Court Orders Reinstatement of Branding in Franchise Dispute: A Win for 'No. 1 Malatang'

Category: , Intellectual Property, Technology & Data
Date: 25 March 2025
Author: Tyrone Walker - Genuine People
Supreme Court of New South Wales grants interlocutory injunctions protecting restaurant branding. In a significant interlocutory decision handed down on 18 March 2025, the Supreme Court of New South Wales in' Soyo Investments Holdings Pty Ltd v AL Brands Management Group Pty Ltd' [2025] NSWSC 246 has granted injunctive relief in favour of the operator of the popular "No. 1 Malatang" soup restaurants, halting a large-scale rebranding effort by its business partner. The plaintiffs, including Soyo Investments and its controllers, had entered into various informal business arrangements with AL Brands Management Group Pty Ltd (AL Brands), under which AL Brands operated and expanded the "No. 1 Malatang" brand across Australia. Despite the lack of a formally executed agreement, the Court found there was evidence of a commercial relationship, including the payment of substantial sums (up to $1.8 million for one store), ongoing profit-sharing arrangements, and the opening of new stores under the trade mark and brand identity. However, in March 2025, AL Brands suddenly began rebranding all 17 stores as "Master Malatang" and issued a purported notice terminating the use of the original brand. Social media posts announced the change, and at least two stores'€”Burwood and Sydney CBD'€”were physically rebranded. The plaintiffs sought urgent injunctive relief to:
  1. Restrain AL Brands from further altering the branding of any of the stores;
  2. Compel AL Brands to reverse the rebranding at the Burwood and Sydney CBD stores.

Key Takeaways from the Decision:

  • Serious Question to Be Tried: The Court found a sufficient basis to consider that an enforceable agreement or joint venture existed between the parties, given the conduct, payments, and shared use of branding.
  • Passing Off and Misleading Conduct: Soyo had developed a reputation in the market, which AL Brands had relied on. The Court accepted that claims of passing off or misleading or deceptive conduct were arguable.
  • Balance of Convenience: The Court held that the balance of convenience favoured maintaining the status quo'€”that is, use of the "No. 1 Malatang" branding'€”until the matter is determined.
  • Mandatory Injunction Granted: The Court granted a mandatory interlocutory injunction requiring the two rebranded stores to be restored to their original appearance, citing minimal evidence of hardship to AL Brands and the potentially significant harm to Soyo's goodwill.
  • Undertakings Required: The Court made the order conditional upon Soyo providing usual undertakings as to damages and a further undertaking to cover all reasonable costs incurred by AL Brands in changing the branding back and forth.

Why This Case Matters

This decision serves as a stark reminder to businesses'€”particularly in the food and hospitality sector'€”that informal franchise or licensing arrangements, even if not fully documented, can give rise to enforceable obligations. It also highlights the risks of unilateral action in rebranding where a shared identity or goodwill exists.

Takeaways for Clients

  • Put it in writing: Always ensure key commercial terms are captured in a properly executed agreement'€”particularly where brands, IP, or profit-sharing are involved.
  • Franchise law considerations: Where franchise-like relationships exist, the Franchising Code may apply even if the parties don't label it as such.
  • Act with caution in disputes: A party cannot unilaterally change branding without risking court intervention, especially where significant goodwill is at stake.
If your business operates under a brand that others are using'€”or you are expanding your business using another's brand'€”seek legal advice to formalise the arrangement and protect your interests. For further guidance on franchise agreements, trade mark protection, or commercial disputes, please contact our Commercial or IP Team.