Singapore court orders Ron Sim’s LAC to hand over GNC store leases, pay US$18.9 million in franchise dispute
Court finds LAC had wrongfully terminated its agreement after ‘secretly’ preparing to rebrand the US health supplement retailer’s 54 stores here
[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.
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.
LAC and its associated company ONI Global are part of V3 Group – the luxury lifestyle and wellness holding company belonging to Ron Sim, founder of wellness brand Osim. There are currently 63 LAC outlets in Singapore.
A spokesperson for LAC said it is studying the court’s judgement and assessing its options for an appeal.
The spokesperson added: “At 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.”
According to the judgement, the relationship between GNC and LAC – through ONI Global – had broken down around 2020, when the US firm GNC filed for bankruptcy protection.
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Besides Singapore, the franchisee operated GNC stores in the Philippines, Malaysia and Taiwan through other associated companies.
These relationships soured when GNC emerged from bankruptcy with new ownership, resulting in disputes over franchise operations in Malaysia and Taiwan.
In those earlier arbitrations, LAC proved that GNC committed serious contract breaches by wrongfully terminating the franchise agreements before their natural expiration.
Overnight switch
The disputes over the Singapore business were arbitrated before a three-member tribunal in Pittsburgh, Pennsylvania.
According to the tribunal’s findings, LAC’s senior management believed that trust with GNC had broken down by September 2021.
Specifically, they believed that GNC’s executive vice-chairman, named only as Wong in court documents, wanted to push them out of the franchise.
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.
LAC believed that GNC’s breaches were so serious that it would be legally released from its post-termination obligations – including the requirement to hand the stores back to GNC upon termination.
On May 20, 2022, LAC unilaterally terminated the franchise agreements and executed the rebranding overnight – transforming all GNC stores into LAC-branded outlets.
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.
Tribunal findings
The Pittsburgh tribunal found that Wong’s testimony was “evasive, unhelpful and not credible”, and accepted that he “may well had envisioned” replacing LAC in Singapore.
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.
Instead, the tribunal found that LAC’s termination was a calculated attempt to escape its contractual obligation to return the stores to GNC.
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.
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.
Singapore court challenge
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’s public policy due to Wong’s destruction of evidence.
The SICC panel, comprising Chua Lee Ming, Simon Thorley and James Allsop, rejected these arguments and upheld the core aspects of the arbitration award – the requirement to transfer stores and pay damages to GNC.
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.
Meanwhile, the court rejected LAC’s argument that Wong’s document destruction provided sufficient grounds to set aside the award.
The court noted that while the tribunal made “substantial findings” against GNC regarding the destroyed evidence, the tribunal had carefully considered the claims and concluded there was “insufficient basis to conclude that the destroyed evidence would have altered the outcome”.
The court also rejected LAC’s contention that GNC’s post-termination damages claim was a surprise that fell outside the scope of arbitration.
From the outset, GNC had demanded both the handover of stores and damages as concurrent remedies. LAC’s own expert had engaged with these alternative scenarios throughout the arbitration.
”It is not an answer to say that the alternative cases were ‘buried’ and not expressed,” the court said.
In October 2024, GNC announced that it will be relaunching in Singapore after a “three-year hiatus” with an exclusive partnership with Watsons.
GNC said then that the “strategic re-entry” is part of the brand’s ongoing international expansion and to reinforce its global presence.
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