Diedrich Coffee To Sell Franchisee Operations

March 30, 2009 (FinancialWire) -- Diedrich Coffee, Inc. (NASDAQ: DDRX) (Current Market Cap: US$2.30 Mil.) said that it has signed a definitive agreement with Praise International North America, Inc., an affiliate of Gloria Jean's Coffees International, to sell its Gloria Jean's Coffees domestic franchise operations for around $3.1 million.

Gloria Jean's Coffees International holds the rights to the Gloria Jean's Coffees brand for all international countries excluding the U.S. and Puerto Rico.

The sale includes a total of 102 franchise and company-operated locations in 24 states. The purchase price is around $3.1 million and the transaction is anticipated to close within 60 days, according to Diedrich.

Terms of the sale include a five-year roasting agreement and rights to use the Gloria Jean's Coffee brand names in perpetuity in Diedrich's various wholesale business channels and Keurig K-cup product lines.

In late 2006, Diedrich Coffee said it would sell certain company-operated Diedrich Coffee and Coffee People retail stores as part of its plan to expand its wholesale business and focus the retail side of its business on the Gloria Jean's franchise operations.

Company CEO J. Russell Phillips said that the latest transaction takes that strategy "one step further" and allows the company to focus primarily on the sale of specialty coffees in its wholesale business channels.

Irvine, California-based Diedrich Coffee specializes in sourcing, roasting and selling coffees. The company roasts and packages coffees under the Diedrich Coffee, Coffee People and Gloria Jean's Coffees brands.

Diedrich sells its coffees through wholesale accounts including office coffee service distributors, restaurants and specialty retailers, and via the company's web stores.

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