BAB Holdings, Inc. Further Invests in E-Commerce.

CHICAGO--(BUSINESS WIRE)--May 7, 1999--

BAB Holdings, Inc. (Nasdaq: BAGL), the Chicago-based operator, franchisor, and licensor of Big Apple Bagels, My Favorite Muffin, and Brewster's Coffee, announced that it has hired David Hassler, President and CEO of Arborcorp, Ltd. (www.arborcorp.com), an Illinois-based, E-Commerce and web page design and consulting firm. Mr. Hassler is a member of the International Webmasters Association. As part of the agreement, the Company has entered into an agreement which provides the Company the option to acquire Arborcorp, Ltd.

Arborcorp, Ltd. provides E-Commerce and web page consulting services to companies in the retail and foodservice industry. States BAB Holdings, Inc. CEO Michael Evans "Arborcorp greatly impressed us when they helped develop our web page. By joining our organization, Dave Hassler will direct our focus upon E-commerce as a growth vehicle for BAB Holdings. It is an exciting and essential step in the rapid evolution of our E-Commerce business. This will enhance our core business and increase brand-awareness."

BAB Holdings, Inc. recently initiated an Internet advertising campaign with Yahoo and Excite. The Company is aggressively pursuing relationships with various cybermalls in order to increase the momentum generated by the advertising campaign. The Company will be adding a Brewsters(R) Coffee of the Month program, featuring more than thirty varieties of coffee available for delivery throughout the year. Gift certificates, redeemable at any BAB location can now be purchased from www.babholdings.com. The Company's E-Commerce section now accept all major credit cards .

An on-line guest book has also been added to the site. Visitors are encouraged to submit names and addresses with the chance to win a free muffin gift basket. By collecting a list of individuals who are interested in its products, the Company is establishing a growing base of potential customers for e-mail marketing.

BAB Holdings, Inc. operates, franchises, and licenses Big Apple Bagels, My Favorite Muffin, and Brewster's 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.