Is trouble brewing for popular brown sugar boba brand Xing Fu Tang in Malaysia?

KUALA LUMPUR, Oct 23 — A rift appears to be growing between Xing Fu Tang’s Taiwanese founding company and its Malaysian franchisor, Collab Working Lifestyle.

On October 21, a social media post in Mandarin by Xing Fu Tang Taiwan saw them listing a string of complaints they had received from the franchisees of the brand in Malaysia.

Xing Fu Tang Taiwan also stated that they will be entering the market themselves.

The post said they were on the look-out for a partner that will build their brand according to their “Xing Fu principles.”

The founder of Xing Fu Tang Taiwan Edison Chen also shared his contact details in the post.

A day later, an English translation was also posted on their Facebook page.

According to that post, Xing Fu Tang Taiwan said that among the complaints from the franchisees were claims that higher raw material costs and transport fees charged to them ate into their profits.

The franchisees also claimed that they were promised that there would be no other outlet opening within the same area, which apparently was not the case.

Xing Fu Tang Taiwan also mentioned that they have a right to open a store in Malaysia as they didn’t want another “Hong Kong incident” to happen.

This refers to a legal dispute they had with their Hong Kong distributor, Tenpence International. According to South China Morning Post, Tenpence later closed all the shops in January this year.

Malay Mail contacted Collab Working Lifestyle Executive Director and co-founder Derek Cheong who said the Xin Fu Tang Taiwan post is “widely inaccurate and it does not reflect the full picture of what is happening behind the scenes.”

In addition, he said it is unfortunate that the Taiwan principal had to resort to this. Cheong also said he didn’t want to make this a public spectacle.

He clarified that Collab Working Lifestyle is the exclusive master franchisor of Malaysia and they have an agreement with the Taiwan principal for 10 years.

“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,” he said.

Cheong also emphasised that Collab Working Lifestyle has a good relationship with their franchisees, distributors and suppliers, and is instrumental to Xing Fu Tang’s brand growing so quickly in Malaysia.

According to Cheong, the first Xing Fu Tang outlet opened this year at Subang SS15 on March 3. By the end of this week, they will have 39 outlets and nearly 500 staff in Malaysia.