They do, but they figured it wouldn't be good PR.
Many strange things happen in court cases, not all of which are consistent with law. But I’d like to know what law the student would be in violation of that KK would have grounds to do anything legally.
Of course I guess anyone can sue anyone for anything in our society. Question is will it go anywhere.
As others said yesterday, its not a copyright infringement or similar as he wasn’t using the KK name on his own product. I haven’t purchased donuts myself in decades, but I don’t recall any food purchase, super market or restaurant, where I had to sign or it was stated that the food sold could only be consumed by the original purchaser.
I understand KK wanting to protect its brand, but it has to do that within what KK controls, its franchises and its employees. Beyond that they have no control, and likewise, no liability.