co Ltd’s decision to terminate its Chatime master franchisor contract with Loob Holding Sdn Bhd a few weeks ago, the latter will give up the Chatime franchise.
According to a report by The Star Online, Loob Holding CEO Bryan Loo confirmed that there were disagreements and disputes over various business and operational matters. However, despite the fact that Loob Holding and/or its sub-franchisees were still operating all 165 outlets in Malaysia, all the current outlets will cease using the Chatime branding. It will take effect after 45 days and Loob Holding has given the notice to La Kaffa in a letter last week.
This is in accordance with the franchise agreement.
As at time of writing, the official Chatime Malaysia Facebook page is no longer accessible. It is unknown if the page was taken down by Loob Holding.
Moving forward, Loob Holding will create its own brand for its 165 outlets.