The business combination of tea and doughnuts has fallen apart, leaving Allied Domecq hoping to complete a new franchise agreement for Dunkin' Donuts in the Republic in the near future. This follows the decision of tea company Lyons Irish Holdings not to renew its franchise once the fiveyear term expires shortly. Allied Domecq was the former majority shareholder in Lyons until Unilever acquired control of the company last year.

Ms Brenda Williams of Allied Domeq Retailing said that the Dunkin' Donuts franchise will be awarded to a single franchisee and that there is no question of the stores being franchised out to a number of franchisees.

"We would hope to have a new franchisee as soon as possible," said Ms Williams

Ms Chamaine Keenan, who has been general manager of Dunkin' Donuts, Ireland, since Lyons obtained the franchise in 1992, is buying the lease on some of the outlets but these will not trade as Dunkin' Donuts. Lyons will sell the remaining shares and expects to suffer a loss on the disposals which will be treated as a once-off item in the 1997 accounts. The value of the net assets being sold is £992,000.

Lyons chief executive Mr Pierce Butler said that Dunkin' Donuts has been a success for Lyons but the group had taken the view that it is a business best run by a company already in the franchise business.

Mr Butler said that Lyons will now concentrate on its core tea distribution business in the Republic and Northern Ireland.