Why pay even a nominal sum for franchises? If KKD wants to take stores from franchisees, they can do take away their franchise rights at any time without paying a cent. All franchisees are likely in violation of their franchise agreements, specifically agreements to open franchises on a specific schedule. Since there hasn't been a new store in years, my guess is they are all in violation. And revoking franchise rights means KKD can start over new store concepts in key markets, an possibly new franchise partners, etc, instead of being stuck with stores that are too large and expensive to ever make money.
So why doesn't KKD revoke franchise rights? My guess is there are three key reasons.
1) They'll lose the remaining franchise and mix fees they can suck out of the franchisees before they finally go belly up. 2) Franchisees have legal claims and fraud allegations (ala GCFF) against KKD they will pursue in court, so KKD wants to play nice for as long as possible. 3) KKD has no more borrowing capacity, and the $19M in remaining cash is dwindling with the recent cash outflow to buy GCFF and the loss of $3M+ in AR to Rigel. How are they ever going to build a new store or con a new franchise partner?
I think the hubris of posters on this board is to think that Cooper or Silverpoint or the invisible new CEO have some "grand plan" to save KKD or instead, profit from it's demise.
Instead, I think all parties are pedaling as fast as they can until the wheels fall off the bike. Cooper is making great money, they have no incentive to quit, bankruptcy just means more fees. The invisible CEO is a CEO of a public company for the first time in his life, he'll milk that for as long as possible and then blame the results on others (unless he can make a lateral move to another public company CEO spot). Silverpoint made a horrible loan that they are stuck with, I mean, is the guy who sponsored it even there anymore?
Silverpoint doesn't want bankruptcy. Then they have to fight it out with all the other creditors, all of whom are going to use alleged fraud as a reason to move their claims in front of Silverpoint. So they'll milk KKD for as much interest as they can get before BK, all the while praying for some sort of magical turnaround that could enable them to exit with their loan fully repaid.
The only way KKD buys more stores, even for nominal amounts, is if someone holds a gun to their head. That's essentially what GCFF did, and KKD was lucky GCFF ran out of cash and settled their claims cheap.
A bum loan to start -- bond mavens going for a busted business they didn't understand, clothing their financing in useless legalize; Cooper, Weil Gotshall, and PWC feeding on the corpse; sharpies trading on inside information, shares and options; SEC, Justice and the shareholders in the wings.
Long forgotten are the much abused Krispy directors who hold the ultimate power to file, who might, just might, face up to halting the whole miasmic charade, personal liability be damned.