The Borders' bookstore bankruptcy drama continues to unfold, this time revolving around the company's desire to terminate its licensing agreement with Seattle's Best.
Borders Group Inc. is set to seek bankruptcy-court permission to terminate its licensing agreement with the Starbucks Corp. brand, a move that would remove the Seattle's Best name from cafés at Borders' s417 remaining locations nationwide.
Ending the seven-year partnership with Seattle's Best is a cost-cutting move for Borders, allowing it to reduce the licensing fees it pays and boost café profits.
It isn't clear how much money this move will save Borders; but if the bankruptcy court approves the termination of the contract the company is poised to save thousands of dollars on licensing fees. However,we may see a new contract between the two companies, something which has been hinted at but has not come into fruition. On the other hand, Borders may decide to use their bankruptcy to terminate the contract with Seattle's Best and brand their own version of the existing café. The company has emphasized that customers will not see any changes in-store in terms of losing the ability to get a drink or pastry while they browse, it's just that those products may no longer be provided by Seattle's Best.
And while the row between Seattle's Best is on the front burner, the bigger concern facing Borders is the ability of the company to survive bankruptcy intact without selling itself off piecemeal to various bidders. Borders is currently searching for a bidder while in bankruptcy; but has failed to find one yet.
(source: http://blogs.wsj.com/bankruptcy/2011/05/19/borders-seeks-coffee-break-with-seattle%E2%80%99s-best/ )