The legal battle between real estate moguls Abhishek and Abhinandan Lodha have put into focus the often-inevitable disputes that erupt among family-owned businesses. To be sure, family business disputes are not uncommon and have been seen across sectors. Tussles among siblings or family members over control and inheritance of the business occur regularly.
The ongoing row between the Lodha brothers however brings in yet another challenge — the use of the family surname as brand name. To recap, elder brother Abhishek filed a petition in the Bombay High Court last week seeking damages worth `5,000 crore from Abhinandan Lodha alleging unlawful use of the brand names Lodha and Lodha Group. Younger brother Abhinandan runs the Lodha Ventures business set up in 2015, which includes the House of Abhinandan Lodha.
Abhishek runs the Lodha Group, whose market capitalisation is an estimated `1.1 trillion, and operating in almost all real estate segments. As per observers, the lawsuit has been years in the making, the result of longstanding disputes over the use of the Lodha brand.
Sandeep Goyal, chairman at Rediffusion points out that using the family name as brand name is always dicey because there are no legal protections against the use of the name. “This is different from other Indian family-owned businesses like Hero Group and Parle, where business verticals can be given to each sibling and the brand name can be used by all,” he explains.
The dividing of businesses and public family disputes result in a lot of bad press and that can cause dilution of a brand, says a brand lawyer who doesn’t want to be named. He adds, “The loss of brand identity leads to the erosion of goodwill and that has financial, reputational and strategic implications for all stakeholders in the immediate and long term.”
Risky business
An industry observer remarks that public disagreements within the family seldom bode well for brands in the long run. Perception is key, and people tend to judge on the basis of how these disagreements are handled. Those who wash the proverbial dirty laundry in public tend to receive less empathy from consumers, the media and even investors.
Real estate is strongly dependent on corporate credibility rather than product, explains Agnello Dias, advertising veteran and co-founder, Spinach Experience Design. “This dispute could potentially erode that credibility if it gets uglier and murkier. Last stage buyers could be inclined to steer clear of the entire brand when faced with confusion about the real Lodha,” says Dias.
Some of the most popular global brands are in fact family owned, as Ajimon Francis, MD of Brand Finance India, points out. Tetra Pak, Ferrero Rocher and Porsche are a few examples of how family created and owned brands are nurtured through good governance. In India, he notes that companies such as Godrej, Parle and Birla have done fairly well in maintaining good brand health.
“The challenge for family brands vis-à-vis other brands is that the generations that follow (children, grandchildren and so on) take the brand for granted. They have not really put their ‘blood and sweat’ into creating the brand. Good Indian business houses have ensured that the next generation goes through the grind of operations, shop-floors and managerial roles before they are inducted into leadership roles,” observes Francis.
Additionally, he adds that good governance through clearly detailed formal agreements ensure that there are clear boundaries defined for subsequent generations. In the case of Lodha, Francis believes there may not be much impact on the end customers but stakeholders such as trade partners may be impacted by the ongoing feud.
N Chandramouli, CEO of brand intelligence firm, TRA Research, argues that the fallout for the Lodha brand will be negligible among customers and stakeholders. “Both organisations are established and prominent, and the case won’t cause any major damage to the Lodha brand. Even for Macrotech, which is publicly listed (Abhishek Lodha’s company), there won’t be any impact other than temporary dips that may go away in a few days,” says Chandramouli.
The two businesses do not impinge on each other and are clearly defined, and will most likely not create too much confusion among consumers. Experts note that both have distinct trademarks, defined brand identities and colour codes. Ultimately, Francis sums up that the issue will not be resolved in the court but rather through dialogue and agreements on brand boundaries.