Krispy Kreme Ends Relationship With Houston Area Franchisee

Krispy Kreme
Doughnuts, Inc. yesterday announced that Krispy Kreme Doughnut
Corporation, its wholly-owned subsidiary, has reached a mutual agreement with
its Houston area franchisee, Lone Star Doughnuts, Ltd., to end their existing
franchisor-franchisee relationship.

As of March 8, 2006, Lone Star’s six
locations will cease to be operated as Krispy Kreme stores.
“Krispy Kreme remains committed to developing the brand in the Houston
market and plans to re-establish stores in the area at the appropriate time,”
said Steve Panagos, President and Chief Operating Officer of Krispy Kreme.
As a result of the agreement, the parties have settled all outstanding
disputes and claims, including the dismissal of a lawsuit filed by Lone Star
against Krispy Kreme Doughnut Corporation.

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