Java Detour tri-brands with Mrs. Fields, TCBY

Java Detour tri-brands with Mrs. Fields, TCBY
November 12, 2009

San Francisco-based Java Detour Inc. has announced that it has executed a co-branding agreement and a reciprocal development agreement with Mrs. Fields Famous Brands LLC, franchisor of over 1,200 Mrs. Fields Cookies and TCBY yogurt stores, a boost to the struggling coffeehouse brand.

The new partnership allows current and future franchisees of Mrs. Fields, TCBY and Java Detour to open franchise stores that promote and sell all three brands in the same location. The first tri-branded store offering Java Detour coffees, Mrs. Fields cookies and TCBY yogurts opened at the Flamingo Hotel and Casino in Las Vegas on Oct. 3. A second Java Detour/Mrs. Fields store will open this month at 39th Street and Third Avenue in New York City.

Java Detour also announced that its board of directors has appointed Harry R. Kraatz as chairman of the board and CEO. Kraatz was previously the company's chief restructuring officer. Michael Binninger, the co-founder of Java Detour and a board member, will continue as president and chief operating officer.

"We believe this new partnership with Mrs. Fields and TCBY significantly strengthens Java Detour's intrinsic value and positions Java Detour to dramatically grow its franchise business and aggressively move Java Detour forward," Kraatz said.

"This partnership is significant because we feel the combination of these three brands creates a strong franchise model with large growth potential. All three brands have excellent products that complement each other and drive sales during different times of the day," Binninger said.

"Opening the first tri-brand store at the Flamingo Hotel allows us to showcase the tri-brand concept to thousands of customers and potential franchisees." he said. "The strong sales numbers from this first tri-branded store are very encouraging."

Michael Ward, co-CEO of Mrs. Fields Famous Brands, said the company was interested in the partnership as a means to enable the brand to expand its footprint beyond the traditional mall-based store.

"With Java Detour as our partner, our options for real estate increase and the addition of their great products will help our franchisees increase sales particularly in the mornings," he said. "Whenever our franchisees can realize new cost efficiencies and increase revenue by offering a more complete product line up, we feel strong about their position in the market place."

Java Detour attempts reorganization

As previously announced, Java Detour is still in the process of restructuring its balance sheet, attempting an out-of-court reorganization and developing a revised business plan. The company has been immersed in reorganization related matters and has not yet filed its Annual Report on Form 10-K for the year ended Dec. 31, 2008, nor has it filed its Quarterly Reports on Form 10-Q for the quarters ending March 31, 2009, and June 30, 2009. During the year ended Dec. 31, 2008, and for the first three quarters of 2009, the company suffered recurring losses. The company has re-engaged the auditing firm of Farber, Haas Hurley to audit its 2008 financial statements.

The company's largest secured creditor continues to forbear and remains committed to facilitate attempts to successfully complete the company's restructuring and recapture shareholder value. There can be no assurance that the company will be successful with its reorganization attempt or continue operations in its present form. The company continues to need additional funding to continue operations.