Taiwanese Boba Chain Alleges U.S. Franchise Operator Is Misleading Customers

Note: This story has been updated with statements from the CEO of Xing Fu Tang USA.

A Taiwanese boba chain is alleging that its U.S. franchises — including one that recently opened in Houston — are operating without authorization and using questionably sourced ingredients to make the chain’s trademarked Brown Sugar Boba Milk drink.

The company, Xing Fu Tang, is known as the Hermes of bubble tea due to signature drinks like a gold foil-topped boba milk and the afore-mentioned brown sugar boba milk. Founded in Taiwan in 2017, the chain has since spread to more than 70 locations worldwide, including South Africa, France, and Japan.

However, in a statement that was posted to Instagram on October 18, the company accuses its former U.S. master franchisee of trademark infringement, opening stores under the Xing Fu Tang brand without authorization, and purchasing “unknown raw materials from unapproved suppliers.” The statement, which is dated September 13, 2021, also specifically mentions a brand new Houston location that recently opened in Dun Huang Plaza as being unauthorized.

According to the Instagram post, Timothy Chuang (which is also spelled as ‘Ching’ in the statement) opened the chain’s first U.S. location, in Flushing, Queens, in January of 2020 under contract to act as the brand’s U.S. master franchisee, responsible for recruiting and training additional franchisees in the United States. However, Xing Fu Tang alleges that Chuang violated that contract by repeatedly failing to comply with standard operating procedures during the agency period, manufacturing copyrighted materials (including the brown sugar boba milk) with goods purchased from unknown suppliers, failing to pay franchising fees, and failing to follow the company’s vetting procedures for opening new franchises.

Xing Fu Tang said it terminated its agreement with Chuang on July 14, 2021, but that Chuang continued to recruit U.S. franchisees, opening additional locations in Los Angeles, Rowland Heights, and Alhambra, California, and in Houston. Xing Fu Tang says those franchises infringe on its trademark rights.

Andrew Chuang, who is the CEO of Xing Fu Tang USA, has called the allegations “baseless.”

“We’re aware of these posts and our legal team is working on how we can best handle it,” Chuang said in a statement to Eater. “These allegations are baseless and I can guarantee we are operating well within our legal rights as the sole master franchisor for the U.S. In my best estimation, the Taiwan notice posted to their social media is an unprofessional attack stemming from a personal dispute unrelated to our business operations.”

So far, it does not appear that Xing Fu Tang has taken Chuang to court over the allegations. However, the brand has a history of similar allegations against franchisees in other countries. In 2019, Xing Fu Tang Malaysia said it was being “bullied” by the parent company over its refusal to purchase more than 4.5 million Malaysian ringgit worth of equipment (the equivalent of about $1 million U.S. dollars.) In a Facebook post, Xing Fu Tang Malaysia said the master company asked for payment for the machinery, used to make special heart-shaped boba pearls, to be made the next business day, and threatened to terminate the master franchisee agreement if they did not buy the machines.

• Brown sugar boba brand Xing Fu Tang’s Malaysia franchisee hits back at Taiwan HQ, says won’t be bullied [Malay Mail]
• Yet Another Wildly Popular Taiwanese Brown Sugar Bubble Tea Shop Is Coming to NYC [ENY]
• Luxe Taiwanese Bubble Tea Specialist Xing Fu Tang Has Arrived in Houston [EHOU]