Bubble trouble: Milk tea giant takes on Australian franchisor

A Sydney-based company behind the popular bubble tea brand Sharetea is fighting an attempt by its Taiwanese franchise partner to stop it from using the brand and its recipes in Australia, in a legal dispute that could affect more than 80 stores around the country.

Lian Fa International Business Dining Corporation, which has the international rights to Sharetea, has launched legal proceedings against Sharetea Australia, a Sydney-based franchising company for the brand locally, court filings show.

Sharetea Australia is at odds with the Taiwanese giant originally behind the brand.Credit: Edwina Pickles

Lian Fa claims it terminated an agreement between the two in September, making it unlawful for Sharetea Australia to use its brand or confidential information such as its recipes for the sweet milky tea served with pearls of tapioca that the chain is known for.

But according to an email seen by The Sydney Morning Herald and The Age, Sharetea Australia has refused to comply with the termination notice, sparking questions from the individual franchisees who operate outlets under the brand.

Sharetea Australia, launched by entrepreneur Teng ‘Anthony’ Mu almost a decade ago, has about 80 stores in its network. The company is vigorously contesting the termination notice in court, with a spokesman saying it has a legally binding agreement with Lian Fa that still has a decade to run.

He said Lian Fa had requested Sharetea Australia provide confidential information regarding its franchisees to help with the Taiwanese company’s public listing, which was at the heart of the dispute.

“Sharetea Australia did not comply with Lian Fa’s requests for several reasons, including our obligation to protect the confidentiality of our franchise partners,” the spokesman said. “Early this year, Lian Fa stopped supplying Sharetea Australia with product, which forced Sharetea Australia to source products from alternative suppliers.”

The spokesman said Sharetea Australia would keep operating normally while the dispute is before the courts, had informed its franchisees of the issue and maintained Lian Fa had not validly ended the two sides’ agreement, which was signed in Shenzhen and lasts until 2032.

“Sharetea Australia maintains that our menus, recipes, store designs and operations manual were developed independently of Lian Fa,” he said.

In the November 7 email obtained by this masthead, Lian Fa’s licensing director Emily Liao told Australian partners that “Sharetea Australia Pty Ltd... no longer has the right to lawfully operate in Australia under the ‘Sharetea’ brand and using the ‘Sharetea’ trademarks or its confidential information (which includes its recipes).”

She said Lian Fa assumed that Sharetea Australia had already informed franchisees of the termination because of rules in the national Franchising Code of Conduct that require disclosure of major changes to intellectual property ownership.

Ms Liao declined to comment further on why Lian Fa had terminated its relationship with the Australian franchisor, citing the legal action launched last month.

“Regrettably, in recent months events have transpired that have required Lian Fa to terminate its relationship with the company operating under the Sharetea brand in Australia,” she told the Sydney Morning Herald and The Age.

“As the global owner of the Sharetea brand Lian Fa Dining International is committed to its business partners and its many customers.”

Sharetea, which was founded in Taiwan in 1992, is a giant in the growing market for bubble tea. It has stores in 16 countries on five continents and 50 major cities.

The dispute will return to court on December 2 to hear a preliminary matter.

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