Franchise agreements require mandatory registration under statute, and failure to comply renders the contract void and unenforceable.

Lau Bee Lan JJCA:

JUDGMENT

Introduction

[1]This is an appeal by the Appellant against the decision of the learned Judicial Commissioner (‘Judge’) made on 19/1/2018 dismissing the Appellant’s claim with no order as to costs and dismissing the Counterclaim of 1^st to 3^rd Respondents with no order as to costs.

[2]The 1^st to 3^rd Respondents filed a cross-appeal dated 20/4/2018 against the said High Court decision in relation to the High Court’s refusal to order restitution of the monies paid by the 1^st Respondent to the Appellant under the illegal MLA 2013.

[3]We shall for easy reference refer to the parties as they were in the Court below.

Brief Facts

[4]The Plaintiff, Dr. H K Fong Brainbuilder Pte Ltd is a company incorporated in Singapore by Dr. Fong Ho Keong (‘Dr. Fong’), a Singaporean citizen. Dr. Fong claims to have developed ‘Dr Fong’s Method’ of teaching mathematics to students in primary and secondary schools. The 2^nd and 3^rd Defendants were Dr. Fong’s best friends for 55 years and interested in the business. Pursuant to that, the 1^st Defendant was established; the 2^nd and 3^rd Defendants owned 85% of 1^st Defendant while Dr. Fong owned the remaining 15%.

[6]There is another company called Dr. Fong BrainBuilder Pte Ltd (‘DFB’) which was owned by Dr. Fong as well. DFB entered into a Master License Agreement with the 1^st Defendant on 26/2/2008 (‘MLA 2008’) which expired on 30/6/2012. On 18/12/2013, another MLA, (‘MLA 2013’), a Guarantee and Power of Attorney were executed ( ‘the 3 Documents’). The MLA 2013 allows the 1^st Defendant to, among others, operate and manage the ‘BrainBuilder’ business (a business to teach mathematics to students) (‘BrainBuilder Business’) in Malaysia.

[7]The 4^th Defendant is the 2^nd Defendant’s daughter and former employee of the 1^st Defendant. The Plaintiff alleged the 4^th Defendant had taken over a registered business called “Pusat Latihan Perkembangan Kaji Kreatif’ (‘PLPKK’) from the 2^nd and 3^rd Defendants. The 2^nd and 3^rd Defendants established the 5^th and 6^th Defendants.

[8]The Plaintiff claimed that (i) 1^st Defendant had breached the MLA 2013 by awarding a sub-license to En. Suhaimi bin Ramly to operate a franchise in Setapak; and (ii) PLPKK and the 5^th and 6^th Defendants are competing businesses with the BrainBuilder Business and had used Dr. Fong’s Method which is the Plaintiff’s confidential information. The Plaintiff then terminated the MLA 2013 on 8/10/2015. The 1^st Defendant did not comply with the post-termination provisions in the MLA 2013 to enable the Plaintiff to take over 1^st Defendant’s BB centres, i.e. BrainBuilder Business centres operated by the 1^st Defendant to teach Mathematics using Dr. Fong’s Method.

[9]The Plaintiff prayed, among others, (i) that the 2^nd to 6^th Defendants be restrained from dealing with the 1^st Defendant’s customers and from disclosing the Plaintiff’s confidential information and other business techniques; (ii) that the 2^nd to 6^th Defendants be compelled to cease all business that are in competition with the Plaintiff; (iii) for the return of all materials resembling the BrainBuilder Business to the Plaintiff; (iv) for an injunction to restrain the Defendants from destroying, among others, the 1^st Defendant’s business details; (v) that 1^st to 3^rd Defendants provide a complete business account derived by the 1^st Defendant arising from the BrainBuilder Business; (vi) that the Receiver be appointed over the 1^st, 4^th, 5^th and 6^th Defendants; (vii) that general, aggravated and exemplary damages be payable by the Defendants jointly and severally; (viii) that the 1^st, 2^nd and 3^rd Defendants make restitutio