printer-friendly

Sample Business Contracts

Associate's License Agreement - Krispy Kreme Doughnut Corp.

Sponsored Links


                                    FORM OF

                          ASSOCIATE'S LICENSE AGREEMENT

                             FOR MAKING AND SELLING

                                  KRISPY KREME

                                    DOUGHNUTS


NORTH CAROLINA    )
                  )                                ASSOCIATE'S LICENSE AGREEMENT
FORSYTH COUNTY    )


         THIS AGREEMENT ("Agreement"), made and entered into as of the date and
year set forth below, by and between KRISPY KREME DOUGHNUT CORPORATION ("Krispy
Kreme"), a North Carolina corporation, having its principal office at
Winston-Salem, North Carolina and ________________________ ("Associate").

         WHEREAS, Krispy Kreme has established successfully over a period of
years a reputation, demand and goodwill for fresh and distinctive doughnuts and
related products, as set forth in the Krispy Kreme Associates' Manuals as
amended from time to time, under the name "Krispy Kreme," which signifies the
highest standards of management, supervision, merchandising and freshness,
uniformity and quality of products; and

         WHEREAS, Krispy Kreme has developed and maintained over a period of
years, by expending time, effort and money, a unique system for the production,
marketing and sale of its products (the "System") and has been and is currently
engaged, among other things, in the business of licensing its System; and

         WHEREAS, the System is one unique and highly developed product
consisting of the Krispy Kreme's mixes (the "Mix"), its Production Equipment
System, which consists of equipment manufactured by Krispy Kreme, its federally
registered trademarks and service marks (the "Marks") and the reputation and
goodwill established and associated therewith, its unique doughnut shops with
their distinctive architectural style and motif, properly located to yield the
greatest public acceptance, and high standards and quality of products and
service, and its knowledge, technology and manner of doing business in the field
of production and sales, all of which are designed to produce Krispy Kreme
Doughnuts that are fresh and uniform in taste; and

         WHEREAS, Associate recognizes the benefit of being identified with
Krispy Kreme and desires to be licensed to utilize the unique System, to
produce, market, package and sell Krispy Kreme Doughnuts in the manner set forth
in the Krispy Kreme Associates' Manuals as amended from time to time (the
"Manual"), to operate a doughnut shop(s) and a doughnut producing facility or
facilities at the location(s) defined in Exhibit A attached (the "Location"), to
have the only license with Krispy Kreme to utilize the System in an exclusive
geographical area defined in

<PAGE>   2

Exhibit B attached (the "Area"), and to do all of the foregoing under the Krispy
Kreme name and Marks; and

         WHEREAS, Krispy Kreme is willing to grant such license to Associate
upon the terms and conditions herein set forth;

         NOW, THEREFORE, it is mutually agreed by Krispy Kreme and Associate as
follows:

                                    ARTICLE I
                  GRANT OF LICENSE BY KRISPY KREME TO ASSOCIATE

         Subject to the continuing good faith performance by Associate in the
use and application of the System and in consideration of payment by Associate
of royalties defined below and purchase of Mix and Production Equipment System,
Krispy Kreme hereby grants a license to Associate strictly limited to the
following:

         A.       USE OF SYSTEM. To produce and sell Krispy Kreme Doughnuts
                  using the System in accordance with standards set forth in the
                  Manual.

         B.       PACKAGING. To package Krispy Kreme Doughnuts so produced in
                  containers and boxes of a quality, size, type and design and
                  strictly in accordance with the instructions set out in the
                  Manual.

         C.       LOCATION OF PRODUCTION, PACKAGING AND DOUGHNUT SHOP SALES. To
                  operate a doughnut producing facility and doughnut shop for
                  retail sale of Krispy Kreme Doughnuts at the Location, and to
                  conduct the business of producing, marketing, packaging and
                  selling at retail or both retail and wholesale, over the
                  counter and by truck distribution, from the Location. Since
                  location is vitally important to successful marketing of
                  Krispy Kreme Doughnuts, if Associate desires to relocate or
                  establish an additional location within the Area, he shall
                  obtain prior written approval of Krispy Kreme.

         D.       SIGNIFICANCE OF FRESHNESS. To sell, at retail or wholesale,
                  Krispy Kreme Doughnuts only if such doughnuts are "fresh," as
                  that term is defined in the Manual. Associate acknowledges
                  that "freshness," as defined in the Manual, is a key element
                  of the System and essential to maintenance of Krispy Kreme's
                  high standards of quality and uniformity and covenants to sell
                  Krispy Kreme Doughnuts only if they are fresh. For purposes of
                  this Agreement, the words "Krispy Kreme Doughnuts" mean FRESH
                  doughnuts (but not frozen doughnuts) and related products that
                  are uniform in taste and that are produced under the System in
                  accordance with the Manual and this Agreement.

                                       2

<PAGE>   3

         E.       TRADEMARKS. To use Krispy Kreme's Marks in selling of Krispy
                  Kreme Doughnuts only as authorized in this Agreement and the
                  Manual.

         F.       NAME. To use the words "Produced under the Authority of Krispy
                  Kreme Doughnut Corporation" on containers and packages for
                  Krispy Kreme Doughnuts produced by Associate.

         G.       TERM. Unless terminated under the provisions of Article VIII
                  hereof, the term of this Agreement shall be for a period of 15
                  years commencing upon the date hereof and ending on _____,
                  ____ ("Original Term"), such Original Term (or any subsequent
                  five (5) year renewal term) to be automatically extended for a
                  five (5) year period thereafter, subject to the right of
                  either party to terminate the Agreement upon giving written
                  notice to the other party not less than six (6) months prior
                  to date of termination of the Original Term (or any subsequent
                  five (5) year renewal term).

                                   ARTICLE II
                            KRISPY KREME'S COVENANTS

         A.       EXCLUSIVE AREA. Notwithstanding anything else in the Agreement
                  to the contrary, during the term hereof, Krispy Kreme shall
                  not grant to any other person a license to utilize the System
                  in the Area to make wholesale, retail, special order and fund
                  raising sales. During such term, Krispy Kreme shall not itself
                  produce, package, distribute or sell fresh Krispy Kreme
                  Doughnuts in the Area through retail, wholesale and special
                  order and fund raising sales. Krispy Kreme may produce and
                  sell products not sold under Krispy Kreme Marks, within the
                  Area regardless of whether or not such products shall be
                  deemed to be competitive with Associate.

                           Associate shall not sell Krispy Kreme Doughnuts or
                  utilize the System to sell any products outside the Area.
                  Associate shall not deliver or solicit orders for sales of
                  Krispy Kreme Doughnuts or other products outside the Area.

         B.       FOOD, DRUG AND COSMETIC ACT AND OTHER GUARANTEES. Krispy Kreme
                  guarantees that all articles and goods shipped or delivered to
                  Associate shall be properly branded and labeled at the time of
                  delivery and shall comply with the provisions of the Federal
                  Food, Drug and Cosmetic Act. Krispy Kreme shall use its best
                  efforts to see that all said articles and goods comply with
                  and are produced and shipped under and in accordance with all
                  other applicable federal, state and local laws, rules and
                  regulations.

         C.       INDEMNIFICATION. Krispy Kreme hereby agrees to indemnify and
                  save harmless Associate from and against any loss, claim or
                  damage, including reasonable attorneys' fees, resulting from
                  any impurity, adulteration, or misbranding of the Mix and
                  other products produced by Krispy Kreme and delivered to

                                       3

<PAGE>   4

                  Associate which may be due to negligence of Krispy Kreme or
                  breach by Krispy Kreme of any provision of this Agreement.

         D.       TRADEMARKS AND SERVICE MARKS.

                  1.       Krispy Kreme warrants:

                           (a)      that it or one of its subsidiary
                                    corporations is owner of the Marks set forth
                                    in the Manual;

                           (b)      that said Marks are duly registered in the
                                    United States Patent Office as trademarks
                                    and service marks for goods and services set
                                    forth in the Manual; and

                           (c)      that Krispy Kreme has the right to grant
                                    this license.

                  2.       Krispy Kreme agrees that, in respect of all actions
                           or claims by third parties, it will indemnify and
                           hold Associate harmless from all costs (including
                           reasonable attorneys' fees), losses and liabilities
                           arising out of or resulting from the use by Associate
                           of Krispy Kreme's Marks, distinctive markings,
                           designs, labels and other marks pursuant to this
                           Agreement. Both parties agree that Krispy Kreme shall
                           have the exclusive right to defend any such claim,
                           suit, action or proceeding by any third party against
                           Associate arising out of or resulting from such use
                           and that Associate shall promptly and timely notify
                           Krispy Kreme of all such claims, actions, suits and
                           proceedings.

         E.       PURPOSE OF LICENSE. Krispy Kreme covenants, and Associate
                  agrees, that the purpose of this Agreement is to generate
                  revenue for Associate through his active participation in the
                  licensed business and for Krispy Kreme as compensation for its
                  licensing of the System; and they further agree that the
                  purpose of such compensation and revenue is not to raise
                  capital for Krispy Kreme or to provide Associate with a
                  monetary return on his investment solely from the efforts of
                  others.

         F.       TECHNICAL ASSISTANCE. Krispy Kreme shall make available to
                  Associate such technical assistance and services as it may be
                  providing Associates from time to time upon such terms and
                  conditions as may be established by Krispy Kreme.

         G.       FINANCIAL ASSISTANCE. If Krispy Kreme provides financial
                  assistance of any kind to Associate, it will charge Associate
                  a service fee and interest, or either, for such financial
                  assistance.

                                       4

<PAGE>   5

                                   ARTICLE III
                              ASSOCIATE'S COVENANTS

         A.       BEST EFFORTS IN AREA. Associate shall exert his best efforts
                  to maximize the permitted sales potential for Krispy Kreme
                  Doughnuts in the Area.

         B.       TERM. Associate shall have the right to utilize the System and
                  to produce, distribute, market and sell, at such price or
                  prices as Associate in his sole discretion shall determine,
                  Krispy Kreme Doughnuts under Krispy Kreme's Marks for so long
                  as this Agreement remains in full force and effect and no
                  longer.

         C.       DOUGHNUT PRODUCING FACILITY. Associate shall maintain and
                  operate a doughnut producing facility, where all production
                  shall be done, at the Location with delivery and production
                  equipment adequate to supply Krispy Kreme Doughnuts through
                  both wholesale and retail sales in the Area, and he shall
                  comply with all applicable laws, regulations and ordinances
                  pertaining to its operation and shall at all times maintain
                  the doughnut producing facility in a clean, wholesome and
                  sanitary condition.

         D.       PRODUCTION. Associate shall comply with all instructions,
                  formulae, specifications and quality control guidelines for
                  the production of, and the procedures for packaging of, Krispy
                  Kreme Doughnuts as set forth in the Manual. If Associate fails
                  to comply with these provisions of the Manual, (or has not
                  received written approval for deviation from Manual standards)
                  after written notice thereof by Krispy Kreme, Associate shall
                  immediately cease all further production, distribution and
                  sale of Krispy Kreme Doughnuts or such portions thereof as
                  Krispy Kreme shall direct until such failure is corrected (or
                  until such deviation from Manual standards is approved in
                  writing by Krispy Kreme).

         E.       USE OF MIX AND PRODUCTION EQUIPMENT SYSTEM. Associate
                  recognizes the importance of the Krispy Kreme name and agrees
                  to use his best efforts to maintain the high standards of the
                  System. In connection with the license of the System,
                  Associate recognizes that the Mix is an essential ingredient
                  of the Krispy Kreme Doughnut and a key element and important
                  factor in the uniqueness and uniformity of the System.
                  Associate also recognizes that the Mix (1) is distinctive, (2)
                  is made from a secret formula, (3) has been developed after
                  many years of experimentation, (4) is considered a trade
                  secret by Krispy Kreme and (5) is the result of careful
                  blending of the ingredients under strict quality control to
                  produce its unique texture and taste. Associate also
                  recognizes that Krispy Kreme will make a profit on the sale of
                  Mix to Associate and that the price of the Mix may be changed
                  upon written notification of Krispy Kreme.

                           Associate shall purchase from Krispy Kreme and from
                  no other source and Krispy Kreme shall sell to Associate, such
                  quantities of Krispy Kreme's Mix as shall be needed to produce
                  and sell Krispy Kreme Doughnuts under this Agreement.
                  Associate shall order and pay for all shipments of Mix on
                  terms and prices currently

                                       5

<PAGE>   6

                  in effect at the time of the sale. Each shipment by Krispy
                  Kreme to Associate shall constitute a separate sale.

                           Associate recognizes that the use of Krispy Kreme's
                  Production Equipment System is essential to the uniqueness and
                  uniformity of the System and is a key element in the
                  production of Krispy Kreme Doughnuts; that the Production
                  Equipment System (1) is the product of years of research and
                  development by Krispy Kreme, (2) is being continually improved
                  and (3) is considered a trade secret by Krispy Kreme; and that
                  Krispy Kreme will make a profit or return from the sale or
                  lease of the Production Equipment System to Associate.

                           Associate shall purchase or lease, as shall be
                  determined by Krispy Kreme, from Krispy Kreme and from no
                  other source, and Krispy Kreme shall sell or lease to
                  Associate, such numbers and components of its Production
                  Equipment System of such size and capacity as in the opinion
                  of Krispy Kreme shall be needed by Associate to produce and
                  sell Krispy Kreme Doughnuts under this Agreement. If the
                  Production Equipment System is sold to Associate, Associate
                  shall order and pay for it on terms, conditions (which
                  conditions include Krispy Kreme's right or option to
                  repurchase on the termination of this Agreement) and prices as
                  specified by Krispy Kreme. If the Production Equipment System
                  is leased to Associate, the monthly rental therefor shall be
                  the current rate then being charged to Krispy Kreme associates
                  on similar new equipment leases at the time of the inception
                  of Associate's lease. The Associate shall maintain the
                  Production Equipment System in proper working order so that he
                  can fulfill all obligations under this Agreement. The lease of
                  the Production Equipment System shall terminate upon
                  termination of this Agreement for any reason, and Associate
                  shall surrender it to Krispy Kreme immediately upon
                  termination.

         F.       QUALITY CONTROL SAMPLING. Associate shall promptly comply with
                  the sampling and reporting procedures required by Krispy
                  Kreme.

         G.       PROHIBITIONS. Associate shall not:

                  1.       Produce a substandard product of Krispy Kreme
                           Doughnuts which do not fully comply with standards
                           set forth in this Agreement and the Manual.

                  2.       Produce Krispy Kreme Doughnuts other than in
                           accordance with the formulae and standards set forth
                           in this Agreement and the Manual.

                  3.       Use Krispy Kreme's System or its Mix or its
                           Production Equipment System to produce and sell any
                           product other than Krispy Kreme Doughnuts, including
                           but not limited to private label product, without
                           prior written approval of Krispy Kreme.

                                       6

<PAGE>   7

                  4.       Use Krispy Kreme's Marks or name on any doughnut or
                           other product of any kind other than Krispy Kreme
                           Doughnuts.

         H.       INDEMNIFICATION. Associate shall indemnify and save harmless
                  Krispy Kreme from any loss, claim or damage, including
                  reasonable attorney's fees, resulting from any impurity,
                  adulteration or misbranding of Krispy Kreme Doughnuts due to
                  negligence of Associate or any breach by Associate of any
                  provisions of this Agreement.

         I.       INSURANCE. Associate will maintain for the benefit of both
                  parties product liability insurance covering bodily injury and
                  property damage with such limits as may be prescribed in the
                  Manual from time to time. Associate shall furnish Krispy Kreme
                  a Certificate of Insurance indicating that such insurance is
                  in effect and that such insurance shall not be cancelled or
                  modified on less than ten (10) days' written notice to Krispy
                  Kreme.

         J.       ADVICE OF INDEPENDENT COUNSEL. Associate covenants that he
                  has sought advice of independent counsel (attorney, accountant
                  or financial advisor) in connection with the review and
                  execution of this Agreement.

         K.       ACTIVE PARTICIPATION. Associate covenants that he will
                  actively participate in the management and operation of the
                  licensed business by devoting a substantial amount of time and
                  will not be a passive investor.

         L.       FINANCIAL STATUS AND RECORDS. Associate shall operate his
                  business on a sound financial basis and shall have sufficient
                  funds in the business (not making excessive withdrawals
                  therefrom) for Associate to meet his current obligations to
                  Krispy Kreme under this Agreement and to others, to produce
                  and sell Krispy Kreme Doughnuts in sufficient quantity to meet
                  the demand therefor in the Area and to conduct his business in
                  a proper manner. Associate shall submit to Krispy Kreme such
                  financial reports as may be stipulated in the Manual from time
                  to time and shall permit Krispy Kreme to examine his financial
                  books and records to assure Krispy Kreme that Associate is
                  complying with this Agreement and provisions of the Manual.

         M.       TRADEMARKS, TRADE NAMES AND TRADE SECRETS. Associate agrees
                  that

                  1.       Krispy Kreme has the sole and exclusive right (except
                           for certain rights granted under existing and future
                           license agreements) to use the Marks, trade names and
                           trade secrets set forth herein and Associate
                           represents, warrants and agrees that, neither during
                           the term of this Agreement nor after the expiration
                           or other termination hereof, shall Associate directly
                           or indirectly

                                       7

<PAGE>   8

                           contest or aid in contesting the validity or
                           ownership of the Marks, trade names or trade secrets
                           or take any action whatsoever in derogation of Krispy
                           Kreme's claimed rights therein.

                  2.       Nothing contained in this Agreement shall be
                           construed to vest in Associate any right, title or
                           interest in or to Krispy Kreme's Marks, the goodwill
                           now or hereafter associated therewith, or any right
                           in the design of the doughnut producing facility,
                           doughnut shop, signs and other distinctive equipment,
                           other than the rights and license expressly granted
                           herein. Any and all goodwill associated with the use
                           of Krispy Kreme's Marks and name shall inure directly
                           and exclusively to the benefit and is the property of
                           Krispy Kreme.

                  3.       Associate shall advertise and promote the licensed
                           business only under Krispy Kreme Marks; and his
                           advertising or other use of Krispy Kreme's Marks
                           shall not contain any statement or material which, in
                           the judgment of Krispy Kreme, may be in bad taste or
                           inconsistent with Krispy Kreme's public image. Krispy
                           Kreme reserves the right to preview and edit any of
                           Associate's television and radio advertisements prior
                           to Associate's commitment thereto.

                  4.       Associate shall use the business name "Krispy Kreme
                           Doughnut Company" during the term of this Agreement
                           and no longer. Such business name may be changed upon
                           prior written approval by Krispy Kreme. Associate
                           shall not use the words "Krispy Kreme" or similar
                           words in any corporate name.

                  5.       Krispy Kreme is the owner of all proprietary rights
                           in and to the System and all material pertaining to
                           the use of the System which are described in the
                           Manual. The System and the contents of the Manual
                           constitute trade secrets of Krispy Kreme which are
                           revealed to the Associate in confidence, and no right
                           is given to or shall be acquired by Associate to
                           disclose, duplicate, license, sell or reveal any
                           portion thereof to any person other than an employee
                           of Associate required by his work to be familiar with
                           relevant portions thereof. Associate agrees to keep
                           and respect the confidence extended hereby and that
                           the Manual and other similar materials furnished to
                           Associate hereunder are and will remain the property
                           of Krispy Kreme and must be returned to Krispy Kreme
                           immediately upon termination of this Agreement.

                                       8

<PAGE>   9

                                   ARTICLE IV
                    STANDARDS OF UNIFORMITY AND OPERATION OF
                  DOUGHNUT PRODUCING FACILITY AND DOUGHNUT SHOP

         Associate agrees that Krispy Kreme's special architectural design,
color and decor of doughnut producing facility and doughnut shop buildings,
uniformity of layout, equipment, supplies, and containers, and adherence to the
Manual are essential to the System. In recognition of the mutual benefits
accruing from maintaining uniformity of appearance, service, products and
marketing procedures, it is mutually covenanted and agreed:

         A.       BUILDINGS AND PREMISES. Except as specifically authorized by
                  Krispy Kreme, the exterior and interior of the doughnut
                  producing facility and doughnut shop building shall conform to
                  the architectural style and motif and layout previously,
                  currently or hereafter approved by Krispy Kreme. Associate
                  shall not alter the appearance of the doughnut producing
                  facility or doughnut shop as approved. If Krispy Kreme shall
                  determine that the doughnut shop and doughnut producing
                  facility do not meet Krispy Kreme standards as to sanitation,
                  cleanliness, maintenance, painting and general state of
                  repair, Associate will, within a reasonable period of time not
                  exceeding 45 days, make, or make arrangements for, all such
                  repairs, maintenance, cleaning and painting as may be required
                  by Krispy Kreme.

         B.       SIGNS. Associate agrees to display Krispy Kreme's name and
                  Marks at the Location and to maintain and display signs
                  reflecting current image of Krispy Kreme in accordance with
                  standards established by Krispy Kreme.

         C.       LAYOUT AND USE OF VENDING MACHINE, ETC. The standards for the
                  exterior and interior layout of the doughnut producing
                  facility and doughnut shop and use or nonuse of items such as
                  telephone booths, newspaper and magazine racks, jukeboxes, gum
                  machines, games, rides or coin vending machines shall be
                  established by Krispy Kreme.

         D.       MENU AND SERVICE AT DOUGHNUT SHOP. The limited menu of Krispy
                  Kreme doughnut shop is an essential and necessary element of
                  the System, having been designed to contribute to the fine
                  public image of Krispy Kreme and the uniformity of all the
                  Krispy Kreme doughnut shops. Associate agrees that he will
                  operate his doughnut shop in accordance with the standards,
                  specifications and procedures set forth in the Manual, will
                  serve at the doughnut shop only items of food and drink
                  specified in the Manual and will follow all specifications and
                  formulae in the Manual as to quality of products produced at
                  the plant and served in the doughnut shop. Associate agrees
                  that all food and drink items will be served in containers
                  bearing accurate reproductions of Krispy Kreme's Marks.

                                       9

<PAGE>   10

         E.       ALTERNATE SUPPLIERS. Except for the Mix and Production
                  Equipment System, Associate may purchase through Krispy Kreme
                  or any other source (1) any other ingredients for Krispy Kreme
                  Doughnuts and other products permitted to be sold in the
                  doughnut shop; (2) any other doughnut plant equipment; (3)
                  packages and containers for his products; and (4) other
                  supplies, if the items supplied meet specifications set forth
                  in the Manual. Krispy Kreme will not unreasonably withhold
                  prompt approval of such purchases provided sufficient notice
                  is given by Associate for Krispy Kreme to determine that such
                  items conform to the standards and specifications set forth in
                  the Manual. In return for services and expertise provided by
                  Krispy Kreme, it will charge a service fee in the form of a
                  markup for any purchase of supplies made through the
                  Purchasing Department of Krispy Kreme.

         F.       RIGHT OF ENTRY AND INSPECTION. To ensure that Associate is
                  complying with the provisions of this Agreement and the Manual
                  in his utilization of the System, any officer of Krispy Kreme
                  Doughnut Corporation or a representative designated by the
                  President or Vice President - Associate Division of Krispy
                  Kreme Doughnut Corporation shall have the right to enter and
                  inspect the doughnut producing facility and doughnut shop at
                  any time and test the Associate's finished products and
                  ingredients thereof, his Product Equipment System and other
                  equipment, packages and supplies. Associate shall diligently
                  correct any such deficiencies detected during such
                  inspections. If written notice of such deficiency is given,
                  Associate shall immediately desist and refrain from a
                  continuation of any deficiency set forth in the notification.

                                    ARTICLE V
                                     ROYALTY

         A.       ROYALTY. As part of the total consideration for Krispy Kreme's
                  licensing of its System to Associate, Associate agrees to pay
                  weekly a royalty of three percent (3%) of Associate's gross
                  retail sales and one percent (1%) of all other sales (not
                  including sales tax) or as otherwise set forth in the Manual
                  as it may be changed from time to time. Associate's check
                  covering the royalty for the preceding seven days shall be
                  mailed to Krispy Kreme on Friday of each week.

         B.       ACCOUNTING PROCEDURES AND RIGHT TO AUDIT. Associate agrees to
                  keep complete records of his business, maintain such records
                  for the same period of time as required by federal and local
                  income tax laws, and submit to Krispy Kreme such financial
                  reports as prescribed in the Manual. Associate agrees that
                  Krispy Kreme or its agents shall have the right to examine or
                  audit the books and accounts of Associate.

                                       10

<PAGE>   11

                                   ARTICLE VI
                            COVENANTS OF BOTH PARTIES

         A.       FORCE MAJEURE. Neither Krispy Kreme nor Associate shall be
                  held liable for the failure of either to comply with any terms
                  of this Agreement if such failure is caused solely by fire,
                  strike, union or other labor problems, war (whether or not
                  declared), riots, insurrection, government restrictions, acts
                  of God, or other causes beyond its or his control and without
                  its or his fault; provided, however, that Associate shall
                  continue to be obligated to pay to Krispy Kreme all amounts on
                  which he shall have duly become obligated prior to the
                  occurrence of any event referred to in this section.

         B.       INDEPENDENT CONTRACTOR. Associate is an independent contractor
                  and neither party shall have the power to incur or be liable
                  for any debts, accounts, obligations or other liabilities of
                  the other party or its or his agents or employees except as
                  specifically authorized in writing.

         C.       NO AGENCY. Associate shall not represent or hold himself out
                  as an agent, legal representative, partner, subsidiary, joint
                  venturer or employee of Krispy Kreme and he shall exhibit on
                  his premises in a place designated by Krispy Kreme, a
                  notification that he is an Associate of Krispy Kreme. In all
                  public records, in his relationship with other persons and on
                  letterheads, calling cards and business forms, he shall
                  indicate his independent ownership of said business and that
                  he is an Associate of Krispy Kreme.

                                   ARTICLE VII
                               TRANSFER OF LICENSE

         A.       ASSIGNABILITY. Except as provided in Sections B, C and D of
                  this Article, Associate acknowledges that this Agreement is
                  personal to him and made with him as an individual; and he
                  shall neither sell, assign, transfer, sublicense, pledge,
                  mortgage, hypothecate, encumber nor otherwise dispose of this
                  Agreement or any right or interest therein, nor suffer or
                  permit any such assignment, transfer or disposition to occur
                  by operation of law unless the prior written consent of Krispy
                  Kreme be first had and obtained. Assignment of any interest,
                  other than as provided in this Article, shall constitute a
                  material breach of this Agreement; and, upon such assignment,
                  Krispy Kreme shall have the right to terminate this Agreement
                  immediately upon written notice to Associate.

         B.       TRANSFER OF LICENSE IN EVENT OF ASSOCIATE'S DEATH, DISABILITY
                  AND RETIREMENT. Upon the death or disability of Associate or
                  if Associate desires to retire, Krispy Kreme shall give
                  consideration to the transfer of his interest herein to the
                  Associate's spouse, issue or any other person so designated by
                  Associate to assume operation of the licensed business if in
                  the sole discretion and judgment of Krispy Kreme, such person
                  obtaining said interest is in all respects acceptable to
                  Krispy Kreme and shall be capable of conducting said

                                       11

<PAGE>   12

                  business in a manner satisfactory to Krispy Kreme, shall
                  satisfy the requirements of Section D of this Article and
                  shall assume in writing all obligations under this Agreement.
                  Krispy Kreme agrees to exert its best efforts to assist
                  Associate in planning the transfer of the license granted
                  hereunder upon his retirement, death or disability, including
                  counseling with the Associate at Associate's expense, training
                  the designated successor to the license and satisfying the
                  requirements of Section D below. Upon the death of Associate,
                  Krispy Kreme shall have the right to continue the operation of
                  the System at Associate's Location and assist his heirs or
                  personal representatives in the transfer of the license as
                  provided herein.

         C.       ASSOCIATE RECEIVES OFFERS TO PURCHASE FROM UNRELATED THIRD
                  PARTIES. If Associate, his heirs or personal representatives
                  receive a bona fide acceptable offer to purchase his business
                  or any portion thereof, the real property which is the situs
                  of the Location or any portion thereof, or any offer to
                  acquire his license granted hereunder or any portion thereof,
                  he or they shall within forty-eight (48) hours of such offer
                  notify Krispy Kreme in writing. Krispy Kreme shall have for a
                  period of sixty (60) days the first refusal to purchase upon
                  the same terms and conditions as offered by the prospective
                  buyer. If Krispy Kreme does not accept the offer within sixty
                  (60) days, Associate may conclude the sale to the prospective
                  purchaser at the price and upon such terms and conditions as
                  offered to Krispy Kreme; provided that the requirements of
                  Section D of this Article must be met if the license granted
                  herein is to be transferred.

         D.       TRANSFER REQUIREMENTS. Krispy Kreme may impose reasonable
                  conditions on any assignment of the license granted hereunder
                  which may include, without limitation, the following:

                  1.       Associate must satisfy fully all obligations to
                           Krispy Kreme and others arising out of this Agreement
                           and the operation of the licensed business unless
                           Krispy Kreme otherwise agrees in writing.

                  2.       Assignee must satisfactorily (a) demonstrate to
                           Krispy Kreme's sole and complete satisfaction that he
                           meets the financial and managerial criteria required
                           by Krispy Kreme, (b) agree to avail himself of such
                           training as Krispy Kreme shall, in its sole
                           discretion, specify, and (c) shall pay to Krispy
                           Kreme One Hundred Dollars ($100) as an assignment
                           fee. If more than one doughnut producing facility and
                           doughnut shop location granted under this Agreement
                           is assigned, there shall be a charge of Fifty Dollars
                           ($50) for each additional location included in the
                           same transaction.

         E.       CONDUCT OF BUSINESS IN CORPORATE FORM. If Associate desires to
                  conduct business as a corporation, Krispy Kreme will consent
                  to the sublicensing of this Agreement to a corporation
                  approved by Krispy Kreme provided Associate shall remain the
                  primary licensee, guaranteeing all obligations of such
                  corporation

                                       12

<PAGE>   13

                  to Krispy Kreme under this Agreement and shall comply with the
                  provisions hereinafter specified and any other condition that
                  Krispy Kreme may require, including a limitation on the number
                  of stockholders of the sublicensee corporation. Such
                  corporation shall be closely held and shall not engage in any
                  business activity other than those directly related to the
                  production, marketing, distribution and sale of Krispy Kreme
                  Doughnuts pursuant to the terms and conditions of Associate's
                  Agreement with Krispy Kreme. There shall be no sublicensing
                  fee imposed by Krispy Kreme if such sublicense is made within
                  ninety (90) days after the execution of this Agreement.

                           Associate shall be and remain the legal and
                  beneficial owner of the stock in such corporation and shall
                  act as such corporation's principal officer. Provided
                  Associate retains in excess of fifty percent (50%) ownership
                  of the voting stock ("controlling interest") of the
                  corporation, he may transfer or assign stock in such
                  corporation only to his spouse, issue or operating managers.
                  If Associate ceases to act as principal officer or own
                  controlling interest through death or otherwise, the
                  sublicense to such corporation shall terminate immediately.
                  Associate may not otherwise transfer, assign, bequeath,
                  pledge, hypothecate, encumber or mortgage his stock without
                  the prior written consent of Krispy Kreme. The transfer or
                  assignment of any stock interest of such corporation, other
                  than as herein provided, without the prior written consent of
                  Krispy Kreme, shall constitute a material breach of this
                  Agreement permitting Krispy Kreme, at its sole option, to
                  terminate same immediately upon written notice.

                           The corporation shall have sufficient equity capital
                  in the business to result in a debt-to-equity ratio of one (1)
                  to one and a half (1-1/2), or such other debt-to-equity as may
                  be approved in writing by Krispy Kreme.

                           Associate agrees to furnish to Krispy Kreme certified
                  copies of its Articles of Incorporation, By-Laws, a specimen
                  stock certificate and any other documents required by Krispy
                  Kreme to enable it to determine if Associate and his
                  corporation are meeting the requirements of this Section E,
                  and further agrees that Krispy Kreme or its agents shall have
                  the right to examine the Articles of Incorporation, By-Laws,
                  Minute Book, Stock Ledger and other Corporate records of such
                  Corporation to verify compliance with this Article.

                                  ARTICLE VIII
                             TERMINATION OF LICENSE

         A.       TERMINATION WITHOUT NOTICE. In the event of any of the
                  following:

                  1.       The cessation by Associate of his business; or

                  2.       The insolvency of Associate; or

                                       13

<PAGE>   14

                  3.       The filing by or against Associate of a voluntary or
                           involuntary petition pursuant to any present or
                           future act of the Federal Congress on the subject of
                           bankruptcy, including the Federal Wage Earner Plan,
                           which petition has not been dismissed within thirty
                           (30) days after such filing;

                  4.       The institution of any proceeding by or against
                           Associate arising from any insolvency, bankruptcy or
                           assignment for the benefit of creditors, which
                           proceeding has not been dismissed within thirty (30)
                           days after the institution of such proceeding; the
                           foreclosure by a creditor of the Associate on any
                           obligation due such creditor, or attempt of any
                           governmental agency to collect taxes owed by or money
                           due from the Associate;

                  5.       The making of any assignment for the benefit of
                           creditors or the appointment of a receiver of
                           Associate or of substantially all of the property of
                           Associate;

                  6.       Death or any declaration of incompetency of
                           Associate, regardless of whether Associate has
                           sublicensed this Agreement to a sublicensee
                           Corporation under ARTICLE VIII, Section E in which
                           event, this Agreement shall automatically and
                           immediately be terminated.

         B.       TERMINATION FOR VIOLATION OF ARTICLE VII. Termination of this
                  Agreement for Associate's violation of ARTICLE VII above is
                  governed by the provisions of that Article.

         C.       TERMINATION UPON NOTICE FOR CAUSE. This Agreement may be
                  terminated at any time by either party, if the other party
                  shall fail to perform ("for cause") any of the covenants
                  herein contained to be performed by the other party (except as
                  provided in ARTICLES VI-A and VII hereof), by written notice
                  of the failure, stating the nature and character thereof and
                  allowing the other party sixty (60) consecutive days from the
                  date of the notice to correct the failure. If the failure is
                  not corrected within the period of sixty (60) consecutive
                  days, the party who shall have given the notice may terminate
                  this Agreement forthwith without need of any additional notice
                  to that effect.

         D.       WAIVER. The failure of either party to give notice of
                  performance or of termination shall not constitute a waiver of
                  the covenants, terms or conditions herein, or of the rights of
                  either party thereafter to enforce such covenants, terms or
                  conditions or to terminate this Agreement for any subsequent
                  breach thereof.

                                       14

<PAGE>   15

                                   ARTICLE IX
                                POST TERMINATION

         A.       TERMINATION OF GRANT. Upon the termination of this Agreement,
                  except as may otherwise be provided herein, all rights and
                  privileges granted under this Agreement shall immediately
                  cease and terminate and Associate shall thereupon discontinue
                  forever the use of Krispy Kreme's Marks in connection with
                  Associate's business except the right to sell its inventory of
                  finished product.

         B.       USE OF KRISPY KREME MATERIALS. Upon the termination of this
                  Agreement for any reason, Associate shall cease his use of
                  Krispy Kreme's System. Associate shall deliver to Krispy
                  Kreme, and Krispy Kreme shall repurchase from Associate, the
                  following items which in Krispy Kreme's opinion are in usable
                  condition and in current use at Associate's depreciated cost
                  or fair market value whichever is less but in no event less
                  than 20% of Associate's original cost: all of the Mix,
                  Production Equipment System, packaging materials, and supplies
                  which bear the Krispy Kreme Marks. With respect to Krispy
                  Kreme's signs, menu boards and other items of tangible
                  personal property which bear Krispy Kreme's Marks or are
                  representative of Krispy Kreme's public image, Associate shall
                  either sell such items to Krispy Kreme at Associate's
                  depreciated cost value or fair market value whichever is less
                  but in no event less than 20% of Associate's original cost, or
                  alter and remodel such items in such way so that they shall no
                  longer be representative of Krispy Kreme's public image or be
                  deemed a use of Krispy Kreme's Marks, as shall be determined
                  solely by Krispy Kreme. Associate shall remove all Krispy
                  Kreme Marks from his motor vehicles.

         C.       INJUNCTION AND OTHER LEGAL AND EQUITABLE REMEDIES. The
                  provisions of this Article may be enforced by injunction, but
                  the use of such injunction by Krispy Kreme shall not prevent
                  it from seeking any other legal or equitable remedy available.

                                    ARTICLE X
                                  MISCELLANEOUS

         A.       NOTICE. Any notice to be given pursuant to the provisions of
                  this Agreement shall be in writing and shall be sent by
                  registered mail addressed in the case of Krispy Kreme to:

                           Krispy Kreme Doughnut Corporation
                           Attention: Vice President - Associate's Division
                           P O Box 83
                           Winston-Salem, North Carolina 27102-0083


                  and in the case of notice to Associate, to:

                                       15

<PAGE>   16






                  or to such other place as the receiving party shall have given
                  in writing to the sending party.

         B.       ONLY AGREEMENT. Except as otherwise stated herein, this
                  Agreement contains the complete agreement between the parties
                  in respect of the subject matter of the licensing of the
                  System, and all other prior agreements are superseded. Except
                  for the Manual, this Agreement (together with its Exhibits)
                  shall not be amended or supplemented except in writing signed
                  by Associate and Krispy Kreme.

         C.       GOVERNING LAW. This Agreement shall be interpreted and
                  governed by the laws of the State of North Carolina.

         D.       INVALIDITY. If any term or provision of this Agreement shall
                  be or become invalid under any applicable law; then the
                  remainder of this Agreement shall not be affected thereby, and
                  the remaining terms and provisions hereof shall remain in
                  effect as if the invalid portion were not a part hereof.

         E.       NON-WAIVER. The failure of Krispy Kreme to exercise any right,
                  power or option given to it hereunder, or to insist upon
                  strict compliance with the terms hereof by Associate shall not
                  constitute a waiver of the terms and conditions of this
                  Agreement with respect to any other or subsequent breach
                  thereof, nor a waiver by Krispy Kreme of its right at any time
                  thereafter to require exact and strict compliance with all the
                  terms hereof. The rights and remedies hereunder are cumulative
                  to any other rights or remedies which may be granted by law.

         F.       RIGHT OF KRISPY KREME TO HAVE OTHER PARTIES FULFILL ITS
                  OBLIGATIONS. Krispy Kreme shall have the right to have the
                  services it provides to Associate or its obligations to
                  Associate hereunder performed or fulfilled by Krispy Kreme,
                  its subsidiary corporations or such agents, employees and
                  representatives as it shall designate.

         G.       MERGER OR CONSOLIDATION. If Krispy Kreme shall at any time be
                  merged or consolidated into or with another corporation or if
                  substantially all of its assets are transferred to another
                  corporation or business entity, the provisions of this
                  Agreement shall be binding upon and inure to the benefit of
                  the corporation or business entity resulting from such merger
                  or consolidation or to which such assets shall be transferred,
                  and this provision shall apply in the event of any subsequent
                  merger, consolidation or transfer.

                                       16

<PAGE>   17

         H.       THE WORD "ASSOCIATE." The word "Associate" and all pronouns
                  relative thereto as used in this Agreement include the
                  masculine, feminine and neuter gender as the case may be and
                  shall mean the Associate, his Assignee, his sublicensee or
                  successors in interest where the context so indicates.

         I.       HEADINGS TO ARTICLES AND SECTIONS. The headings or captions of
                  Articles and Sections of this Agreement are merely descriptive
                  and not substantive and have no meaning in the interpretation
                  of this Agreement.

         IN WITNESS WHEREOF, the parties hereto have executed this License
Agreement as of the ____ day of __________________, _____.


                                       KRISPY KREME DOUGHNUT CORPORATION


                                       By
                                         ---------------------------------------
                                             President
ATTEST:


------------------------------------
     Secretary


[CORPORATE SEAL]


                                       ASSOCIATE


                                       By                                 (SEAL)
                                         ---------------------------------------



                                       17