<PAGE>
 
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                                                                     EXHIBIT 4.2


                               WARRANT AGREEMENT

                                 BY AND AMONG

                               KOO KOO ROO, INC.

                                      AND

                          THE PURCHASER NAMED HEREIN



                          Dated as of August 28, 1997


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<PAGE>
 
                               TABLE OF CONTENTS

<TABLE>
<CAPTION> 
                                                                                               PAGE
<S>                                                                                            <C> 
ARTICLE I - Warrant Certificates.............................................................     1
     Section 1.1    Forms of Warrant Certificates............................................     1
     Section 1.2    Execution of Warrant Certificates........................................     1
     Section 1.3    Registration of Warrant Certificates.....................................     2
     Section 1.4    Exchange and Transfer of Warrant Certificates............................     2
     Section 1.5    Lost, Stolen, Mutilated or Destroyed Warrant Certificates................     2
     Section 1.6    Cancellation of Warrant Certificates.....................................     2

ARTICLE II - Warrant Exercise Price and Exercise of Warrants.................................     3
     Section 2.1    Exercise Price...........................................................     3
     Section 2.2    Registration of Warrants and Warrant Shares..............................     3
     Section 2.3    Procedure for Exercise of Warrants.......................................     3
     Section 2.4    Issuance of Common Stock.................................................     5
     Section 2.5    Certificates for Unexercised Warrants....................................     5
     Section 2.6    Reservation of Shares....................................................     5
     Section 2.7    No Impairment............................................................     5

ARTICLE III - Adjustments and Notice Provisions..............................................     6
     Section 3.1    Adjustment of Exercise Price.............................................     6
     Section 3.2    No Adjustments to Exercise Price.........................................     7
     Section 3.3    Adjustment of Number of Shares...........................................     8
     Section 3.4    Reorganizations..........................................................     8
     Section 3.5    Verification of Computations.............................................     8
     Section 3.6    Notice of Certain Actions................................................     9
     Section 3.7    Certificate of Adjustments...............................................     9
     Section 3.8    Warrant Certificate Amendments...........................................     9
     Section 3.9    Fractional Shares........................................................    10

ARTICLE IV - Miscellaneous...................................................................    10
     Section 4.1    Payment of Taxes and Charges.............................................    10
     Section 4.2    Changes to Agreement.....................................................    10
     Section 4.3    Assignment...............................................................    10
     Section 4.4    Successor to Company.....................................................    11
     Section 4.5    Notices..................................................................    11
     Section 4.6    Defects in Notice........................................................    12
     Section 4.7    Governing Law............................................................    12
     Section 4.8    Standing.................................................................    12
     Section 4.9    Headings.................................................................    12
     Section 4.10   Counterparts.............................................................    12
     Section 4.11   Availability of the Agreement............................................    12
     Section 4.12   Entire Agreement.........................................................    12
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                                      (i)
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<TABLE> 
<S>                                                                                             <C> 
COMPANY SIGNATURE PAGE.......................................................................    13
PURCHASER SIGNATURE PAGE.....................................................................    14

EXHIBIT A - FORM OF WARRANT CERTIFICATE......................................................   A-1
</TABLE>

                                     (ii)
<PAGE>
 
                               WARRANT AGREEMENT


     WARRANT AGREEMENT dated as of August 28, 1997 by and among KOO KOO ROO,
INC., a Delaware corporation (the "Company"), and the undersigned purchaser (the
"Purchaser").


                                  WITNESSETH:

     WHEREAS, the Company proposes to sell pursuant to a Securities Purchase
Agreement, dated as of August 12, 1997 (the "Securities Purchase Agreement"), by
and between the Company and the Purchaser, units consisting of Senior Notes in
the aggregate principal amount of $12 million (as defined in the Securities
Purchase Agreement) and warrants (each, a "Warrant", and collectively, the
"Warrants") to purchase up to an aggregate of 330,000 shares (subject to
adjustment) of the common stock, par value $.01 per share, of the Company (the
"Common Stock") (the Common Stock issuable upon exercise of the Warrants being
referred to herein as the "Warrant Shares");

     NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:

                       -1RT-1CLE - Warrant Certificates

     Sect-1on I.1   Forms of Warrant Certificates.  The warrant certificates
                    -----------------------------                           
(the "Warrant Certificates") shall be issued in registered form only and,
together with the form of the election to purchase (the "Election to Purchase"),
and assignment (the "Assignment") to be attached thereto, shall be substantially
in the form of Exhibit A attached hereto and, in addition, may have such
               ---------                                                
letters, numbers or other marks of identification or designation and such
legends, summaries, or endorsements stamped, printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as, in any particular case, may be required in
the opinion of counsel for the Company, to comply with any law or with any rule
or regulation of any regulatory authority or agency, or to conform to customary
usage.

     Sect-1on I.2   Execution of Warrant Certificates.  The Warrant Certificates
                    ---------------------------------              
shall be executed on behalf of the Company by its Chairman or President or any
Vice President and attested to by its Secretary or Assistant Secretary, either
manually or by facsimile signature printed thereon. In case any authorized
officer of the Company who shall have signed any of the Warrant Certificates
shall cease to be an officer of the Company either before or after delivery
thereof by the Company to any Purchaser, the signature of such person on such
Warrant Certificates shall be valid nevertheless and such Warrant Certificates
may be issued and delivered to those persons entitled to receive the Warrants
represented thereby with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be an officer of the Company.
<PAGE>
 
                                                                            PAGE

     Sect-1on I.3   Registration of Warrant Certificates.  The Company shall
                    ------------------------------------              
number and register the Warrant Certificates in a register as they are needed.
The Company may deem and treat the registered holder(s) of the Warrant
Certificates (the "Holders") as the absolute owner(s) thereof for all purposes.

     Sect-1on I.4   Exchange and Transfer of Warrant Certificates.  The Warrants
                    ---------------------------------------------      
(and any Warrant Shares issued upon exercise of the Warrants) shall bear such
restrictive legend or legends as may be required by the Securities Purchase
Agreement and as may be required by law and shall be transferable only in
accordance with the terms of this Agreement and the Securities Purchase
Agreement.

     The Company may from time to time register the transfer of any outstanding
Warrant Certificates in a warrant register to be maintained by the Company upon
surrender thereof accompanied by a written instrument or instruments of transfer
in form satisfactory to the Company duly executed by the Holder or Holders
thereof or by the duly appointed legal representative thereof or by a duly
authorized attorney. Upon any such registration of transfer, a new Warrant
Certificate shall be issued to the transferee(s).

     Warrant Certificates may be exchanged at the option of the Holder(s)
thereof, when surrendered to the Company at the address set forth in Section 4.5
hereof for another Warrant Certificate or Warrant Certificates of like tenor and
representing in the aggregate a like number of Warrant Shares: provided that the
                                                               --------         
Company shall not be required to issue any Warrant Certificate representing any
fractional Warrant Shares.

     Sect-1on I.5   Lost, Stolen, Mutilated or Destroyed Warrant Certificates.
                    ---------------------------------------------------------
If any Warrant Certificate shall be mutilated, lost, stolen or destroyed, the
Company shall issue, execute and deliver, in exchange and substitution for and
upon cancellation of a mutilated Warrant Certificate, or in lieu of or in
substitution for a lost, stolen or destroyed Warrant Certificate, a new Warrant
Certificate representing an equivalent number of Warrants or Warrant Shares. If
required by the Company, the Holder of the mutilated, lost, stolen or destroyed
Warrant Certificate must provide indemnity sufficient to protect the Company
from any loss which it may suffer if the Warrant Certificate is replaced. Any
such new Warrant Certificate shall constitute an original contractual obligation
of the Company, whether or not the allegedly lost, stolen, mutilated or
destroyed Warrant Certificate shall be at any time enforceable by anyone.

     Sect-1on I.6   Cancellation of Warrant Certificates.  Any Warrant 
                    ------------------------------------              
Certificate surrendered upon the exercise of Warrants or for exchange or
transfer, or purchased or otherwise acquired by the Company, shall be cancelled
and shall not be reissued by the Company; and, except as provided in Section 2.5
hereof in case of the exercise of less than all of the Warrants evidenced by a
Warrant Certificate or in Section 1.4 in an exchange or transfer, no Warrant
Certificate shall be issued hereunder in lieu of such cancelled Warrant
Certificate. Any Warrant Certificate so cancelled shall be destroyed by the
Company.

                                       2
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                                                                            PAGE

        -1RT-1CLE II - Warrant Exercise Price and Exercise of Warrants

     Sect-1on II.1  Exercise Price.  Each Warrant Certificate shall, when signed
                    --------------                                       
by the Chairman or President or any Vice President and attested to by the
Secretary or Assistant Secretary of the Company, entitle the Holder thereof to
purchase from the Company, subject to the terms and conditions of this
Agreement, the number of fully paid and nonassessable Warrant Shares evidenced
thereby at a purchase price of $5.3750 per share (the "Initial Exercise Price")
or such adjusted number of Warrant Shares at such adjusted purchase price as may
be established from time to time pursuant to the provisions of Article III
hereof, payable in full in accordance with Section 2.3 hereof, at the time of
exercise of the Warrant. Except as the context otherwise requires, the term
"Exercise Price" as used in this Agreement shall mean the purchase price of one
share of Common Stock, reflecting all appropriate adjustments made in accordance
with the provisions of Article III hereof.

     Sect-1on II.2  Registration of Warrants and Warrant Shares.  The Company
                    -------------------------------------------      
shall secure the effective registration of the Warrant Shares for resale under
the Securities Act upon the terms and subject to the conditions set forth in the
Registration Rights Agreement dated as of the date hereof (the "Registration
Rights Agreement") among the Company and the Purchaser. Promptly after a
registration statement under the Securities Act covering the Warrant Shares has
become effective, the Company shall cause notice thereof together with a copy of
the prospectus covering the Warrant Shares to be mailed to each registered
Holder.

     Sect-1on II.3  Procedure for Exercise of Warrants.  The Warrants may be
                    ----------------------------------                      
exercised prior to the Expiration Date (as hereinafter defined) at the Exercise
Price at any time after (a) the first anniversary of the date hereof, (b) eleven
(11) business days following the commencement of a tender offer (as provided in
Rule 14d-2 of the Exchange Act (as defined below)) with respect to the Common
Stock pursuant to Regulation 14D promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), unless the Company has published, sent
or given to securityholders pursuant to Rule 14e-2(a) under the Exchange Act a
statement that the Company recommends rejection of such tender offer (a
"Rejection Recommendation"), (c) after a Rejection Recommendation, if and upon
the public announcement by the Company, a filing by the Company with the
Securities and Exchange Commission, or the sending by the Company to
securityholders of a statement pursuant to Rule 14e-2(b) under the Exchange Act,
in each case, which changes the Company's position with respect to such tender
offer to a recommendation of acceptance of such tender offer or an expression of
no opinion with respect to such tender offer, (d) immediately prior to
consummation by the Company of any consolidation or merger with any entity
(other than a wholly-owned subsidiary of the Company) other than a consolidation
or merger as a result of which each of the stockholders of the Company owns,
immediately after consummation of such consolidation or merger, directly or
indirectly, at least 67% of the percentage of the fully diluted capital stock of
the Company or the surviving entity of such consolidation or merger which such
stockholder owned immediately prior to the consummation of such consolidation or
merger, calculated without giving effect to the issuance as part of such
consolidation or merger of up to 330,000 shares of Common Stock upon exercise of
the 

                                       3
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                                                                            PAGE

Warrants, or (e) the consummation by the Company of any sale, transfer or other
disposition of all or substantially all of its property, assets or business,
other than to a subsidiary of the Company in respect of which the Company owns
or controls, directly or indirectly, 67% or more of the outstanding voting
stock. The Warrants shall expire at 5:00 p.m., New York City time on August 28,
2002 (the "Expiration Date"). The Warrants may be exercised by surrendering the
Warrant Certificates representing such Warrants to the Company at its address
set forth in Section 4.5 hereof, together with the Election to Purchase duly
completed and executed, accompanied by payment in full, as set forth below, to
the Company of the Exercise Price for each Warrant Share in respect of which
such Warrants are being exercised. Such Exercise Price shall be paid in full by
(i) cash or a certified check or a wire transfer in same day funds in an amount
equal to the Exercise Price multiplied by the number of Warrant Shares then
being purchased or (ii) delivery to the Company of that number of shares of
Common Stock having a Fair Market Value (as hereinafter defined) equal to the
Exercise Price multiplied by the number of Warrant Shares then being purchased.
In the alternative, the Holder of a Warrant Certificate may exercise its right
to purchase some or all of the Warrant Shares subject to such Warrant
Certificate, on a net basis, such that, without the exchange of any funds, such
Holder receives that number of Warrant Shares subscribed to pursuant to such
Warrant Certificate less that number of shares of Common Stock having an
aggregate Fair Market Value at the time of exercise equal to the aggregate
Exercise Price that would otherwise have been paid by such Holder for the number
of Warrant Shares subscribed to pursuant to such Warrant Certificate
(hereinafter, a "Net Cashless Exercise").

     As used herein: (a) the term "Fair Market Value," on a per share basis,
means the average of the daily Closing Prices (as hereinafter defined) of the
Common Stock for the ten (10) consecutive Trading Days (as hereinafter defined)
ending the Trading Day immediately preceding the Date of Exercise; (b) the term
"Date of Exercise" with respect to any Warrant means the date on which such
Warrant is exercised as provided herein; (c) the term "Closing Price" for any
date shall mean the last sale price reported in The Wall Street Journal regular
                                                -----------------------        
way or, in case no such reported sale takes place on such date, the average of
the last reported bid and asked prices regular way, in either case on the
principal national securities exchange on which the Common Stock is admitted to
trading or listed if that is the principal market for the Common Stock or, if
not listed or admitted to trading on any national securities exchange or if such
national securities exchange is not the principal market for the Common Stock,
the last sale price as reported by The Nasdaq Stock Market, Inc.'s National
Market ("Nasdaq") or its successor, if any, or if the Common Stock is not so
reported, the average of the reported bid and asked prices in the over-the-
counter market, as furnished by the National Quotation Bureau, Inc., or if such
firm is not then engaged in the business of reporting such prices, as furnished
by any similar firm then engaged in such business and selected by the Company
or, if there is no such firm, as furnished by any member of the National
Association of Securities Dealers, Inc. ("NASD") selected by the Company or, if
the Common Stock is not quoted in the over-the-counter market, the fair value
thereof determined in good faith by the Company's Board of Directors as of a
date which is within 15 days of the date as of which the determination is to be
made; and (d) the term "Trading Days" with respect to the Common Stock means (i)
if the Common Stock is quoted on 

                                       4
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                                                                            PAGE

Nasdaq or any similar system of automated dissemination of quotations of
securities prices, days on which trades may be made on such system or (ii) if
the Common Stock is listed or admitted for trading on any national securities
exchange, days on which such national securities exchange is open for business.

     Sect-1on II.4  Issuance of Common Stock.  As soon as practicable after the
                    ------------------------                               
Date of Exercise of any Warrants, the Company shall issue, or cause its transfer
agent to issue, a certificate or certificates for the number of full Warrant
Shares, registered in accordance with the instructions set forth in the Election
to Purchase, together with cash for fractional shares as provided in Section
3.9. All Warrant Shares issued upon the exercise of any Warrants shall be
validly authorized and issued, fully paid, non-assessable, free of preemptive
rights and (subject to Section 4.1 hereof) free from all taxes, liens, charges
and security interests in respect of the issuance thereof. Each person in whose
name any such certificate for Warrant Shares is issued shall, provided such
exercise complies in full with the applicable requirements of this Agreement, be
deemed for all purposes to have become the holder of record of the Common Stock
represented thereby on the Date of Exercise of the Warrants resulting in the
issuance of such shares, irrespective of the date of issuance or delivery of
such certificate for Warrant Shares.

     Sect-1on II.5  Certificates for Unexercised Warrants.  In the event that,
                    -------------------------------------               
prior to the Expiration Date, a Warrant Certificate is exercised in respect of
fewer than all of the Warrant Shares issuable on such exercise a new Warrant
Certificate representing the remaining Warrant Shares shall be issued and
delivered pursuant to the provisions hereof; provided that the Company shall not
                                             --------                       
be required to issue any Warrant Certificate representing any fractional Warrant
Shares.

     Sect-1on II.6  Reservation of Shares.  The Company shall at all times 
                    ---------------------                                 
reserve and keep available, free from preemptive rights, for issuance upon the
exercise of Warrants, the maximum number of its authorized but unissued shares
or treasury shares, or both, of Common Stock which may then be issuable upon the
exercise in full of all outstanding Warrants.  The Company shall from time to
time take all action which may be necessary or appropriate so that the Warrant
Shares, immediately upon their issuance following an exercise of Warrants, will
be listed or quoted, as the case may be, on the principal securities exchanges
or markets within the United States of America, if any, on which other shares of
the Common Stock are then listed.

     Sect-1on II.7  No Impairment.  The Company shall not by any action, 
                    -------------                                       
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of the Warrants,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holders against impairment.  Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any Warrant Shares receivable upon the exercise of the Warrants above the amount
payable therefor upon such exercise immediately prior to such increase in par
value, (b) take all such action as may be necessary or appropriate in order that
the Company may validly 

                                       5
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                                                                            PAGE

and legally issue fully paid and non-assessable Warrant Shares upon the exercise
of any Warrant, and (c) use its best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under the Warrants. Notwithstanding the foregoing paragraph, the Company shall
not be required to issue Warrant Shares upon the exercise of any Warrant unless
the Company is reasonably satisfied that any such issuance complies with all
applicable securities laws and would not result in a violation by the Company of
any such laws; provided, that, in the event the Company is not so satisfied, the
               --------                                       
Company may require any Holders of Warrant Certificates seeking to exercise such
Warrants to effect a Net Cashless Exercise.

               -1RT-1CLE III - Adjustments and Notice Provisions

     Sect-1on III.1 Adjustment of Exercise Price.  Subject to the provisions of
                    ----------------------------                 
this Article III, the Exercise Price in effect from time to time shall be
subject to adjustment, as follows:

      (a) In case the Company shall (i) declare a dividend or make a
distribution on the outstanding shares of its Common Stock in shares of its
Common Stock, (ii) subdivide or reclassify the outstanding shares of its Common
Stock into a greater number of shares, or (iii) combine or reclassify the
outstanding shares of its Common Stock into a smaller number of shares, the
Exercise Price in effect immediately after the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be adjusted so that it shall equal the price determined
by multiplying the Exercise Price in effect immediately prior thereto by a
fraction, of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such dividend, distribution, subdivision,
combination or reclassification, and of which the denominator shall be the
number of shares of Common Stock outstanding immediately after such dividend,
distribution, subdivision, combination or reclassification.  Any shares of
Common Stock of the Company issuable in payment of a dividend shall be deemed to
have been issued immediately prior to the record date for such dividend for
purposes of calculating the number of outstanding shares of Common Stock of the
Company under Subsections 3.l(b) and 3.l(c) hereof.  Such adjustment shall be
made successively whenever any event specified above shall occur.

      (b) In case the Company shall fix a record date for the issuance of
rights, options, warrants or convertible or exchangeable securities to all
holders of its Common Stock entitling them (for a period which, by its express
terms, expires within forty-five (45) days after such record date) to subscribe
for or purchase shares of its Common Stock at a price per share less than the
Current Market Price (as such term is defined in Subsection 3.1(d) hereof) of a
share of Common Stock of the Company on such record date, the Exercise Price
shall be adjusted immediately thereafter so that it shall equal the price
determined by multiplying the Exercise Price in effect immediately prior thereto
by a fraction, of which the numerator shall be the number of shares of Common
Stock outstanding on such record date plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of Common Stock
so offered would purchase at the Current Market Price per share, and of which
the 

                                       6
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                                                                            PAGE

denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock offered for
subscription or purchase. Such adjustment shall be made successively whenever
such a record date is fixed. To the extent that any such rights, options,
warrants or convertible or exchangeable securities are not so issued or expire
unexercised, the Exercise Price then in effect shall be readjusted to the
Exercise Price which would then be in effect if such unissued or unexercised
rights, options, warrants or convertible or exchangeable securities had not been
issuable.

      (c) In case the Company shall fix a record date for the making of a
distribution to all holders of shares of its Common Stock (i) of shares of any
class other than its Common Stock or (ii) of evidences of its indebtedness or
(iii) of assets (excluding cash dividends or distributions (other than
extraordinary cash dividends or distributions), and dividends or distributions
referred to in Subsection 3.1(a) hereof) or (iv) of rights, options, warrants or
convertible or exchangeable securities (excluding those rights, options,
warrants convertible or exchangeable securities referred to Subsection 3.1(b)
hereof), then in each such case the Exercise Price in effect immediately
thereafter shall be determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, of which the numerator shall be the
total number of shares of Common Stock outstanding on such record date
multiplied by the Current Market Price (as such term is defined in Subsection
3.l(d) hereof) per share on such record date, less the aggregate fair market
value as determined in good faith by the Board of Directors of the Company of
said shares or evidences of indebtedness or assets or rights, options, warrants
or convertible or exchangeable securities so distributed, and of which the
denominator shall be the total number of shares of Common Stock outstanding on
such record date multiplied by such Current Market Price per share.  Such
adjustment shall be made successively whenever such a record date is fixed.  In
the event that such distribution is not so made, or that such distribution, by
its express terms, is intended to be made, and is in fact made, to all holders
of Warrant Shares upon exercise of their respective Warrants, the Exercise Price
then in effect shall be readjusted to the Exercise Price which would then be in
effect if such record date had not been fixed.

      (d) For the purpose of any computation under Subsection 3.1(b) or 3.1(c)
hereof, the "Current Market Price" per share at any date (the "Computation
Date") shall be deemed to be the average of the daily Closing Prices of the
Common Stock for the ten (10) consecutive Trading Days ending the Trading Day
immediately preceding the Computation Date; provided, however, that if there
                                            --------  -------               
shall have occurred prior to the Computation Date any event described in
Subsection 3.l(a), 3.l(b) or 3.1(c) which shall have become effective with
respect to market transactions at any time (the "Market-Effect Date") on or
within such 10-day period, the Closing Price for each Trading Day preceding the
Market-Effect Date shall be adjusted, for purposes of calculating such average,
by multiplying such Closing Price by a fraction, of which the numerator shall be
the Exercise Price as in effect immediately prior to the Computation Date and
the denominator of which shall be the Exercise Price as in effect immediately
prior to the Market-Effect Date, it being understood that the purpose of this
proviso is to ensure that the effect of such event on the market price of the
Common Stock shall, as nearly as possible, be eliminated in order that the
distortion in the calculation of the Current Market Price may be minimized.

                                       7
<PAGE>
 
                                                                            PAGE

     Sect-1on III.2 No Adjustments to Exercise Price.  No adjustment in the
                    --------------------------------                       
Exercise Price in accordance with the provisions of Subsection 3.1(a), (b) or
(c) hereof need be made unless such adjustment would amount to a change of at
least 1.0% in such Exercise Price, provided, however, that the amount by which
                                   --------  -------                          
any adjustment is not made by reason of the provisions of this Section 3.2 shall
be carried forward and taken into account at the time of any subsequent
adjustment in the Exercise Price.

     Sect-1on III.3 Adjustment of Number of Shares.  Upon each adjustment of
                    ------------------------------                       
the Exercise Price pursuant to Subsection 3.l(a), (b) or (c) hereof, each
Warrant shall thereupon evidence the right to purchase that number of Warrant
Shares (calculated to the nearest hundredth of a share) obtained by multiplying
the number of Warrant Shares purchasable immediately prior to such adjustment
upon exercise of the Warrant by the Exercise Price in effect immediately prior
to such adjustment and dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment.

     Sect-1on III.4 Reorganizations.  In case of any capital reorganization,
                    ---------------                         
other than in the cases referred to in Section 3.1 hereof, or the consolidation
or merger of the Company with or into another corporation (other than a merger
or consolidation in which the Company is the continuing corporation and which
does not result in any reclassification of the outstanding shares of Common
Stock or the conversion of such outstanding shares of Common Stock into shares
of other stock or other securities or property), or the sale or conveyance of
the property of the Company as an entirety or substantially as an entirety
(collectively such actions being hereinafter referred to as "Reorganizations"),
there shall thereafter be deliverable upon exercise of any Warrant (in lieu of
the number of Warrant Shares theretofore deliverable) the number of shares of
stock or other securities or property to which a holder of the number of Warrant
Shares which would otherwise have been deliverable upon the exercise of such
Warrant would have been entitled upon such Reorganization if such Warrant had
been exercised in full immediately prior to such Reorganization. In case of any
Reorganization, appropriate adjustment, as determined in good faith by the Board
of Directors of the Company, shall be made in the application of the provisions
herein set forth with respect to the rights and interests of Holders so that the
provisions set forth herein shall thereafter be applicable, as nearly as
possible, in relation to any shares or other property thereafter deliverable
upon exercise of Warrants. Any such adjustment shall be made by and set forth in
a supplemental agreement prepared by the Company or any successor thereto,
between the Company and any successor thereto, and shall for all purposes hereof
conclusively be deemed to be an appropriate adjustment. The Company shall not
effect any such Reorganization, unless upon or prior to the consummation thereof
the successor corporation, or if the Company shall be the surviving corporation
in any such Reorganization and is not the issuer of the shares of stock or other
securities or property to be delivered to holders of shares of the Common Stock
outstanding at the effective time thereof, then such issuer, shall assume by
written instrument the obligation to deliver to the Holder of any Warrant
Certificate such shares of stock, securities, cash or other property as such
holder shall be entitled to purchase in accordance with the foregoing
provisions.

                                       8
<PAGE>
 
                                                                            PAGE

     Sect-1on III.5 Verification of Computations.  The Company shall select a
                    ----------------------------                           
firm of independent public accountants (which may be its outside auditors),
which selection may be changed from time to time, to verify each computation
and/or adjustment made in accordance with this Article III. The certificate,
report or other written statement of any such firm shall be conclusive evidence
of the correctness of any computation made under this Article III. Promptly upon
its receipt of such certificate, report or statement from such firm of
independent public accountants, the Company shall deliver a copy thereof to each
Holder.

     Sect-1on III.6 Notice of Certain Actions.  In the event the Company shall
                    -------------------------                           
(a) declare any dividend payable in stock to the holders of its Common Stock or
make any other distribution in property other than cash to the holders of its
Common Stock, (b) offer to the holders of its Common Stock rights to subscribe
for or purchase any shares of any class of stock or any other rights or options,
or (c) effect any reclassification of its Common Stock (other than a
reclassification involving merely the subdivision or combination of outstanding
shares of Common Stock) or any capital reorganization or any consolidation or
merger (other than a merger in which no distribution of securities or other
property is made to holders of Common Stock) or any sale, transfer or other
disposition of its property, assets and business substantially as an entirety,
or the liquidation, dissolution or winding up of the Company; then, in each such
case, the Company shall cause notice of such proposed action to be mailed to
each Holder no later than five (5) days after notice of such action is provided
to holders of the Common Stock generally or earlier if necessary to prevent the
rights of Holders from being prejudiced thereby; provided, however, that in the
                                                 --------  -------             
event that the Company provides public notice of such action specifying the
information set forth below at least ten (10) days prior to such action, the
Company shall be deemed to have satisfied its obligation to provide notice
pursuant to this Section 3.6. Such notice shall specify the date on which the
books of the Company shall close, or a record be taken, for determining holders
of Common Stock entitled to receive such stock dividend or other distribution or
such rights or options, or the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, other disposition,
liquidation, dissolution, winding up or exchange shall take place or commence,
as the case may be, and the date as of which it is expected that holders of
record of Common Stock shall be entitled to receive securities or other property
deliverable upon such action, if any such date has been fixed. Such notice shall
be mailed in the case of any action covered by paragraph (a) or (b) of this
Section 3.6, at least ten (10) days prior to the record date for determining
holders of the Common Stock for purposes of receiving such payment or offer, and
in the case of any action covered by this paragraph (c), at least ten (10) days
prior to the earlier of the date upon which such action is to take place or any
record date to determine holders of Common Stock entitled to receive such
securities or other property.

     Sect-1on III.7 Certificate of Adjustments.  Whenever any adjustment is to 
                    --------------------------                             
be made pursuant to this Article III, the Company shall prepare a certificate
executed by the Chief Financial Officer of the Company, which certificate shall
(a) be mailed to each Holder prior to the event causing such adjustment, if
practicable, or, if not practicable, as promptly as possible following such
event, and (b) include in reasonable detail (i) the events precipitating the

                                       9
<PAGE>
 
                                                                            PAGE

adjustment, (ii) the computation of any adjustments, and (iii) the Exercise
Price and the number of shares or the securities or other property purchasable
upon exercise of each Warrant after giving effect to such adjustment. Such
Certificate shall be accompanied by the accountant's verification required by
Section 3.5 hereof.

     Sect-1on III.8 Warrant Certificate Amendments.  Irrespective of any
                    ------------------------------                      
adjustments pursuant to this Article III, Warrant Certificates theretofore or
thereafter issued need not be amended or replaced, but certificates thereafter
issued shall bear an appropriate legend or other notice of any adjustments;
provided the Company may, at its option, issue new Warrant Certificates
--------                                                  
evidencing Warrants in such form as may be approved by its Board of Directors to
reflect any adjustment in the Exercise Price and number of Warrant Shares
purchasable under the Warrants.

     Sect-1on III.9 Fractional Shares.  The Company shall not be required upon
                    -----------------                                    
the exercise of any Warrant to issue fractional Warrant Shares which may result
from adjustments in accordance with this Article III to the Exercise Price or
number of Warrant Shares purchasable under each Warrant. If more than one
Warrant is exercised at one time by the same Holder, the number of full Warrant
Shares which shall be issuable upon the exercise thereof shall be computed based
on the aggregate number of Warrant Shares purchasable upon exercise of such
Warrants. With respect to any final fraction of a share called for upon the
exercise of any Warrant or Warrants, the Company shall pay an amount in cash to
the Holder of the Warrants in respect of such final fraction in an amount equal
to the Fair Market Value of a share of Common Stock as of the Date of Exercise
of such Warrants, multiplied by such fraction. All calculations under this
Section 3.9 shall be made to the nearest hundredth of a share.

                         1-RT-1CLE IV - Miscellaneous

     Sect-1on IV.1  Payment of Taxes and Charges.  The Company will pay all 
                    ----------------------------                           
taxes and other government charges in connection with the issuance or delivery
of the Warrants and the initial issuance or delivery of Warrant Shares upon the
exercise of any Warrants and payment of the Exercise Price.  The Company shall
not, however, be required to pay any additional transfer taxes in connection
with the subsequent transfer of Warrants or any transfer involved in the
issuance and delivery of Warrant Shares in a name other than the name in which
the Warrants to which such issuance relates were registered, and, if any such
tax would otherwise be payable by the Company, no such issuance or delivery
shall be made unless and until the person requesting such issuance has paid to
the Company the amount of any such tax, or it is established to the reasonable
satisfaction of the Company that any such tax has been paid.

     Sect-1on IV.2  Changes to Agreement.  The Company, when authorized by its
                    --------------------                                  
Board of Directors, with the written consent of Holders of at least a majority
of the outstanding Warrants may amend or supplement this Agreement. The Company
may, without the consent or concurrence of any Holder, by supplemental agreement
or otherwise, make any changes or corrections in this Agreement that the Company
shall have been advised by counsel (a) are 

                                       10
<PAGE>
 
                                                                            PAGE

required to cure any ambiguity or to correct any defective or inconsistent
provision or clerical omission or mistake or manifest error herein contained,
(b) add to the covenants and agreements of the Company in this Agreement such
further covenants and agreements thereafter to be observed, or (c) result in the
surrender of any right or power reserved to or conferred upon the Company in
this Agreement, in each case which changes or corrections do not and will not
adversely affect, alter or change the rights, privileges or immunities of the
Holders.

     Sect-1on IV.3  Assignment. All the covenants and provisions of this
                    ----------                                           
Agreement by or for the benefit of the Company or the Holders shall bind and
inure to the benefit of their respective successors and assigns.

     Sect-1on IV.4  Successor to Company. The Company will not merge or
                    -------------------                                
consolidate with or into any other corporation or sell or otherwise transfer its
property, assets and business substantially as an entirety to a successor
corporation, unless the corporation resulting from such merger, consolidation,
sale or transfer (if not the Company) shall expressly assume, by supplemental
agreement satisfactory in form and substance to the Holders, the due and
punctual performance and observance of each and every covenant and condition of
this Agreement to be performed and observed by the Company.

     Sect-1on IV.5  Notices. Any notice or demand required by this Agreement to
                    -------                                        
be given or made by any Holder to or on the Company shall be sufficiently given
or made if sent by first-class or registered mail, postage prepaid, addressed as
follows:

          Koo Koo Roo, Inc.
          11075 Santa Monica Boulevard, Suite 225
          Los Angeles, CA 90025
          Attn: Chief Financial Officer

     With a copy to:

          Koo Koo Roo, Inc.
          11075 Santa Monica Boulevard, Suite 225
          Los Angeles, CA 90025
          Attn: General Counsel

Any notice or demand required by this Agreement to be given or made by the
Company to or on any Holder shall be sufficiently given or made if sent by
first-class or registered mail, postage prepaid, addressed to such Holder and
sent to the following address:

          DDJ Capital Management, LLC
          141 Linden Street, Suite S-4
          Wellesley, MA 02181
          Attn: Wendy Schnipper Clayton, Esq.

                                      11
<PAGE>
 
                                                                            PAGE

          With a copy to:

               Goodwin, Procter & Hoar LLP    
               Exchange Place                 
               Boston, MA 02109               
               Attn: Laura Hodges Taylor, P.C. 

Any notice or demand required by this Agreement to be given or made by the
Company to or on any Holder shall be sufficiently given or made, whether or not
such holder receives the notice, five  (5) days after mailing, if sent by first-
class or registered mail, postage prepaid, addressed to such Holder at its last
address as shown on the books of the Company.  Otherwise, such notice or demand
shall be deemed given when received by the party entitled thereto.

          Sect-1on IV.6 Defect in Notice. Failure to file any certificate or
                        ---------------- 
notice or to mail any notice, or any defect in any certificate or notice
pursuant to this Agreement shall not affect in any way the rights of any Holder
or the legality or validity of any adjustment made pursuant to Section 3.1
hereof, or any transaction giving rise to any such adjustment, or the legality
or validity of any action taken or to be taken by the Company.

          Sect-1on IV.7 Governing Law.  This Agreement and each Warrant
                        -------------                                  
Certificate issued hereunder shall be governed by the laws of the State of New
York without regard to principles of conflicts of laws thereof.

          Sect-1on IV.8 Standing.  Nothing in this Agreement expressed and
                        --------                                          
nothing that may be implied from any of the provisions hereof is intended, or
shall be construed, to confer upon, or give to, any person or corporation other
than the Company and the Holders of any right, remedy or claim under or by
reason of this Agreement or of any covenant, condition, stipulation, promise or
agreement contained herein; and all covenants, conditions, stipulations,
promises and agreements contained in this Agreement shall be for the sole and
exclusive benefit of the Company and its successors, and the Holders.

          Sect-1on IV.9  Headings. The descriptive headings of the articles and
                         --------                                           
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

          Sect-1on IV.10 Counterparts.  This Agreement may be executed in
                         ------------                                    
any number of counterparts, each of which so executed shall be deemed to be an
original, and all of which together shall constitute one and the same
instrument.

          Sect-1on IV.11 Availability of the Agreement.  The Company shall
                         -----------------------------                    
keep copies of this Agreement available for inspection by Holders during normal
business hours.  Copies of this Agreement may be obtained upon written request
addressed to the Company at the address set forth in Section 4.5 hereof.

                                      12
<PAGE>
 
                                                                            PAGE

          Sect-1on IV.12 Entire Agreement.  This Agreement, including the
                         ----------------                                
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings.

                                      13
<PAGE>
 
                                                                            PAGE

                             COMPANY SIGNATURE PAGE

     IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the
parties as of the day and year first above written.

                              KOO KOO ROO, INC.


                              By:   /s/ Robert F. Kautz
                                 --------------------------------------------
                                 Name:  Robert F. Kautz
                                 Title: President and Chief Financial Officer

                                      14
<PAGE>
 
                                                                            PAGE

                               WARRANT AGREEMENT
                           PURCHASER SIGNATURE PAGE

Accepted and Agreed as of the date first written above.


B III CAPITAL PARTNERS, L.P.
     a Delaware Limited Partnership

By: DDJ CAPITAL III, LLC
     Its General Partner

By: DDJ CAPITAL MANAGEMENT, LLC
     Its Manager


  By:_________________________________
     Name:
     Title:


  Notice Information:
     Mr. Jay Burnham
     DDJ Capital Management, LLC
     141 Linden Street, Suite S-4
     Wellesley, Massachusetts 02181
     phone:   (617) 283-8500
     fax:   (617) 283-8555

                                      15
<PAGE>
 
                                                                            PAGE

                    EXHIBIT A - FORM OF WARRANT CERTIFICATE

 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE SECURITIES OR "BLUE
SKY" LAWS OF ANY STATE.  SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (i) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER
SUCH ACT, (ii) RULE 144 OR RULE 144A UNDER SUCH ACT, OR (iii) ANY OTHER
EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO SUCH ACT, PROVIDED THAT,
IF REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN
FORM AND SUBSTANCE IS FURNISHED TO THE COMPANY THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.  IN ADDITION, ANY SALE,
ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THIS SECURITY IS RESTRICTED
BY, AND THE RIGHTS OF THE HOLDER OF SUCH SECURITY ARE SUBJECT TO THE TERMS AND
CONDITIONS CONTAINED IN, A SECURITIES PURCHASE AGREEMENT DATED AS OF AUGUST 12,
1997, A COMPLETE AND CORRECT COPY OF THE FORM OF WHICH WILL BE FURNISHED BY THE
ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.  SUCH
AGREEMENT, AMONG OTHER THINGS, RESTRICTS THE DETACHMENT OF THE COMMON STOCK
PURCHASE WARRANTS FROM THE SENIOR NOTE ATTACHED HERETO.

No.  DDJ W-1

                       Certificate for 330,000 Warrants

                       NOT EXERCISABLE AFTER 5:00 P.M.,
                    NEW YORK CITY TIME, ON AUGUST 15, 2002

                               KOO KOO ROO, INC.

                   COMMON STOCK PURCHASE WARRANT CERTIFICATE

          THIS CERTIFIES that [ ], a Delaware limited partnership, or its
registered assigns is the registered holder (the "Registered Holder") of
Warrants set forth above, each of which represents the right to purchase one
fully paid and non-assessable share of common stock, par value $.01 per share
(the "Common Stock") of Koo Koo Roo, Inc., a Delaware corporation (the
"Company"), at the Exercise Price (as defined in the Warrant Agreement) at the
times specified in the Warrant Agreement, by surrendering this Warrant
Certificate, with the form of Election to Purchase attached hereto duly executed
and by paying in 

                                      A-1
<PAGE>
 
                                                                            PAGE

full the Exercise Price. Payment of the Exercise Price shall be made as set
forth in the Warrant Agreement (as hereinafter defined).

                    EXHIBIT A - FORM OF WARRANT CERTIFICATE

No Warrant may be exercised after 5:00 P.M., New York City time, on August 15,
2002 (the "Expiration Date").  All Warrants evidenced hereby shall thereafter
become void, subject to the terms of the Warrant Agreement hereinafter referred
to.

     Prior to the Expiration Date, subject to any applicable laws, rules or
regulations restricting transferability and to any restriction on
transferability that may appear on this Warrant Certificate and in accordance
with the terms of the Warrant Agreement hereinafter referred to, the Registered
Holder shall be entitled to transfer this Warrant Certificate, in whole or in
part, upon surrender of this Warrant Certificate at the principal office of the
Company with the form of assignment set forth hereon duly executed. Upon any
such transfer, a new Warrant Certificate or Warrant Certificates representing
the same aggregate number of Warrants to purchase the shares of the Common Stock
will be issued in accordance with instructions in the form of assignment.

     Upon the exercise of less than all of the Warrants to purchase the shares
of the Common Stock evidenced by this Warrant Certificate, there shall be issued
to the Registered Holder a new Warrant Certificate in respect of the Warrants
not exercised.

     Prior to the Expiration Date, the Registered Holder shall be entitled to
exchange this Warrant Certificate, with or without other Warrant Certificates,
for another Warrant Certificate or Warrant Certificates for the same aggregate
number of Warrants to purchase the shares of the Common Stock, upon surrender of
this Warrant Certificate at the principal office of the Company.

     Upon certain events provided for in the Warrant Agreement, the Exercise
Price and the number of shares of Common Stock issuable upon the exercise of
each Warrant are required to be adjusted.

     No fractional shares will be issued upon the exercise of Warrants. As to
any final fraction of a share of Common Stock which the Registered Holder of one
or more Warrant Certificates, the rights under which are exercised in the same
transaction, would otherwise be entitled to purchase upon such exercise, the
Company shall pay the cash value thereof determined as provided in the Warrant
Agreement. No Warrant Certificate representing any fractional Warrant Shares
will be issued.

     This Warrant Certificate is issued under and in accordance with the Warrant
Agreement dated as of August 28, 1997 (the "Warrant Agreement") by and among the
Company and the Purchaser (as defined in the Warrant Agreement) and is subject
to the term and provisions 

                                      A-2
<PAGE>
 
                                                                            PAGE

contained in the Warrant Agreement. All capitalized terms not defined herein
shall have the meanings given such terms as set forth in the Warrant Agreement.

This Warrant Certificate shall not entitle the Registered Holder to any of the
rights of a stockholder of the Company, including, without limitation, the right
to vote, to receive dividends and other distributions, or to attend or receive
any notice of meetings of stockholders or any other proceedings of the Company.

                    EXHIBIT A - FORM OF WARRANT CERTIFICATE

 
     IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its facsimile corporate seal.

                               KOO KOO ROO, INC.


                               By: ____________________________________
                                   Name:
                                   Title:

[Seal]                         Attest:


                               By: ____________________________________    Name:
                                   Title:  Secretary

                                      A-3
<PAGE>
 
                                                                            PAGE

                             [Form of Assignment]


     FOR VALUE RECEIVED, the undersigned hereby irrevocably sells, assigns and
transfers unto the Assignee named below all of the rights of the undersigned
represented by the within Warrant Certificate, with respect to the number of
Warrants to purchase the shares of the Common Stock set forth below:

     NAME OF ASSIGNEE             ADDRESS                 NO. OF WARRANTS

and does hereby irrevocably constitute and appoint ___________ Attorney, to make
such transfer on the books of Koo Koo Roo, Inc., maintained for that purpose,
with full power of substitution in the premises.

Dated: __________, 1997
                                            ___________________________
                                            Signature



                                            (Signature must conform in all
                                            respects to name of holder as
                                            specified on the face of the Warrant
                                            Certificate.)

                                      A-4
<PAGE>
 
                                                                            PAGE

                        [Form of Election To Purchase]

          The undersigned hereby irrevocably elects to exercise ____________  of
the Warrants represented by this Warrant Certificate and to purchase the shares
of Common Stock issuable upon the exercise of said Warrants, and requests that
certificates for such shares be issued and delivered as follows:

ISSUE TO:______________________________________________________________________
                                     (NAME)

________________________________________________________________________________
                         (ADDRESS, INCLUDING ZIP CODE)

________________________________________________________________________________
                (SOCIAL SECURITY OR OTHER IDENTIFICATION NUMBER)

DELIVER TO:_____________________________________________________________________
                                     (NAME)

at______________________________________________________________________________
                         (ADDRESS, INCLUDING ZIP CODE)

          If the number of Warrants to purchase the shares of the Common Stock
hereby exercised is less than all the Warrants represented by this Warrant
Certificate, the undersigned requests that a new Warrant Certificate
representing the number of such full Warrants not exercised be issued and
delivered as set forth below.

          In full payment of the purchase price with respect to the exercise of
Warrants to purchase shares of the Common Stock the undersigned [hereby tenders
payment of $______ by cash, certified check, cashier's check or money order
payable in United States currency to the order of the Company][hereby delivers
to the Company that number of shares of Common Stock having a Fair Market Value
(as defined in the Warrant Agreement) equal to the Exercise Price multiplied by
the number of Warrant Shares being purchased] [hereby makes a Net Cashless
Exercise (as defined in the Warrant Agreement)].

ISSUE TO:_______________________________________________________________________
                                     (NAME)

________________________________________________________________________________
                         (ADDRESS, INCLUDING ZIP CODE)

________________________________________________________________________________
                 (SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)

DELIVER TO:_____________________________________________________________________

                                      A-5
<PAGE>
 
                                                                            PAGE
                                     (NAME)
________________________________________________________________________________
at
                         (ADDRESS, INCLUDING ZIP CODE)


Date: __________, 19__
                                                  
                                            ____________________________________
                                            Signature

                                            (Signature must conform in all
                                            respects to name of holder as
                                            specified on the face of the Warrant
                                            Certificate.)

                                            PLEASE INSERT SOCIAL SECURITY OR 
                                            TAX I.D. NUMBER OF HOLDER


                                            ____________________________________

                                      A-6