September 07, 2006
A Not-So-Sweet Tradition for Krispy Kreme: Another Franchisee Lawsuit Settled
As reported in this article, Krispy Kreme Doughnuts Inc. announced in an 8-K filing that it has reached another in a string of settlements of franchisee litigations, this time with Illinois-based franchisee Sweet Traditions LLC, with stores in St. Louis and Chicago. Sweet Traditions sued Krispy Kreme in July 2005 to force the franchisor to continue to supply it with doughnut mix and other necessary supplies, even though it owed Krispy Kreme more than $2.4 million and had stopped paying the franchisor. Early in the case, as noted in this article, an Illinois judge granted Sweet Traditions a temporary restraining order, finding that Krispy Kreme’s “severe mismanagement” contributed to the franchisee’s “perilous financial condition.” The case was later removed to federal court and then went into arbitration. In Friday’s announcement, Krispy Kreme said that that the settlement, which included the dismissal of the case with prejudice as of August 28, would not result in any accounting charges for the donut maker.
Posted by franchiselawblog at September 7, 2006 12:14 PM