By Park Jae-hyuk

Mister Donut is expected to stop operating in Korea after a court ordered its Korean operator to stop using the brand, according to industry officials Sunday.

SDK2, a unit of Korean construction group SDK, has run Mister Donut's Korean stores since July 2014, after signing a franchise contract with a Hong Kong subsidiary of Duskin, which owns the Japanese-based doughnut chain.

Last November, Duskin said it planned to terminate the agreement with SDK2 as of Jan. 31 this year, citing the Korean company's contract violations, such as allegedly falsifying expiration dates.

SDK2 has resisted the move, emphasizing that it was acquitted of the charge.

The Korean operator was fined 3 million won ($2,600) last September for making doughnuts with ingredients whose shelf lives had expired. The regulation regarding the case was found unconstitutional later last year, which prompted prosecutors to acquit SDK2.

But Duskin claimed the Korean store had obviously falsified the expiration dates. It also said the contract included a clause that headquarters could immediately terminate the agreement if a local operator received a criminal penalty. In addition, the Osaka-based company blamed SDK2 for selling products that were not on the headquarters' menu.

Seoul Central District Court recently granted Duskin's injunction against SDK2's trademark infringement. The court also judged that the trust between Duskin and SDK2 had been "totally destroyed."

SDK2 will be unable to use the Mister Donut brand on its products, packages and in advertisements. If the Korean company violates the order, it will have to pay 3 million won a day to Duskin.

Duskin also must put down a 100 million won deposit to compensate for SDK2's possible losses in case the judgment is reversed. If Duskin pays the deposit, the court's order will take effect immediately.

SDK2 is considering appealing to the upper court, but has reportedly closed its stores in Korea.

Duskin will continue its other businesses in Korea, including cleaning kit rentals, although it will not run any food business here.