Bubble tea battle: Sharetea Australia ‘very happy’ after three-year fight against Taiwanese giant

A long-running legal tussle between Sharetea Australia and the Taiwanese parent company behind the bubble tea brand has ended with the local business gaining exclusive and indefinite rights in Australia, even as it battles separate disputes with some store operators.

Lian Fa International Business Dining Corporation, whose chairman founded Sharetea in 1992, launched court proceedings against the Australian master franchise Sharetea Australia in October 2021 after the nine-year relationship broke down, with Lian Fa alleging that Sharetea Australia was using its trademarks, recipes and passing off its products without permission after terminating their agreement.

Sharetea Australia has won exclusive rights to the brand in Australia for an unlimited term.Credit: Edwina Pickles

After years of delays where trial dates were pushed back several times, the Federal Court ordered the two parties to attend a mediation where they reached a settlement. Sharetea Australia now owns the exclusive trademark licence to Sharetea and the right to sub-license all registered and future registered trademarks relating to the brand in Australia.

Teng “Anthony” Mu, who established Sharetea’s presence in Australia in early 2012, said the outcome was a “big relief” and paid tribute to his legal team Addisons.

“I’m not surprised. Of course, I’m happy,” Mu said.

Sharetea Australia founder Teng ‘Anthony’ Mu.Credit: Murray harris

“It’s not only me that’s excited about this result; it’s also for the whole head office team, which is over 40, and also for our whole network, over 1000 Australian employees, relating to that many families. I’m very excited with these results, and I’m very happy.”

The local bubble tea chain has continued to expand over the years while the dispute ran in the background: Sharetea Australia says it turns over more than $50 million every year and has 125 outlets across the country with plans to open 25 more by the end of the year.

“The business will keep growing and never stop,” he said. “Every day, honestly, I work on how to build this brand, how to grow this business.”

Lian Fa was represented by law firm Holman Fenwick Willan, which declined to comment. Lian Fa has also been contacted for comment.

While the court case with Lian Fa has been resolved, Mu is facing separate disputes with some of its franchisees. The Australian Small Business and Family Enterprise Ombudsman confirmed it had received four requests for assistance from bubble tea franchisees in the past 12 months. In late 2021, the ombudsman was handling 22 complaints about ingredient costs, supplies, leasing arrangements and marketing funds.

One would-be franchisee said they were not informed by Sharetea Australia about its dispute with Lian Fa before paying a $107,800 invoice to secure a franchise. After finding out through this masthead’s reporting, they engaged a solicitor to request a refund, arguing Sharetea Australia had not signed their part of the deal.

“All our efforts to get this money back has exhausted us financially and emotionally,” they said.

The franchise code of conduct requires a franchisor to tell a franchisee in writing about legal disputes within 14 days if it is not mentioned in disclosure documents.

“Part of our service is helping franchisees and we’d encourage any franchisees with problems like these to approach us and we will assist with trying to resolve the dispute,” said Ombudsman Bruce Billson.

Sharetea Australia has rejected these allegations and said franchisees had all been adequately informed through the provision of disclosure documents.

“This is not any legal allegation,” said Mu. “I’m very unsure if the information involved is true.”

Lian Fa claims it terminated its agreement with Sharetea Australia in September 2021, which it refused to comply with. Lian Fa then initiated legal proceedings in October claiming Sharetea had infringed its trademarks, engaged in misleading and deceptive conduct, and ordered it to pay damages.

In a statement of claim filed to the Federal Court obtained by this masthead, Lian Fa also alleged Sharetea Australia placed an order for ingredients totalling $124,829.76 in January 2021 that Sharetea had agreed to pay for before picking up the goods.

“In breach of the agreement, Sharetea Australia took possession of the goods and has refused or neglected to pay for the goods sold and delivered to it by Lian Fa,” read the statement of claim.

Lian Fa subsequently stopped supplying Sharetea with ingredients, forcing the local chain to change suppliers, sparking complaints from franchisees of contamination and dead insects.

The Fair Work Ombudsman conducted an audit of 14 Sharetea stores in April 2022 and recovered nearly $90,000 in unpaid wages for 36 workers.

Of the 14 outlets, only five met fast food award obligations. Casual pay, weekend penalty rates, and overtime rates were not properly paid and inspectors also found inadequate record-keeping and payslip breaches.

As part of the settlement, both parties have been ordered to pay their own legal costs.

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