More than 30 franchisees of ice cream brand Wendy's previously rebranded to Shake Shed & Co. Photo / File
More than 30 franchisees of ice cream brand Wendy's previously rebranded to Shake Shed & Co. Photo / File
The High Court has ordered the former Wendy's Supa Sundae master franchisee and certain directors to pay $5.5m following a dispute with the ice cream brand's owner.
Supatreats Asia PTE Limited, owned by Singapore-based parent company Global Food Retail Group, launched legal action against Wendy's former master franchisee Chang Xiand a number of the mall-based icecream stores that collectively rebranded to Shake Shed & Co in an attempt to breakaway from the company.
Supatreats Asia's case was favoured by the High Court in 2018, with a judge ruling that two of the former 32 Wendy's franchisees that rebranded without permission - one in Mt Maunganui and another in Hastings - must cease trading or remove all Shake Shed & Co branding immediately.
Further court action has now resulted in a judgment following a deed of settlement.
Associate Judge Dale Lester in a December 19 judgment ordered Xi of Cone Enterprises New Zealand Limited, Shake Shed & Co NZ Limited, Parita Phamornpibul, Shake Shed & Co Holding Limited and Zhenyu Zhong to jointly pay $5,504,145 to Supatreats Asia.
Phamornpibul is director of BB Cup Limited, and a shareholder in BB Icy Limited and BB&C Limited, both jointly owned by Xi.
Supatreats Asia sought a summary judgment against the parties arising from a deed of settlement dated August 15, 2018, and a deed of guarantee and indemnity, also dated August 15, the judgment noted.
Interest of $287,506 was awarded at the contractual rate of 18 per cent per annum from September 2019 to December 2019.
Lester also ruled that Supatreats Asia had the right to claim legal costs.
He said the six defendants had taken no steps to appear or be represented when the application for summary judgment was called.
"I am satisfied that the first plaintiff [Supatreats Asia] has discharged the onus on it of demonstrating that the defendants do not have a reasonably arguable defence to the first plaintiff's claim. That is reinforced by the fact that the defendants have taken no steps."
Global Food Retail, owned by parent company Global Yellow Pages, purchased the master franchisor rights for the Wendy's Supa Sundae ice cream franchise for A$10 million ($11.2m) in 2014.
A Shake Shed & Co kiosk pictured in Christchurch. Photo / File
In 2018, the Herald reported that a number of the New Zealand icecream stores were fighting for their livelihoods following claims of restrictive measures implemented by the parent company.
About 32 of the 34 Wendy's stores at the time rebranded to Shake Shed & Co, understood to be encouraged by Xi. Global Food Retail filed legal proceedings shortly after on the basis that the master franchisee and sub-franchisees had breached their franchise agreements.
Earlier High Court judgments stated that the Hastings and Mt Maunganui stores had "rebranded with their eyes open" and despite warnings from Supatreats.
"Evidence to date suggests that Mr Chang was throughout working in the background to engineer the situation that has arisen, and then to present the revolt by franchisees as a fait accompli," Justice Edwin Wylie said in a 2018 judgment.
At the time he acknowledged a risk of significant damage that had been caused to Supatreats' business model and its ability to re-establish its presence in the New Zealand marketplace.
