Note 7 — Investments in Franchisees

As of January 31, 2016, we had an ownership interest in two franchisees, the aggregate carrying value of which was zero. Information about our ownership in, and the markets served by, these franchisees is set forth below:

		Number of
		Stores as of
		January 31,	Ownership%
	Geographic Market	2016	Company		Third Parties
Kremeworks, LLC	Alaska, Hawaii, Oregon, Washington	9	25.0	%	75.0	%
Kremeworks Canada, LP	Western Canada	1	24.5	%	75.5	%

Our financial exposures related to franchisees in which we have an investment are summarized in the tables below.

	January 31, 2016
	Investments and Advances			Receivables
	(In thousands)
Kremeworks, LLC	$	900		$	300
Kremeworks Canada, LP		667			38
		1,567			338
Less: reserves and allowances		(1,567	)		-
	$	-		$	338


	February 1, 2015
	Investments and Advances			Receivables
	(In thousands)
Kremeworks, LLC	$	900		$	353
Kremeworks Canada, LP		667			30
Krispy Kreme of South Florida, LLC		-			399
		1,567			782
Less: reserves and allowances		(1,567	)		-
	$	-		$	782

The carrying values of our investments and advances in Kremeworks, LLC (“Kremeworks”) and Kremeworks Canada, LP (“Kremeworks Canada”) were zero at January 31, 2016 and February 1, 2015. In addition, we had reserved all of the balance of our advances to Kremeworks and Kremeworks Canada at such dates. Accrued but uncollected interest on such advances of approximately $370,000 and $390,000 at January 31, 2016 and February 1, 2015, respectively, has not been reflected in income at such date.

We recorded an accrual of $1.6 million in fiscal 2008 for potential payments under a loan guarantee related to Krispy Kreme of South Florida, LLC (“KKSF”), representing the amount we had estimated we were likely to pay under such guarantee. KKSF failed to repay the indebtedness upon its maturity in October 2009 but continued to make payments pursuant to an informal forbearance agreement with the lender. In October 2012, KKSF received notice that the original lender had sold the loan to a new lender. KKSF then entered into refinancing negotiations with the new lender, while continuing to make payments on the loan. Such negotiations were unsuccessful, and in October 2013 the new lender made demand on KKSF to retire the loan in full and on us to perform under our guarantee. On November 1, 2013, we made a loan of approximately $1.6 million to KKSF, the proceeds of which KKSF used to retire the debt in full, including accrued interest and lender expenses. Such amount was charged against the guarantee liabilities accrual. The amount advanced to KKSF pursuant to our guarantee was evidenced by a promissory note payable to us by KKSF. In light of the uncertainty regarding the collectability of the note, including KKSF's failure to repay the indebtedness when due in 2009, failure to refinance the indebtedness with either of the prior lenders, and the lender ultimately demanding payment of the debt, we recorded payments on the note as a component of other non-operating income as they were received as more fully described in Note 9.

In December 2011, we, KKSF and KKSF's majority owner entered into a restructuring agreement pursuant to which KKSF was to pay to us past due amounts totaling approximately $825,000, all of which we had written off in prior years. KKSF paid a total of $180,000 of such amount following the execution of the agreement, and commenced repayment of the remaining amount in fiscal 2012. All amounts paid under the agreement were being recorded as received. We agreed to convey to KKSF's majority owner all of our membership interests in KKSF at such time as KKSF paid all the agreed upon amounts and we were reimbursed for all amounts paid by us pursuant to our guarantee of the KKSF indebtedness described above, provided that neither KKSF nor its majority owner are then in default under any agreement between either of them and us.

On January 14, 2016, we conveyed our membership interest in KKSF to the majority owner of KKSF upon receipt of payment of approximately $810,000 for all outstanding indebtedness which included the promissory note and amounts due under the restructuring agreement described above.