Krispy Kreme to Cease Operations

2.10.2006, Friday- It might seem easy selling Krispy Kremes Doughnuts. They're hot, delicious doughnuts that lots of people crave. Owning a Kripsy Kreme franchise, however, is apparently harder than it looks. Krispy Kreme Doughnuts is exiting the Houston market after reaching an agreement with with its Houston franchisee, Lone Star Doughnuts. The five Houston-area stores will cease operations on March 8, as will the location in Beaumont.

Lone Star Doughnuts said Thursday that it will launch its own brand of doughnuts as soon as Krispy Kreme closes. And Krispy Kreme said it plans to reopen stores in Houston, but did not say when. Lone Star's new brand, Jumbles Dough Factory & Coffee Bar, will be in the same six locations, selling doughnuts, kolaches and coffee beverages in a softer setting. Krispy Kreme's exit comes aa part of a legal settlement between the doughnut chain and Lone Star. Lone Star had sued the North Carolina company, claiming it pressured Lone Star to open new stores and threatened to declare a default if it refused, according to court documents. It also claimed Krispy Kreme forced Lone Star to buy unnecessary equipment and marked up cost of goods and supplies, the document shows. Krispy Kreme, for its part, argued Lone Star owed it about $1 million.

Krispy Kreme doughnuts will no longer be sold in Kroger, Rice Epicurean, and Gerland's Stores. Lone Star Doughnuts will eventually provide those grocers with Jumbles doughnuts. Krispy Kreme started as a family business in 1937 after founder Vernon Rudolph obtained a recipe for a year-raised doughnut from a French chef in New Orleans. He launched his business in Winston-Salem, N.C., and it gradually spread throughout the Southeast. The company went public in 2000. Many Houstonians will miss Krispy Kreme. Tina Mason has "loved Krispy Kreme since college." Krispy Kreme doughnuts are wonderful."