DEVELOPMENT AGREEMENT

Exhibit 10.5

KRISPY KREME DOUGHNUT CORPORATION
DEVELOPMENT AGREEMENT

      THIS AGREEMENT is made and entered into on this ___day of ___, 20___, by and between Krispy Kreme Doughnut Corporation, a North Carolina corporation, with its principal business address at P.O. Box 83, Winston-Salem, North Carolina 27102 (“Company”) and _____, a _____, whose principal business address is _____(“Franchisee”).

BACKGROUND FACTS

Company has developed a system for the operation of store facilities called “Krispy Kreme Stores” that offer and serve a variety of fresh doughnuts and certain other quality food products under the trademark and service mark “KRISPY KREME.”

Company grants to certain persons who meet its qualifications and who are willing to undertake the investment and effort, the right to develop and operate Krispy Kreme Stores within a defined geographic area offering the Products and other approved products and services and utilizing the Krispy Kreme System.

Pursuant to the terms of this Agreement, Company grants Franchisee the right to develop and operate Krispy Kreme Stores within the Development Area. The operation of each Krispy Kreme Store developed hereunder will be governed by separate Franchise Agreements.

THE PARTIES AGREE:

Affiliate means any person that directly or indirectly owns or controls, that is directly or indirectly owned or controlled by, or that is under common ownership or control with, Company or Franchisee.

Agreement Term means the period commencing upon the execution of this Agreement and ending upon the later of the expiration of the last Development Period or the expiration of any extension granted pursuant to Section 12, unless terminated earlier in accordance with the provisions of Section 10 hereof.

Approvals means all approvals, authorizations, consents, permits, exemptions, licenses and any other actions required by law or by any person, company or governmental authority in order for Franchisee to be able to develop and operate Krispy Kreme Stores within the Development Area.

Competitive Business means a business or enterprise, other than a Krispy Kreme Store, that: (i) sells yeast raised doughnuts, cake doughnuts, or any other types of doughnuts, miniature doughnuts or doughnut holes in any distribution channels to any customer for consumption or resale and such sales constitute ten percent (10%) or more of such business’ revenues; (ii) sells coffee in any distribution channels to any customer for consumption or resale and such sales

constitute twenty percent (20%) or more of such business’ revenues; or (iii) grants or has granted franchises or licenses, or establishes or has established joint ventures, for the development and/or operation of a business that offers the food products referred to in (i) and (ii) in any such channel of distribution.

Development Area means the geographic area described in Exhibit A attached hereto.

Development Fee means the non-refundable development fee that Franchisee agrees to pay Company as set forth in Subsection 2.4 of this Agreement. The aggregate amount of such Development Fee is set forth in Schedule A.

Development Period means each period of time defined as a Development Period in Exhibit B attached hereto.

Development Quota means the minimum number of Krispy Kreme Stores Franchisee agrees to have open and in operation at the end of each Development Period. The Development Quota with respect to each Development Period is set forth in Exhibit B attached hereto.

Development Rights means the rights granted to Franchisee pursuant to this Agreement with regard to Franchisee’s rights to develop Krispy Kreme Stores within the Development Area specified in Exhibit A attached hereto.

Expansion Criteria means Company’s expansion criteria as described in Section 4 of this Agreement and set forth in Schedule B.

Franchise means the right to operate a Krispy Kreme Store at a specific location within the Development Area and the right to use the Krispy Kreme System in the operation thereof.

Franchise Agreement means an agreement used by Company in the offer and sale of Franchises for the operation of a Krispy Kreme Store at a specific location, the current form of which (including all exhibits, schedules, riders and other agreements used in connection therewith) is attached hereto as Exhibit C.

Franchise Documents means the Franchise Agreement together with any other documents required by Company to be executed in connection with the development of Krispy Kreme Stores by Franchisee pursuant to this Agreement.

Franchise Term means the period during which Franchisee is authorized to operate a Krispy Kreme Store pursuant to a Franchise unless terminated earlier in accordance with Section 10 of this Agreement.

Good Standing means that Franchisee is current with all payments due to Company, its Affiliates and suppliers; has met its obligations under the Development Quota and is not in default of any of its obligations under this Agreement or any other agreement between the parties.

Krispy Kreme System means the distinctive business formats, methods, procedures, designs, lay-outs, equipment, mixes, standards and specifications designated by Company for use in

Krispy Kreme Stores, all of which Company may modify from time to time, along with the Marks.

Managing Director means the managing director of Franchisee’s business designated pursuant to Subsection 3.3 of this Agreement. The initial Managing Director will be identified in Exhibit D of this Agreement.

Manuals means such materials (including, without limitation, if applicable, audiotapes, videotapes, magnetic media, computer software and written materials) that Company generally furnishes to developers and franchisees from time to time for use in operating Krispy Kreme Stores.

Marks means the trademarks, service marks and other commercial symbols used in the operation of Krispy Kreme Stores, including, without limitation, the trade and service marks “KRISPY KREME” and associated logos, as same may be changed, enhanced or supplemented from time to time.

New Concept means concepts, products or stores not contemplated by this Agreement that Company may, from time to time, notify Franchisee of its intention to promote. New Concepts may include, without limitation, non-producing stores that only sell the Products, Non-Core Products, and such other items as Company may approve in advance in writing and that are produced by Franchisee at the STORES.

Non-Core Products means any product identified by the Marks other than the Products, such as, for example, ice cream, clothing, hats, cups and other logoed items, etc.

Plans means the final plans, drawings and specifications for the Site and building in respect of a proposed STORE, including signage, fixtures, furniture, equipment and décor, all to the standards specified by Company.

Products means a variety of fresh doughnuts (including among others, yeast raised doughnuts, cake doughnuts, miniature doughnuts and doughnut holes, some of which have various types and flavors of fillings, glazes or other coatings) as well as certain other food products and beverages (specifically including, but not limited to, coffee) and food services as identified by Company from time to time and which are customarily sold in Krispy Kreme Stores.

Site means a physical location that Company has approved as meeting its minimum criteria for the development and operation of a STORE.

STORE means a Krispy Kreme Store developed and operating within the Development Area pursuant to this Agreement.

Transfer means with respect to a Franchise, a STORE, this Agreement or the ownership of Franchisee, any of the following, without limitation, whether voluntary or involuntary, direct or indirect: (i) an assignment, sale, gift or pledge; (ii) the grant of a mortgage, lien, security interest, charge, or any encumbrance whatsoever including, without limitation, the grant of a collateral assignment; and (iii) a transfer that occurs as a result of Franchisee’s insolvency or dissolution or other transfer by operation of law. The term “Transfer” will not be deemed to

include (i) the grant of a lien or security interest to secure financing for the acquisition of equipment, fixtures and supplies for a STORE; (ii) an assignment of a leasehold interest in a Site in accordance with the terms of this Agreement; or (iii) the relocation of a STORE from one Site to another Site.