(CN) - The makers of the French Connection UK fragrance brand owe $3.3 million for reneging on distribution rights, a New York wholesaler claims in court.
Nassau County-based Horizon Beauty Group filed the complaint Friday in Manhattan against TPR Holdings LLC, identifying the defendant company as the exclusive licensee of the French Connection UK and FCUK fragrance brand.
According to the complaint, Horizon struck a sublicensing deal with TPR for the French Connection fragrance lines in 2010, giving Horizon exclusive distribution rights everywhere in the world except Canada.
Despite having been appointed the "exclusive secondary distributor" of TPR's brands, Horizon says it came to learn this past April "that there are large quantities of TPR brands being offered in the market in which Horizon was granted total exclusivity."
"TPR has been surreptitiously distributing its brands, including the 'FCUK' brand, into the secondary distribution market in direct violation of Horizon's right of exclusivity," the complaint states.
Horizon says it has learned from customers in Europe and at a trade show in Las Vegas that TPR's products have been available at lower prices than those it offers.
"As a consequence, Horizon has lost its entire distribution in Australia because of the existence of TPR brands being offered at prices below Horizon's price," the company claims.
Kyle Bisceglie, an attorney for Manhattan-based TPR with the firm Olshan Frome Wolosky, waved off the allegations.
"My client believes that this lawsuit is entirely without merit and intends to mount a vigorous defense," Bisceglie said in an email.
Together with the $2.5 million that Horizon claims TPR's breach of the exclusivity provisions have cost it, Horizon seeks another six figures for a purported loan breach.
As part of the April 2010 distribution agreement, Horizon says it loaned TPR $1 million.
TPR defaulted on the loan immediately by failing to make the first quarterly interest payment, according to the complaint.
Horizon says there was an outstanding interest balance of $255,287 when TPR refinanced the loan in August 2012.
Horizon claims to have upheld its end of the bargain, having bought at least $3 million worth of FCUK products, plus another $1 million in TPR's other brands, each calendar year during the term of the 2012 promissory note.
TPR nevertheless defaulted again in October 2012, according to the complaint.
"lt is now almost four months past the maturity date of the note and there remains a principal balance of $880,993.55 and accrued and unpaid interest of $3,475.70, all of which is currently past due by TPR to Horizon under the note which, despite due demand, TPR has failed to pay," the complaint states.
All together, Horizon seeks $3.38 million in damages.
Two men who own TPR are also named as defendants.
Horizon is represented by Kara Cormier with the firm Locke Lord.
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