BAB Holdings, Inc. Enters Into Licensing Agreement With Beatrice Group, Inc.

CHICAGO--(BUSINESS WIRE)--July 26, 1999--

BAB Holdings, Inc. (Nasdaq: BAGL), the Chicago-based operator, franchisor, and licensor of Big Apple Bagels(R), My Favorite Muffin(R), and Brewster's Coffee(R) today announced that it has entered into a licensing agreement with the Beatrice Group, Inc., a Conagra Company. Under the terms of the agreement, BAB Holdings, Inc. will license its Big Apple Bagels(R) trademark to Beatrice for the worldwide manufacture and sale, under the Big Apple Bagels(R) brand, of BAB's proprietary varieties of packaged cream cheese to the retail trade.

"This agreement with Beatrice is an important step for our company" states Michael Evans, CEO of BAB Holdings, Inc. "It demonstrates further commitment to our growing non-traditional business and represents our entry into national retail distribution of our brand to a mass audience. We believe the revenue potential derived from this agreement and national exposure provided by Beatrice's placement of Big Apple Bagels branded cream cheese throughout its broad distribution network will have a positive impact on the long-term value of our brand."

With sales of $1.4 billion, Beatrice is a major manufacturer and marketer of cheese in the United States. Its various product lines are marketed to consumers under the County Line, Treasure Cave, Healthy Choice, Reddi-Whip, Eggbeaters, Blue Bonnet, Fleischmann, Promise and Touch of Butter brands. The product line is marketed to foodservice and industrial accounts under the Pauly, Dorman, Healthy Choice, Treasure Cave, European Legacy, and Red Umbrella brands.

"Flavored cream cheese is a rapidly growing product category in all of the channels in which we do business" reports John Riley, Vice President of Beatrice Cheese. "The agreement with BAB represents an opportunity for Beatrice to serve an important customer while developing new business opportunities which build upon the strength of the "Big Apple Bagels(R) brand in our existing and future channels of distribution."

BAB Holdings, Inc. operates, franchises, and licenses Big Apple Bagels(R), My Favorite Muffin(R), and Brewster's(R) Coffee and currently has units in 32 states, two Canadian provinces, and Peru. In February of this year it acquired the assets of Jacobs Bros., a Chicago based bagel bakery chain, including eight stores and a central commissary facility. The Company has licensing agreements with Host Marriott, Mrs. Fields Cookies, Oberweis Dairy and Alonti Deli. The Company's stock is traded on the Nasdaq Small-Cap market under the symbol "BAGL" and its web site can be visited at www.babholdings.com.

Certain statements contained in this press release, including statements regarding the development of the company's business, the markets for the company's products, anticipated capital expenditures, and the effects of completed and proposed acquisitions, and other statements contained herein regarding matters that are not historical facts, are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Certain risks and uncertainties are outside the control of the company and its management, including its ability to attract new franchisees; the continued success of current franchisees; the effects of competition on franchisee and company-owned store results; consumer acceptance of the company's products in new and existing markets; fluctuation in development and operating costs; brand awareness; availability and terms of capital; adverse publicity; acceptance of new product offerings; availability of locations and terms of sites for store development; food, labor and employee benefit costs; changes in government regulation (including increases in the minimum wage law); regional economic and weather conditions; the hiring, training, and retention of skilled corporate and restaurant management; and the integration and assimilation of acquired concepts. Some of these risks and uncertainties are wholly outside of the control of the company. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The company undertakes no obligation to publicly release the results of any revision to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.