Big Apple Bagels Signs Agreement with Model Cities Community Development Corp.

Business Editors

CHICAGO--(BUSINESS WIRE)--Dec. 23, 1999

BAB Holdings, Inc. (NASDAQ:BAGDC), the Chicago-based operator, franchisor, and licensor of Big Apple Bagels(R), My Favorite Muffin(R), and Brewster's(R) Coffee, announced today that it has signed an agreement to open franchised tri-branded Big Apple Bagels locations in St. Paul, Minnesota with Model Cities Community Development Corp., a company specializing in business development and job training in low to moderate income areas within St. Paul.

"There are many markets within St. Paul that have not been served by quality retail establishments," says Wolde Selameab, Director of Community Development of Model Cities Community Development Corp. "We have succeeded in our mission to help fuel the economic engine of inner city St. Paul by selecting quality business partners. We are excited to work with BAB Holdings because of the quality of their products, the attractiveness of their stores, and their fine track record of supporting their franchisees. We believe that this first location will be the start of a long and successful relationship as Big Apple Bagels(R) franchisees."

"We are excited to work with a developer of the caliber of Model Cities Community Development Corp," states BAB Holdings, Inc., President and CEO Michael W. Evans. "Their experience and hands-on approach to establishing business in low to moderate income areas make them an ideal partner for us. By successfully executing our concept in the inner city, we will demonstrate that there are significant untapped markets for us to expand within. This is good for our cities, and good for BAB."

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 28 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, Beatrice Group, Inc., a division of ConAgra, and Alonti Deli. The Company's stock is traded on the Nasdaq Small-Cap market under the symbol "BAGDC" 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.