Malaysia's Bubble Tea War

Malaysia's Bubble Tea War

A dispute between a franchisor, La Kaffa International Co. Ltd. ('La Kaffa') and a franchisee, Loob Holding Sdn. Bhd. ('Loob') over the "Chatime" bubble tea franchise has resulted in an interesting ruling from the Malaysian courts that will serve as a warning to both existing franchisors and those looking to expand their business into Malaysia.

The Facts

La Kaffa is a company established under the laws of the Republic of China (Taiwan) and is based in Taiwan. Loob is a company incorporated in Malaysia. Loob was appointed the master franchisee for the Chatime bubble tea franchise in an agreement between the parties called a Regional Exclusive Representation Agreement ('RERA') and it quickly expanded to 165 outlets throughout Malaysia.