Ken McGregor & Andrew Hough, 17 February 2016
ONE of the state’s richest families is involved in an expensive legal fight over the alleged improper sale of Wendy’s hotdogs, ice creams and shakes at its On The Run convenience stores.
The Shahin group will front the Supreme Court on Wednesday after being accused by the owners of the Wendy’s Australia trademark of breaching consumer laws by using its brand in selling milkshakes, ice creams and Shake ‘n’ Dogs at 27 On The Run stores throughout SA.
The Shahins, however, have returned fire at Global Food Retail Group, alleging in a counter claim that the Singapore-based company formed a “strategy” to break a contract entered in 2013 for On The Run to open Wendy’s franchises at 50 of its sites by 2020.
The Shahins claim that in doing so, Global Food Retail Group has breached Australian Consumer Law.
In its statement of claim, Global has demanded the Shahins pay compensation, which could run into the millions of dollars, and remove all trace of the fast food brand from their stores.
They also seek a declaration the Shahins “engaged in misleading and deceptive conduct, or conduct likely to mislead or deceive” in breach of Australian Consumer Law.
“(Global seeks) an order that Shahin deliver up … all documentation and other materials in its possession, custody or control, including signage, stationary, brochures, and pamphlets which bare or incorporate any one of the registered trade marks or any mark identical to, substantially or deceptively similar to the registered trade mark,” documents state.
The company has asked the court to investigate the profits made by the Shahins through its use of the Wendy’s trademark and order compensation be paid to Global, along with further costs.
The Shahins, however, have responded by lodging a counter claim against several companies, and their bosses, including the millionaire chief executive of Global, Stanley Tan, alleging he was involved in the “strategic” scheme to break their franchise agreement.
The documents show the Shahins entered into a contract with Adelaide-based Wendy’s Supa Sundaes in August 2013, which required them to open franchises at 25 OTR stores by October 2016 and 50 by 2020.
Company records show current Shahin Enterprise directors are Khalil, 51, known as Charlie, Samer, 47, known as Sam, and Yasser, 39, all of Burnside, in Adelaide’s east. It is the main operating entity of the Peregrine Corporation.
The documents state that Global bought Wendy’s Supa Sundaes in September 2014 and allege that Global’s bosses failed to inform the Shahins of changes to ownership of Wendy’s trademarks at the time.
The Shahins counter claim alleges Mr Tan’s company told them “explicitly” or by “clear implication” they could legally operate under the agreement’s term and failed to inform them of any trademark breaches while also continuing to accept royalty payments for each new store.
They claim that through a series of complex moves, Global implemented a “strategy” to reorganise the franchise scheme, making the Shahins in breach of it.
Between September 2014 and November last year — the period which Global alleges the Shahins breached copyright — they opened 16 Wendy’s franchises across the state, the brothers say.
Opening, operating and promoting the Wendy’s brand at the outlets, they allege, has cost “significant” money.
There are 27 Wendy’s stores operated by OTR, employing dozens of staff, which would be forced to close if Global wins its lawsuit.
The Shahins claim they should be paid damages, compensation, and the court make an order declaring Mr Tan, company director Chen Boon and Global contravened the Australian Consumer Law.
OTR’s chief operating officer, Michaela Webster, yesterday said the case was “simply a contractual dispute”, which came after they were approached about a “long term franchise agreement” that was agreed in “good faith”.
“In order to meet this obligation, we recruited staff, engaged tradespeople and refitted our stores with Wendy’s signage, investing millions of dollars into new stores, new IT solutions, supervision and staff training,” she said.
“Unknown to us, in late 2014 Wendy’s sold the registered trademarks to Global Retail Food Group which in turn licenced the trademarks to Asia Food Retail Group.
“To meet our obligations under the current agreement we have continued to spend significant sums opening, fitting out and operating new franchises. And Wendy’s continued to accept franchise fees and provide other services.”
Mr Tan yesterday refused to comment about the legal action.
Wendy’s is a globally recognised brand that launched in the US in the 1920s. It has annual revenues of more than $3.5 billion, stores in 28 countries and 100,000 staff.
Its Australian operations were established in Adelaide in 1979 by entrepreneurs Geoff Davis and Phil Rogers and, until last year, were based in Fullarton, in the inner east.
Shake up — what’s at stake
* The Shahins entered into a contract with Adelaide-based Wendy’s Supa Sundaes in 2013 to open 25 Wendy’s franchises at On The Run sites by 2016 and 50 by 2020.
* Wendy’s Supa Sundaes was bought by Singapore-based Global Food Retail Group in September 2014.
* The Shahins claim that at the time of the sale of Wendy’s Supa Sundaes, bosses failed to notify them of changes in ownership or control of Wendy’s trademarks.
* The Shahins further claim that Global told them “explicitly” or by “clear implication” they could legally operate under the agreement’s term and failed to inform them of any trademark breaches.
* They claim that through a series of complex moves, Global implemented a “strategy” to reorganise the Wendy’s franchise scheme, making the Shahins in breach of it.
* Following the sale of Wendy’s Supa Sundaes, the Shahins say they opened a further 16 Wendy’s franchises until November last year and that Global continued to accept royalty payments for each new store.
* In December last year, Global Food Retail Group launched Supreme Court action against Shahin Enterprises, claiming On The Run outlets have illegally sold Wendy’s products because they do not have rights to the trademark.
* Global seeks undisclosed damages — asking the court to determine the profits On The Run has made from Wendy’s products — and to remove all trace of the fast food brand from their stores.
* Global also asks the court to find the Shahins “engaged in misleading and deceptive conduct, or conduct likely to mislead or deceive”, in breach of Australian Consumer Law.
* Last month, Shahin Enterprises launched a counter claim against Global Food Retail Group in the Supreme Court.
* The Shahins claim that the Singapore-based company failed to inform them of trademark breaches and formed a “strategy” to break the franchise contract.
* The Shahins seek undisclosed damages, compensation, and for the court make an order declaring Global contravened Australian Consumer Law.
* The matter is listed for a court hearing today.
Source: Supreme Court documents
Extracted in full from the Adelaide Advertiser.