Krispy Kreme earns $10M selling to CO franchisee

Krispy Kreme Doughnuts Inc., the subject of a federal accounting probe, will sell 12 stores in Colorado, Minnesota and Wisconsin for about $10 million after the shops' owner filed for Chapter 11 bankruptcy.

Westward Dough, the Krispy Kreme area developer for Nevada, Utah, Idaho, Wyoming and Montana, is purchasing the stores and development rights for the three states from Glazed Investments LLC, a franchisee 97 percent owned by Krispy Kreme.

Westward Dough requested Friday's bankruptcy filing to free the stores of any liens and claims, Krispy Kreme, based in Winston-Salem, N.C., said Friday in a statement.

The sale follows bankruptcies by franchisees in Canada and Philadelphia.

Krispy Kreme is shedding stores and restructuring operations amid a probe by the U.S. Securities and Exchange Commission and federal prosecutors into how the company accounted for the repurchases of factory stores. The company hasn't reported earnings for five quarters.

Westward Dough is the franchisee for 15 stores in Nevada, Utah, Idaho, Wyoming and Montana. Krispy Kreme will no longer retain an ownership position in the stores being sold.

"We are very excited to have reached an agreement to purchase the Krispy Kreme franchise in Colorado, Minnesota and Wisconsin," said Lincoln Spoor, principal of Westward Dough, in a prepared statement. "We are pleased with the opportunity to combine Glazed Investment's strengths and best practices with our own, to create a truly great company. The Krispy Kreme brand deserves nothing less."

"Completing this transaction represents another step forward in Krispy Kreme's restructuring," said Steve Panagos, president and chief operating officer of Krispy Kreme, in the statement. "Lincoln Spoor and his team at Westward Dough have a proven track record of successfully operating Krispy Kreme locations, and we are very pleased that they have decided to further expand their relationship with the company."

Shares of Krispy Kreme, which has about 320 locations, rose 28 cents to $6.58 at 4:16 p.m. Friday in New York Stock Exchange composite trading. The stock has fallen 17 percent in the past 12 months.

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Contributing: Deseret Morning News