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Friday, January 6, 2006

Krispy Kreme'd



UPDATE: Never mind. A deal has been struck, and the doughnuts shall continue to be krispy and kremey.

The original post:

I still remember the night a bunch of us piled in the car and headed down to La Habra (La Habra?!) to check out Southern California's first Krispy Kreme. The line was out the door, but we waited patiently to buy a dozen of those glazed treats we'd heard so much about.

Sitting in the parking lot, we consumed most -- if not all -- of the box within 15 minutes. It was good.

Now comes word that Krispy Kreme's moment in the L.A. sun may be over. The once-hot doughnut company has been hit hard on Wall Street over the past year, frustrating investors and franchisees alike.

Great Circle Family Foods LLC, which runs the 28 Krispy Kremes in Southern California, has accused Krispy Kreme of overcharging for equipment and supplies and misappropriating franchisee funds. As a result, Great Circle halted royalty payments to the corporation -- which announced Thursday it was stripping the Krispy Kreme name from those stores:

Termination of the franchise license means that effective immediately, Great Circle can no longer operate its stores as Krispy Kreme outlets, Laura Smith, a spokeswoman for the chain, said. The company also has 30 days to remove all Krispy Kreme signs and symbols.

Employees at three Los Angeles-area Krispy Kreme outlets Thursday morning said they were operating normally.

An attorney for Great Circle, Patty Glaser, called the license termination "a retaliatory act" after a judge ruled last week that the dispute would not be sent to arbitration, as Glaser said Krispy Kreme had sought.

Glaser said Great Circle would seek a temporary restraining order to bar the license termination as on Friday if it could not reach an agreement with the company.

She acknowledged that Great Circle had not been making royalty payments because the company believes Krispy Kreme may owe it money. Great Circle has asked the doughnut maker for financial information to determine whether it is owed money, but Krispy Kreme has refused the request, Glaser said.

Perhaps Great Circle should hold a contest to rename its stores. A commenter at la.foodblogging suggests "Crispy Creme." The folks at losanjealous are looking at ways to reuse the letters in the "Krispy Kreme" signs in case Great Circle wants to go in an entirely different direction.

I remember when Arby's dropped its franchises in Hawaii -- the stores decided to go by the name R.B.'s. Cute, no? Perhaps Great Circle could go with "Kreamy Krisp." (Lawsuit to follow.)

If I were being serious, I'd suggest they go with the corporate name -- "Great Circle" actually has an OK ring to it, and describes a donut anyway. My final choice? "Really, Really Warm Doughnuts That Look and Taste Like Krispy Kremes, But Officially They're Not Really (Wink-Wink)."

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