Schnatter has always been the face of the brand, and Papa John's has acknowledged in regulatory filings that its business could be hurt if Schnatter's reputation was damaged.
The university has also chose to remove Schnatter's name from the Center for Free Enterprise.
Shares in Papa John's were up more than 3.1% on Friday following the news of the branding overhaul, improving further on the gains made after it was announced that Mr Schnatter was departing as chairman.More news: PM announces new Canada-led training mission in Iraq
"By taking this action, we renew our community's commitment to speaking up when it matters, doing what is right and coming together as one team - our Cardinal family - to heal and move forward", Bendapudi said.
The pizza chain is removing John Schnatter's face from its marketing materials, two days after he admitted to using the N-word during a company conference call. Her announcement Friday comes after several football players said on Twitter they want to see the stadium renamed.
Schnatter submitted his resignation Wednesday as a member of the university's board of trustees after Louisville National Association for the Advancement of Colored People (NAACP) called for Schnatter to either step down or be removed from the board, according to the Courier-Journal. "Regardless of the context, I apologize". There is no clear recourse named in the contract that would allow the university to break the contract should a scandal like this happen. "This is our best decision". Since then, the fallout has been swift: Schnatter resigned from the school's board of trustees and as Papa John's chairman.More news: Nets Trade Jeremy Lin to the Hawks
Major League Baseball also suspended its "Papa Slam" promotion with the company - which provided fans a 40 percent discount on online orders the day after a grand slam was hit during a major league game - Yahoo Sports reported on Wednesday.
A slice of cheese pizza at a Papa John's pizza shop in Quincy, Mass.
Bendapudi said she is trying to differentiate between Schnatter and his company, noting multiple times how many people who work at Papa John's and how cutting ties completely could impact them.More news: Protesters gather in London for mass anti-Trump rallies
The University of Louisville's football stadium has a new name.