Sir Richard Branson is suing a former US partner for $250m (£180m) over its decision to drop the Virgin name from its trains due to a perceived decline in brand value.
Virgin and Brightline inked a 20-year licensing deal in 2018 that allowed the American company to rebrand trains on its service as Virgin Trains USA.
But Brightline abruptly withdrew from the agreement in July last year, arguing that Virgin’s brand was no longer of “high-quality status” and continuing to use it would cause reputational damage.
Virgin Enterprises, which controls Branson’s brand, described the accusation as “spurious and cynical” and argued that it is still a brand of “international high repute”.
It is suing its former partner for $251m, which it says will cover lost royalties and an early termination fee.
Brightline, which is owned by investment management firm Fortress, operates a train line between Miami and West Palm Beach in Florida.
It is also planning a new service between Las Vegas and southern California.
The firm’s service was suspended in March last year due to the outbreak of Covid-19, but is due to resume at some point in 2021.
The dispute comes after a torrid year for Virgin, which has seen much of its empire grind to a halt as a result of travel restrictions due to the pandemic.
Virgin Atlantic has cut almost 5,000 jobs — nearly half its pre-pandemic workforce — as part of a £1.2bn rescue plan.
The group also suffered from gym and hotel closures and was forced to delay the launch of its first cruise ship.