A franchisee has filed suit in BC Supreme Court against North Vancouver-based Salad Loop Group Investment Inc., the franchisor of Salad Loop salad shops.
Vancouver-based SCH Enterprise Ltd. filed a civil claim April 26 against the franchisor, alleging that Salad Loop Group breached a franchise agreement.
SCH claims that, as part of franchise discussions, Salad Loop Group principal Sean Kim promised SCH a 10-year lease term for a store location at 819 West Pender Street, advising that it would be based on a five-year lease and an optional five-year renewal.
"It was fundamental to SCH that there be a stable location to operate the business and having 10 years to operate met SCH's requirement," the court document stated.
The court document alleges that SCH paid approximately $190,000 to purchase the franchise from former franchisee Kwok & Tse Investment Inc.
It further claims that, after the deal closed, SCH principal Huang Su-Chuan Yang again stressed to Kim the importance of having a 10-year operating term.
"Mr. Kim confirmed that SCH would have the 10 years and that he would ensure that the option to renew would be exercised by Salad Loop Group under the head lease," the document contended.
However, the suit allegeed, "Salad Loop Group negligently failed to notify the landlord of the option to renew for the five years under the head lease and as a result the option was no longer available."
The plaintiff claims that Salad Loop Group "fundamentally breached" the franchise agreement with SCH or alternatively "repudiated the franchise agreement and SCH accepted the repudiation."
SCH is seeking a declaration that Salad Loop Group fundamentally breached the franchise agreement and damages.
None of these allegations has been proven.
As of press time, no statement of defence had been filed.
According to Salad Loop Group's website, the company has 10 Lower Mainland locations, including the location identified in the civil claim.
– With files from BIV
from Western Investor June 2012
