September 8, 2011 9:05 pm

Vivienne Westwood faces franchise lawsuit

Fashion designer Vivienne Westwood’s clothing brand is facing a court fight with one of its oldest business partners.

Hervia Limited, which operates seven Vivienne Westwood shops in regional cities, has issued High Court proceedings for breach of contract after the designer sought to end a long-standing franchise agreement in June.

“The litigation relates to an attempt by Vivienne Westwood to terminate an existing franchise agreement which has been in place between both parties since 1995, allowing Hervia to operate branded stores in the North of England and Midlands for a total of 60 years,” Hervia said.

The claim also seeks an injunction to prevent Vivienne Westwood “from further breaches to the agreement in respect of Hervia’s exclusivity rights, and the award of damages for breaches that have occurred”.

The stores of Manchester-based Hervia, which called the move a “measure of last resort”, require fresh stock for the spring and summer season.

Vivienne Westwood said it was fighting back, adding that it had successfully defended Hervia’s application for an interim injunction, which was refused by the court.

“While proceedings are ongoing it would be inappropriate to comment further on the matter, save to say that pending the outcome of the litigation, the parties will continue to work together in the best interests of the brand,” it said.

Oscar Pinto-Hervia, a Chilean, founded Hervia as a high-end fashion retailer in 1993 and two years later struck a deal with Dame Vivienne. The creator of the punk look had expanded beyond her famous King’s Road shop in Chelsea but was not widely bought outside London.

Hervia said it had “generated significant sales and royalties for the label and invested millions of pounds building a world-class retail operation to drive its growth”.

Apart from Vivienne Westwood outlets in Manchester, Liverpool, York, Newcastle and Nottingham, and an online operation, Hervia has its own store in Manchester.

It increased turnover sharply in the year to March 31 2010 despite the recession. Pre-tax profits almost doubled from £692,000 to £1.1m ($1.8m) on sales that rose from £7.4m to £9.5m.

Vivienne Westwood reported a pre-tax loss of £478,000 in the year to December 31 2010 compared with a £2.53m profit. Turnover increased from £20.8m to £23.8m, but it was forced to pay £3m to Latimo SA, its Luxembourg-based holding company, for a licence to use the Vivienne Westwood trademark. The highest paid director, believed to be Ms Westwood, earned £708,161.

Dame Vivienne launched her latest collection at the Royal Courts of Justice in February and her company’s next date there, within three months, is expected to attract as much attention.

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