Food and retail franchisor Allied Brands (ASX:ABQ) said today it still has the rights to distribute Baskin Robbins products in Australia.

Allied Brands has managed to stop an attempt by US-based Dunkin Brands, which owns the ice cream chain, to terminate Allied's master franchise agreement for Baskin Robbins, although the dispute between the two parties is continuing.

The Australian firm said in a statement that the US franchise giant had sent a letter on September 10 to end the rights of Allied Brands to franchise and distribute the Baskin Robbins chain across the nation.

Allied, however, said that after discussions between the two companies and their lawyers, Dunkin has moved not to "action this purported termination" but has reserved its right to do so.

According to Allied Brands acting chief executive Sean Corbin, "Further discussions are currently taking place between the parties and the market will be informed of further developments."

The company's financial statements for the 2009-10 year revealed Baskin Robbins take up 25 per cent of its total revenue, although the brand posted a net loss of $1.7 million.

Proposed asset sales and a capital raising would be used to rebuild its balance sheet, said the company, which is also expected to update the market on September 21.

Allied Brand stocks shed 0.5 cents or 18.52 per cent at 2.2 cents by 11.38am (AEST) after a trading halt was lifted today.