Richard Reinis and Roger Glickman, two partners in Great Circle Family Foods LLC, based in Los Angeles, also claimed in their lawsuit filed Thursday that Krispy Kreme was trying to force their company into bankruptcy, according to a statement from their law firm.

Laura Smith, a spokeswoman for Krispy Kreme, said Friday the company had not reviewed the complaint and could not comment.

In the lawsuit, Reinis and Glickman allege Krispy Kreme and its executives made false representations to induce them to personally guarantee the franchise's financial obligations. The suit also claims Krispy Kreme systematically inflated its prices and engaged in deceptive business practices.

Krispy Kreme also required the franchise to contribute to a brand fund that Krispy Kreme was required to spend on marketing and advertising. Reinis and Glickman contend that Krispy Kreme appears to have misappropriated the money and refused to account for the expenditures.

Along with Krispy Kreme, the defendants include former chief executive Scott Livengood, former senior vice president of franchising Phil Waugh, former chief operating officer John Tate, Kroll Zolfo Cooper, the consultant hired by the Krispy Kreme board of directors to manage the company after the departure of Livengood, and other officers.

The Winston-Salem-based company faces several other lawsuits, including one that alleges workers lost millions of dollars in retirement savings because executives at the company hid evidence of declining sales and profits. Krispy Kreme is also the target of a federal criminal inquiry in New York and a Securities and Exchange Commission probe into financial irregularities.

Source: Assoc. Press