KUALA LUMPUR (Jan 20): Master franchisee for Chatime in Malaysia, Loob Holding Sdn Bhd, has lodged a police report against Taiwan's franchisor La Kaffa International Co Ltd over the termination of its franchise here.

According to Loob Holding's statement today, its chief executive officer Bryan Loo has lodged the report at the Dang Wangi police station on Jan 16 over the termination, which was effected through a letter from La Kaffa on Jan 5.

It said the dispute between the franchisor and the master franchisee came out in the open when La Kaffa announced at a press conference on Jan 6 that it had terminated the franchise and would immediately take over all 165 Chatime outlets in Malaysia.

"Although our agreement with them still has 24 years to go, they had unilaterally served us a termination letter on Jan 5.

"It also appears to us that, based on what was reported from the press conference of Jan 6, they already had the intention of taking back the franchise from early last year.

"In Malaysia, we have a rule of law, and all businesses, especially a regulated sector like franchising, have to abide by the law besides professional ethics and norms of industry," Loo said.

He said there had been disagreements and disputes over various business and operational matters but these were all dealt with in accordance with the terms of the franchise agreement.

The statement claimed that Chatime Malaysia had been an outstanding success as its 165 outlets accounted for more than half of the turnover recorded by the franchisor's reported 800 outlets worldwide and it was already a household brand in Malaysia over the last six years.

He said Loob Holding would now leave it to the police and the relevant authorities to investigate and take the necessary actions.

"We reserve our right to continue our action as advised by our legal team," said Loo.

Despite this "bad experience", Loob Holding still believes franchising is a productive and profitable entrepreneurial system, provided franchisors and franchisees adopt professional work ethics while maintaining sincerity and good faith, he added.

Loo said all outlets are now operating as usual with the same management team.

"We are constantly engaging with all our sub-franchisees and they understand the situation. They will not be easily swayed by unfounded allegations as they are part of the team that has built up the brand all these years.

"We assure all customers that they can still go to any of our outlets to enjoy their usual drinks," Loo said.

Founded in 2010, Loob Holding manages a diverse portfolio of food and beverage brands in Malaysia, including Chatime, Tino's Pizza, Soda Xpress, llaollao and Gindaco, with technology start-up investments in the pipeline.