Xing Fu Tang isn’t happy

Of all the kinds of drama I thought I would encounter this week, I never thought that I would come across drama that involves stir fried brown sugar bubble milk tea. But, we live in a social media generation, so here we have what looks like friction between wildly popular (and my personal favourite) stir fried brown sugar milk tea company Xing Fu Tang and their Malaysian master franchisee.

In what looks kind of like a very public airing of dirty laundry, Xing Fu Tang Taiwan (that’s the main company) made a very long post on their Facebook page about the complaints that they’ve received from their Malaysian franchisees about the brand’s Malaysian master franchisee Collab Working Lifestyle.

Now, the original post was in Chinese, and I don’t actually know what was going on because I can’t read Chinese. But, thankfully, they posted a translated version of the first post which goes into pretty excruciating detail.

Now, I’ll admit, this isn’t the highest quality translation so it’s a little hard for me to know if there is any context missing from their original message. But, it looks like the main issues franchisees have with the master franchisee revolves around competition and the cost of running a local Xing Fu Tang store. Among the details include the high cost of raw materials, high transportation fees “without given detail to explain”, and the opening of multiple Xing Fu Tang stores in the same area even though the franchisees were promised that this wouldn’t happen.

According to Xing Fu Tang Taiwan, this goes against their ethos of spreading “Xing Fu” (which is like happiness) and doing their best to make sure their franchisees have a good profit. As a result, Xing Fu Tang Taiwan says that they’re concerned about their Malaysian franchisees and have even brought up the fact that in accordance to their contract with the Malaysian agent, Xing Fu Tang Taiwan has the right to open their own stores in the region.

In fact, at the end of their post, the company even revealed that they’re now looking for a partner with “upright and agree with our purpose which spread Xing Fu by clear and fair management mode”. Again, barring any context that was lost in translation, it looks like they’re looking for a new partner to launch their own stores in Malaysia.

In a separate report, Malay Mail reached out to Collab Working Lifestyle’s executive director and co-founder Derek Cheong for clarification on the matter. Derek says that the post is “widely inaccurate and it does not reflect the full picture of what is happening behind the scenes”.

Derek also said that it was unfortunate that the Taiwan principal had to resort to this, adding that he didn’t want to make this a public spectacle.

“We have complied with every term in our contract and will continue to do so in line with good corporate governance and best business practices”, said Derek. Interestingly, Derek says that Collab Working Lifestyle has a “good relationship” with their franchisees, distributors and suppliers–something he says was key in Xing Fu Tang’s quick growth in Malaysia.

Collab Working Lifestyle is the exclusive master franchisee of Malaysia and they have an agreement with the Taiwan principal for 10 years, according to Derek. The first Xing Fu Tang outlet in Malaysia opened earlier this year at SS15 in Subang.

OK but what does this mean?

While I’m in no position to tell you what this means for the Xing Fu Tang stores in Malaysia, what I do find interesting is the apparent disconnect between the accounts from both Xing Fu Tang Taiwan and Collab Working Lifestyle. There clearly looks like there’s more to the story here than we currently know.

On Xing Fu Tang Taiwan’s side of things, it looks like their franchisees are very unhappy with the way Collab Working Lifestyle is managing the brand in Malaysia. But, from Collab Working Lifestyle’s side, they maintain that they’ve got a “good relationship” with their franchisees. Who’s right here?

Personally, I find the fact that Xing Fu Tang Taiwan took this issue and published it all over Facebook–quite literally the most public space you could find–rather suspicious. Was this not something they could and should have settled directly with their Malaysian agent?

Either way, it’ll be interesting to see how this story develops in the future, especially since this isn’t the first time we’ve had a bubble tea dispute here in Malaysia. What do you guys think of this? Let me know in the comments below.

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Editor’s note: A previous version of this article incorrectly labelled Collab Working Lifestyle as the franchisor of the Xing Fu Tang brand in Malaysia. The article has been corrected.