Krispy Kreme Franchisee: Dispute Resolved

Krispy Kreme Reinstates Southern California Franchisee's Licenses

Feb 11, 2006 - 10:38
Krispy Kreme Doughnuts, Inc. (NYSE: KKD) announced that its wholly-owned subsidiary, Krispy Kreme Doughnut Corporation ("KKDC"), has reached an agreement with Great Circle Family Foods, LLC ("Great Circle"), its Southern California franchisee, to reinstate Great Circle's franchise licenses effective immediately.

On January 5, 2006, KKDC terminated Great Circle's franchise rights for failure to pay certain royalty and Brand Fund payments. Krispy Kreme also filed a lawsuit in North Carolina to stop Great Circle from using the Krispy Kreme trademarks and confidential information following the termination of its franchise rights. After a judge entered a temporary restraining order prohibiting Great Circle from using the Krispy Kreme trademarks and confidential information, Great Circle agreed to remit the past due royalty and brand fund fees that triggered the termination and to pay such fees on a timely basis going forward. KKDC will resume product shipments to Great Circle. Great Circle remains indebted to KKDC for other amounts due under its franchise agreements, and KKDC has reserved its rights to pursue payment of those amounts.

Great Circle, Krispy Kreme's largest franchisee, currently operates 28 Krispy Kreme locations in the Southern California area.