Krispy Kreme franchisee in Philadelphia files Chapter 11
October 17, 2005
by Jeff Gelski
WINSTON-SALEM, N.C. — Freedom Rings, L.L.C., a Krispy Kreme Doughnuts, Inc., franchisee in Philadelphia, has filed a voluntary petition for Chapter 11 bankruptcy, Krispy Kreme said Monday.
Freedom Rings operates six stores. Krispy Kreme, which previously owned 70% of the franchisee, has acquired the 30% minority interest and has agreed to provide funding during the restructuring process.
Freedom Rings owes Krispy Kreme about $24.1 million, but amounts owed to Krispy Kreme have been eliminated in consolidation for financial reporting purposes. Because of the bankruptcy filing, Krispy Kreme expects to deconsolidate Freedom Rings.
"This is a difficult but necessary process for Freedom Rings, and we believe it is in the best interest of the Krispy Kreme brand in the Philadelphia region in the long term," said Steve Cooper, chief executive officer for Krispy Kreme Doughnuts, Inc. "We believe that this process allows us to continue to serve our customers in the Philadelphia region while simultaneously restructuring our local operations."