A new report published inForbes claims Schnatter used the N-word on a conference call in May, suggesting he may not have learned his lesson after all.
Mr. Schnatter already had resigned earlier this year as CEO of the chain, which he built into a national powerhouse, over a sponsorship quarrel with the NFL over the national anthem protests and Papa John's dipping sales. According to an unidentified source, Schnatter was asked how he planned to "distance himself from racist groups" on the internet. Multiple people included on the call confirmed that Schnatter said "Colonel Sanders called blacks ..." the N-word.
Schnatter then went on to describe his early life in IN, a place, he said, where Black people used to be dragged from trucks until they died.
Forbes reported that Schnatter's comments were meant to demonstrate his stance against racism, but that people on the call were offended by them.
He added: 'Regardless of the context, I apologise'. So the school can't simply keep the name in place and say it's no big deal because Schnatter is no longer associated with the company that has his name.
Papa John's was founded by Mr Schnatter in 1984 and he is the largest shareholder, possessing 29 percent of the company.
The company in a statement said Olivia Kirtley will act as lead independent director, and that it will appoint a new chairman in the coming weeks.
Okay, so on one hand, it's good Schnatter is admitting his fault in using the slur.
John Schnatter quits as chairman after using racial slur during a conference call on how to handle controversial situations.
Papa John's stock plunged to a 12-month low in the wake of the news, CNBC reported.
He resigned as the company's chief executive in January amid a public outcry.
The company's shares fell almost 6% during trading on Wednesday, to a new 12-month low of $47.80 a share, erasing $96.2 million in market value-although it closed down 4.8%, at $48.33 a share, reported CNBC.
J. David Grissom, the chairman of the university board, said he had spoken to Schnatter on Wednesday.