Ex-Figaro CEO pushes ahead with new coffee chain

By Johanna D. Poblete, BusinessWorld

Posted at Jun 26 2009 01:19 AM | Updated as of Jun 26 2009 09:29 AM

MANILA - Figaro Coffee Co., Inc. is going through a crisis of identity with two opposing forces claiming to have a right to the Figaro trademarks, and both refusing to back down from the fight.

Exacerbating the rift is the emergence of a new coffee chain, Le Café Figaro, occupying nine spaces that were once branches of the original company, alongside a new outlet at Fraser Place in Salcedo Village — in all totaling 10 coffee shops (some still under renovation). All are operated by a former Figaro franchisee.

The tug-of-war started in June 2008 after former Figaro chief executive officer Pacita U. Juan, who owns 42% of F Coffee Holdings Corp., together with business partner Ma. Regina S. Francisco, surrendered management of the coffee chain to the Tanseco family.

Just two months after her resignation, she came out with a "notice and warning" in newspapers stating that she owned the Figaro trademarks, including the trade name. Thereafter, she lent the name "Figaro" to the newly registered Le Café Figaro Enterprises, Inc., where she acts as consultant.

Airing her side of the story after a Figaro Coffee official’s Wednesday announcement of store and product expansions, Ms. Juan told reporters yesterday she had "stepped down" in good faith, to allow the major shareholders a turn in running Figaro Coffee.

Addressing allegations of financial mismanagement as well as profit loss due to the opening of outlets in Dubai, Hong Kong, and Shanghai, Ms. Juan pointed out that Figaro became "the No. 1 biggest local coffee chain" during her 15-year tenure and that any expansion to other countries "is a challenge every time."

She said her primary issue with the new Figaro Coffee management is that in December 2008 "new players had come in claiming to have put in money," without prior notice to the minority shareholders.

Moreover, she said the new management had decided not to buy stocks from local coffee farmers, making it look like she had turned back on promises made on behalf of the company.

Franchisees needs were also not being met, she said, citing Lot Tan, who now operates the 10 Le Café Figaro coffee shops.

The company also withdrew support for the China branch, she added, forcing her and then head of China operations Ross Juan to close the Shanghai branch themselves, or else be "blacklisted" in the country.

Ms. Juan, who founded the chain in 1993 with six others, hit Figaro Coffee’s expansion plans, new franchising agreements, and the recent move to target the "C" market with new food products.

"You need 67% to get something major done, they didn’t have that. I did not leave the corporation, I left management [but] I don’t know what my 42% is worth now. You love your baby which you have nurtured for 15 years, but you see it going in a new direction that is not the vision that you had for it," she said.

"If I had continued the Figaro management from June 2008, the new Figaro would be this," she said, referring to the new Le Café Figaro chain.

"There’s more food, there’s still coffee, [but] I’m infusing healthier food. So if they say this is unfair competition, what’s unfair competition? This is what I would have done if I had the reins of Figaro until today. Figaro [was the] only local company that was kind of going head-on with the international chains but now, that doesn’t seem to be the direction," she added.

Ms. Juan’s claim to the name "Figaro" resulted in a counter-measure from majority shareholders who contested her right to the Figaro trademarks in court.

An April 14 order by Judge Joselito Villarosa of the Makati Regional Trial Court ruled against Ms. Juan.

The order noted that Ms. Juan registered 12 specified trademarks, under her name, during her tenure as director and president of the company under the Figaro group, but that as an "agent" and "trustee" of the corporation "occupies a fiduciary relation to the corporation."

Therefore the "Figaro trademarks are treated by law as those of the corporation, being the principal," the ruling stated.

It also said Ms. Juan and her allies must "cease and desist from using, passing of as their own, selling, assigning, transferring, disposing or performing any act in connection with the Figaro trademarks."

Ms. Juan’s camp however, claims the court order does not state, specifically, that other parties cannot use the name "Figaro" in conjunction with other words, as in "Le Café Figaro."

F Coffee Holdings Corp., Figaro Coffee Co., Inc., and Figaro Coffee Systems, Inc., are objecting to the use of the Figaro name in any form.

Mel Verano, chief executive officer of Figaro Coffee, said in a phone interview that Ms. Juan shouldn’t be using the name "Figaro," especially when going into a similar business.

Concerning allegations made that his group came in without prior notice to the minority shareholders, Mr. Verano said he and his business partner Gerry Liu have "not bought a single stock," and merely provided financial resources so that the company would continue to operate.

He reiterated that his group came in after Ms. Juan had already stepped down, and that the primary reasons were interest in Figaro as a Filipino brand "which can further be developed like other international brands," to protect workers, and save the investment of franchisees and shareholders.

Mr. Verano said Figaro Coffee would have collapsed if his group didn’t stepped in, as the company was unable to shoulder the expenses of basic supplies.

The Figaro Coffee chain now has 40 franchised stores, and 30 company-owned outlets.

For Ms. Juan, however, the old Figaro is dead.

"Why did people become enamored of Figaro? Because of what it represents, it represents holistic values, that you can be proudly Pinoy," she said.

"Figaro is the one espousing Kape Barako, coffee farming and seed-planting, [the one attempting] to put the Philippines back in the coffee belt. Where is that now?"