In 1971, Philip C. Holland started Yum Yum Donut Shops, Inc. The first shop was a former Orange Julius in Highland Park, California. This shop is still in operation and is one of the highest volume shops in the chain. Phil had become familiar with the donut business through a friend who owned a shop. He had also spent time in North Carolina working with Vernon Rudolph, the founder of Krispy Kreme Donuts.
By 1973, Phil had three Yum Yum donut shops and was anxious to expand. Frank Watase joined as an equal partner.