Franchise holder Loob Holding to appeal against Court of Appeal ruling

Loob Holding, which was operating Chatime outlets, is now operating Tealive. (Facebook pic)

PETALING JAYA: Loob Holding Sdn Bhd will appeal the Court of Appeal’s decision yesterday which granted an injunction filed by Chatime owner La Kaffa International Co Ltd preventing it from carrying out a similar business as the teahouse chain known for its bubble teas.

In a statement, Loob Holding said it would file a leave to appeal application in the Federal Court.

“We will file an application for a stay of the Court of Appeal ruling,” it said, adding that the present status quo should be maintained until final settlement of the entire legal process.

Justice Hamid Sultan Abu Backer, in his written grounds, said yesterday the High Court had erred in dismissing the injunction against Loob Holding based on the grounds that the livelihood of its outlets and employees would be affected if it was barred from running the business.

“The complaint of La Kaffa in crude terms means that Loob had changed the Chatime business overnight to ‘Tealive’.

“Their conduct is not only in breach of legal obligations related to restraint of trade but also a breach of franchise law which does not encourage criminal or tortious conduct of business,” he said in the 41-page written judgment.

Hamid said the injunction was needed as the prohibition order supports the breach of obligation and it was a fact that Loob Holding was using its former franchiser’s assets to run its Tealive business.

Last year, the High Court ruled that an injunction on Loob Holding would cause great risk of injustice to the business and also its associates.

“Its 161 Tealive stores and sub-franchisees will have to close shop.

“The lives of its 800 staff, third parties associated with the business, the shops’ landlords, suppliers and creditors will be adversely affected,” Justice Wong Ken Keong had said.

On Feb 17 last year, La Kaffa sought the injunction to stop Loob Holding from selling similar products as theirs.

Company director Chen Zhao, through his affidavit, claimed Loob Holding had breached the terms of the main franchise agreement.

The dispute between La Kaffa and Loob Holding started in early December 2016 when the Taiwanese company terminated the master franchise agreement between the two parties even though there was more than 20 years left on the deal.

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