Forbes reported that Schnatter used the N-word during a media training exercise. When asked how he would distance himself from racist groups, Schnatter reportedly complained that Colonel Sanders never faced a backlash for using the word.
In a statement released by Louisville, Kentucky-based Papa John's, Schnatter said reports attributing use of "inappropriate and hurtful" language to him were true. "Regardless of the context, I apologize," the statement says.
The University of Louisville also said Wednesday that Schnatter resigned from its board of trustees, effective immediately. Schnatter had already stepped down as CEO of Papa John's last year after blaming slowing sales growth on the outcry surrounding football players kneeling during the national anthem.
As of Thursday morning, Schnatter's image remained on Papa John's website. The company had noted in a previous regulatory filing that its business could be harmed if Schnatter's reputation were negatively impacted.
Papa John's shares were up 4 percent Thursday morning after the company announced Schnatter's departure.