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<\/p>\nCourt finds LAC had wrongfully terminated its agreement after \u2018secretly\u2019 preparing to rebrand the US health supplement retailer\u2019s 54 stores here<\/p>\n
[SINGAPORE] The Singapore International Commercial Court (SICC) has largely upheld an arbitration award ordering LAC Global to hand over the leases on its retail outlets and pay more than US$18.9 million in damages to GNC Holdings, capping a bitter three-year franchise dispute between the parties.<\/p>\n
The ruling was based on findings that the franchisee, LAC, had wrongfully terminated its agreements with the US-based health supplements retailer, said the three-judge panel in its Oct 21 judgement.<\/p>\n
LAC and its associated company ONI Global are part of V3 Group \u2013 the luxury lifestyle and wellness holding company belonging to Ron Sim, founder of wellness brand Osim. There are currently 63 LAC outlets in Singapore.<\/p>\n
A spokesperson for LAC said it is studying the court\u2019s judgement and assessing its options for an appeal. <\/p>\n
The spokesperson added: \u201cAt LAC, our priority remains our customers. They place their trust in the integrity of our brand and the quality of our products, and we are committed to delivering the standard of service they expect while continuing to bring new, innovative offerings to meet their needs.\u201d<\/p>\n
According to the judgement, the relationship between GNC and LAC \u2013 through ONI Global \u2013 had broken down around 2020, when the US firm GNC filed for bankruptcy protection.<\/p>\n
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Besides Singapore, the franchisee operated GNC stores in the Philippines, Malaysia and Taiwan through other associated companies.\u00a0<\/p>\n
These relationships soured when GNC emerged from bankruptcy with new ownership, resulting in disputes over franchise operations in Malaysia and Taiwan.<\/p>\n
In those earlier arbitrations, LAC proved that GNC committed serious contract breaches by wrongfully terminating the franchise agreements before their natural expiration.<\/p>\n
Overnight switch<\/p>\n
The disputes over the Singapore business were arbitrated before a three-member tribunal in Pittsburgh, Pennsylvania.\u00a0<\/p>\n
According to the tribunal\u2019s findings, LAC\u2019s senior management believed that trust with GNC had broken down by September 2021.\u00a0<\/p>\n
Specifically, they believed that GNC\u2019s executive vice-chairman, named only as Wong in court documents, wanted to push them out of the franchise.\u00a0<\/p>\n
At this point, LAC decided to secretly rebrand all 54 Singapore GNC stores with their own branding, intending to continue operating as a competing supplement business.\u00a0<\/p>\n
LAC believed that GNC\u2019s breaches were so serious that it would be legally released from its post-termination obligations \u2013 including the requirement to hand the stores back to GNC upon termination.<\/p>\n
On May 20, 2022, LAC unilaterally terminated the franchise agreements and executed the rebranding overnight \u2013 transforming all GNC stores into LAC-branded outlets.<\/p>\n
This prompted GNC to commence arbitration against LAC, alleging wrongful termination. Days later, LAC filed its own arbitration seeking declarations that it was entitled to keep the stores.<\/p>\n
Tribunal findings<\/p>\n
The Pittsburgh tribunal found that Wong\u2019s testimony was \u201cevasive, unhelpful and not credible\u201d, and accepted that he \u201cmay well had envisioned\u201d replacing LAC in Singapore.\u00a0<\/p>\n
But it found no evidence that GNC had actually taken steps to terminate the Singapore franchise as at May 2022. There were no documents showing GNC was vetting replacement franchises, no due diligence records and no preparation for termination.<\/p>\n
Instead, the tribunal found that LAC\u2019s termination was a calculated attempt to escape its contractual obligation to return the stores to GNC.<\/p>\n
While the disputes over Malaysia and Taiwan had destroyed trust between the parties, this did not give LAC the legal right to terminate the Singapore agreements and keep the stores.<\/p>\n
The tribunal ordered LAC to assign its retail outlets back to GNC and pay damages covering lost profits, royalties and brand damage. GNC obtained permission to enforce the arbitration award in Singapore in March 2025.<\/p>\n
Singapore court challenge<\/p>\n
LAC then challenged the arbitration enforcement, arguing that the Pittsburgh tribunal had exceeded its jurisdiction, breached natural justice principles, and that the award violated Singapore\u2019s public policy due to Wong\u2019s destruction of evidence.\u00a0<\/p>\n
The SICC panel, comprising Chua Lee Ming, Simon Thorley and James Allsop, rejected these arguments and upheld the core aspects of the arbitration award \u2013 the requirement to transfer stores and pay damages to GNC.<\/p>\n
But it set aside three specific sub-orders that detailed particular implementation requirements. The court found that while the tribunal had properly heard arguments about whether to order LAC to hand back the stores, it had not given LAC a proper opportunity to argue about the granular implementation details.<\/p>\n
Meanwhile, the court rejected LAC\u2019s argument that Wong\u2019s document destruction provided sufficient grounds to set aside the award.<\/p>\n
The court noted that while the tribunal made \u201csubstantial findings\u201d against GNC regarding the destroyed evidence, the tribunal had carefully considered the claims and concluded there was \u201cinsufficient basis to conclude that the destroyed evidence would have altered the outcome\u201d.<\/p>\n
The court also rejected LAC\u2019s contention that GNC\u2019s post-termination damages claim was a surprise that fell outside the scope of arbitration.<\/p>\n
From the outset, GNC had demanded both the handover of stores and damages as concurrent remedies. LAC\u2019s own expert had engaged with these alternative scenarios throughout the arbitration.<\/p>\n
\u201dIt is not an answer to say that the alternative cases were \u2018buried\u2019 and not expressed,\u201d the court said.<\/p>\n
In October 2024, GNC announced that it will be relaunching in Singapore after a \u201cthree-year hiatus\u201d with an exclusive partnership with Watsons.<\/p>\n
GNC said then that the \u201cstrategic re-entry\u201d is part of the brand\u2019s ongoing international expansion and to reinforce its global presence.<\/p>\n","protected":false},"excerpt":{"rendered":"Court finds LAC had wrongfully terminated its agreement after \u2018secretly\u2019 preparing to rebrand the US health supplement retailer\u2019s…\n","protected":false},"author":2,"featured_media":245018,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[49,48,84,395],"class_list":{"0":"post-245017","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-nutrition","8":"tag-ca","9":"tag-canada","10":"tag-health","11":"tag-nutrition"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/245017","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=245017"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/245017\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/245018"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=245017"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=245017"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=245017"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}