Singapore Court of Appeal rules in favour of GNC in franchise dispute over 54 stores

Singapore's apex commercial court has delivered a comprehensive judgment dismissing a Singapore-incorporated franchisee's bid to block enforcement of an American arbitral award, in a dispute arising from the collapse of a franchise relationship covering 54 health supplement retail stores.

In a judgment dated 25 May 2026, the Court of Appeal upheld the bulk of a final arbitral award issued in favour of GNC Holdings LLC, an American company incorporated in Delaware and internationally recognised as a distributor of health products and dietary supplements.

Chief Justice Sundaresh Menon delivered the judgment of the court, which also comprised Justice of the Court of Appeal Steven Chong and International Judge David Edmond Neuberger.

Background to the franchise dispute

GNC and ONI Global Pte Ltd, a Singapore-incorporated company, had a long-standing franchise relationship for the sale of health products through franchised stores in Singapore. That relationship was governed by agreements due to expire on 31 December 2024.

LAC Global (Singapore) Pte Ltd, an associated company of ONI Global, operated the franchised stores and agreed to be bound by the arbitration as if it were a direct party. The court referred to both companies collectively as ONI throughout its judgment.

The relationship deteriorated after GNC underwent a change in ownership in October 2020 following bankruptcy proceedings in the United States. By 2021, franchise relationships in Malaysia and Taiwan had ended acrimoniously. From around September 2021, ONI began preparing to rebrand its 54 Singapore stores without notifying GNC.

On 20 May 2022, ONI terminated the Singapore franchise agreements and rebranded all 54 stores, which became LAC-branded outlets. GNC and ONI each commenced separate arbitrations that same month, each alleging repudiatory breach of the agreements by the other.

The two proceedings were consolidated by agreement on 28 July 2022, with the arbitration seated in Pittsburgh, Pennsylvania, and administered by the International Centre for Dispute Resolution of the American Arbitration Association.

The arbitral award

A three-member tribunal constituted in October 2022 issued its final award on 14 August 2024. The tribunal largely found in favour of GNC, determining that ONI had repudiated the Singapore franchise agreements and breached post-termination covenants requiring it to assign the store leases to GNC upon request.

The tribunal ordered specific performance of those covenants through a detailed set of sub-orders requiring ONI to disclose lease documents, assign store leases to GNC, manage landlord consent obligations, and offer continued employment to existing store-level staff.

On the question of damages, the tribunal awarded GNC post-termination damages of US$18,923,012, reflecting what it assessed GNC would have earned had it been able to re-enter the Singapore market without a disruption caused by ONI's breach.

The tribunal also addressed a separate application by ONI over the destruction of relevant text messages by GNC's Executive Vice Chairman, referred to in the judgment as Mr Wong.

The tribunal found that Mr Wong had deleted messages to conceal harmful information and gain an unjust litigation advantage, but declined to dismiss GNC's claims on the basis that there was insufficient evidence the destroyed material would have altered the outcome of the award.

Enforcement proceedings in Singapore

GNC sought enforcement of the award in Singapore. An Assistant Registrar of the General Division of the High Court granted leave on 4 March 2025.

ONI filed an application on 24 March 2025 seeking to set aside the enforcement order on grounds of public policy, breach of natural justice, and matters falling outside the scope of the arbitration.

The Singapore International Commercial Court rejected most of ONI's grounds but found that three sub-orders within the specific performance order had been made in breach of natural justice, as the tribunal had not consulted the parties before crafting those terms. Both sides appealed.

Court of Appeal findings

On the evidence destruction issue, the Court of Appeal affirmed that the court must exercise the greatest caution before reopening questions of procedural fraud that had been fully considered by the tribunal.

The tribunal, being fully aware of all relevant facts and evidence, had carefully weighed the consequences of Mr Wong's conduct and imposed a limited adverse inference rather than dismissing GNC's claims. The court found no basis to disturb that assessment.

On the argument that the tribunal had failed to consider a specific contention by ONI — that GNC's plan to reclaim Singapore stores included GNC operating the outlets itself rather than appointing a replacement franchisee — the court found the point had not been properly brought before the tribunal in a way that required separate determination. The court also found that the tribunal's reasoning was in fact inconsistent with that contention, indicating it had been implicitly considered and rejected.

The most substantive issue concerned what the court described as impermissible hedging. ONI had applied to strike out GNC's post-termination damages claim on the basis that it was a new and unpleaded quantum case introduced only in GNC's post-hearing submissions. At the same time, ONI made extensive submissions on the merits of that very claim.

The court found that ONI's decision to argue the claim on its merits, without clearly intimating to the tribunal that it regarded the arbitration as irretrievably compromised if the striking out application failed, was fatal to its subsequent challenge before the court.

It relied on the principle established in China Machine New Energy Corp v Jaguar Energy Guatemala LLP that a party cannot, in effect, wait to see the outcome of an arbitration and then seek to challenge an unfavourable award on grounds inconsistent with its conduct during the proceedings.

The court noted that ONI had never told the tribunal that if the striking out application failed, the arbitration could not proceed fairly without remedial steps such as further document production, additional expert evidence, or resumed cross-examination. By making substantive submissions on the merits instead, ONI had led the tribunal to proceed on the basis that it could either strike out or rule on the claim. ONI could not then seek to unwind that choice before the court.

Specific performance orders restored

On the question of the detailed specific performance terms, the Court of Appeal departed from the lower court's analysis.

While the Singapore International Commercial Court had found three sub-orders to have been made in breach of natural justice because the parties had not been consulted on their terms, the Court of Appeal held that the possibility of the tribunal crafting detailed orders in the manner it did was reasonably foreseeable given the way both parties had argued the case.

ONI had itself raised concerns about employee hardship and landlord consent complications in opposing specific performance.

The court found that the tribunal's detailed conditions directly reflected its attempt to balance the equities that both parties had placed before it. In those circumstances, it was not incumbent on the tribunal to solicit further submissions before settling on the specific terms.

The court allowed GNC's cross-appeal and restored the three sub-orders that the lower court had declined to enforce.

The two appeals were resolved with ONI's appeal dismissed and GNC's appeal allowed. The court directed parties to file submissions on costs within the timeframes set out in the judgment if they could not reach agreement within 14 days.