From Chatime to Tealive – What Brewed up a Storm

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Social media was abuzz on the Chatime-La Kaffa fracas, amidst allegations and counter-allegations. We can now sip a cup of tea and read about what really happened.

  • Taiwanese company La Kaffa prematurely terminated Chatime franchise, cutting ties with Malaysian master franchisee Loob Holdings
  • Loob CEO Bryan Loo claimed long history of bad faith
  • Loo alleged La Kaffa launched 3-in-1 Chatime milk tea powder in Malaysian supermarkets without Loob’s knowledge
  • Loob’s franchisees unhappy the milk tea powder cheaper than standard Chatime product
  • La Kaffa alleged Loob breached agreement, owed money, used unapproved ingredients
  • Loo rebranded 161 outlets under Tealive, with four handed back to La Kaffa
chatimemalaysia CC BY-SA 2.0

When news broke that leading Taiwanese F&B company La Kaffa International Co Ltd was cutting ties with its Malaysian franchisee Bryan Loo, social media erupted in a flurry of questions about the fate of the iconic bubble tea brand in Malaysia.

The dispute between La Kaffa and Loob Holdings, its master franchisee in Malaysia, came to light when La Kaffa announced its decision to prematurely terminate the franchise earlier this year, though its contract with Loob still had 24 years to go.

So why did the relationship turn sour? Loob CEO Bryan Loo explained in an interview with Vulcan Post, “There was a long history of bad faith that has been happening to the brand, to the business for over 2-3 years. I think that the trigger point was because last year, they came to Malaysia and launched a 3-in-1 Chatime milk tea powder in the supermarkets.”

This was done without their knowledge, said Loo, and the Taiwanese company had left them out of the loop on purpose by initially not launching the product in Klang Valley, where Loob Holdings is located.

This put Loob in a difficult position as they had to explain themselves to franchisees about the product that is cheaper than the standard RM6.90 Chatime product, and from there, Loob Holdings felt that there was no longer any trust or respect between both companies.

But would Loob have eventually terminated the contract themselves? Loo shot down this notion, citing his belief in the brand as well as their longstanding relationship.

Loo has since then lodged a police report over the sudden termination, and both companies have taken their dispute to the Singapore International Arbitration Centre. He also declined to reveal any details on the arbitration process and what had transpired so far, telling the press that he was bound by confidentiality.

Even after the public break-up of the brands, however, Loob Holding’s problems were far from being over; the dispute between the two organisations took a new twist over allegations of outstanding payments and the usage of unapproved ingredients.

According to The Star, La Kaffa had alleged that Loob breached the exclusive master franchise agreement, and 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”.

In terms of product quality, La Kaffa had also thrown some doubt on the ingredients used by Loob and alleged that the latter had used and supplied raw materials that were not part of the approved recipe without the approval of La Kaffa.

The Sun Daily reported that Loob Holdings denied all claims, with Loo insisting that their products are certified either by the Department of Islamic Development Malaysia (JAKIM) or through JAKIM-recognised halal certification bodies and authorities.

Corporate drama aside, Loo and his organisation bounced back with a new brand, which was introduced last weekend. Powered by the mantra ‘Tea Is Our Life’, Loob Holdings’ 161 outlets are now officially transformed into Tealive (pronounced lai-ve, as in alive). According to Loo, Loob Holdings has 165 outlets, but while 161 outlets would operate under the new brand, the other four would not be rebranded and would be handed back to La Kaffa.

“Why Tealive? It’s because we’ve been telling the world that ‘tea is our life’. We’ve come to a point where we can say tea is who we are, tea is what we stand for, and hence, Tealive,” Loo said in an interview with SAYS.

Furthermore, like ‘Chatime’, ‘Tealive’ stood out because it can be pronounced in a few different ways. “You can call it ‘tea live’ (pronounced like ‘leaf’), you can call it ‘tea live’ (as in, ‘life’), and most importantly, you can also see it as ‘tea alive’,” Loo said the new brand name was shortlisted from over 300 names.

“That’s the underlying meaning of our new brand,” he added. “We’re telling people that we’re moving on. We’re telling them that we’re not only alive after everything that’s happened, but we’ve managed to pull through, we’re stronger than ever, and we’re not afraid of changes.”