John Schnatter used the slur during a training exercise in May, when discussing his opposition to racism after being asked how he would distance himself from hate groups.
Schnatter also reportedly recounted his early life in IN, stating that African Americans were dragged behind trucks until they died. "Simply stated, racism has no place in our society", he said in a statement, per CNN Money.
Shares of Papa John's Pizza (PZZA) fell almost 6 percent after the report, and ended Wednesday trading down 4.8 percent. After he learned about the matter, the chairman and CEO of Laundry Service parent company Wasserman, Casey Wasserman, moved to end Laundry Service's contract with the pizza chain, Forbes said.
Schnatter founded Papa John's in 1984 and grew the company into a delivery behemoth with more than 3,400 locations in North America.
John has tendered his resignation from the University of Louisville board of trustees effective immediately.
Shortly after Schnatter's departure, Papa John's executives said the company would overhaul its marketing campaigns and place an increased focus on digital sales efforts amid tough competition from Domino's and Pizza Hut. The University of Louisville football team plays its home games at Papa John's Cardinal Stadium.
Additionally, the marketing form that organized the call has ended their relationship with Papa John's due to the alleged remark.
The furor over the use of the slur was already costing the pizza chain, heavily involved with the major-league sports leagues, before the late-night announcement.
Forbes reports that Papa John's, in a statement, did not dispute any of the reporting. Papa John's later apologized for Schnatter's comments.
Schnatter described his comments during the conference call as "inappropriate and hurtful" in a statement provided by the company.