Sharetea Australia has retained the rights to its branding in the first stage of a battle with international franchisor Lian Fa International Dining Business.
An interlocutory hearing has granted the Aussie business the right to use the trademark in Australia after Sharetea contested the franchisor’s termination of the agreement in September 2021, a move which prevented the Australian business from legally trading under the Sharetea banner.
Federal Court Justice Thawley ruled against China-based Lian Fa on the basis that enacting the provisional orders would likely force Sharetea Australia to rebrand.
Justice Thawley said the disruption to the 90 businesses involved was obvious.
“I accept that there is a real prospect that the legal and commercial relationships between the respondents and its franchisees would be substantially disrupted by the making of such orders. I accept that it is reasonably likely that disputes will arise with some of the franchisees if Sharetea Australia rebranded and sought to require its franchisees to do likewise” he said.
A series of actions led to the licensor terminating the agreement, starting with a request for franchise store information as part of its preparations to float the business. Sharetea Australia refused to provide this on the basis there was no contractual obligation for disclosure.
Sharetea Australia is charged a licence fee and the cost of any supplies sourced through the franchisor but the Aussie operator owns all the menus, operational manuals and store designs.
Lian Fa then started to withhold stock ordered by Sharetea Australia, forcing the outlets to source product from alternative suppliers, before terminating the agreement.
On the interlocutory judgement, Anthony Mu, director of Sharetea Australia, said the business now has “secure and independent access to the highest quality ingredients and will no longer be hostage to Lian Fa’s unreasonable demands in order to either use the brand name nor keep being able to serve our customers”.
