SAN ANTONIO (AP) _ Pizza Management Inc., one of the largest franchisees of Pepsico's Pizza Hut chain, escalated a dispute with the soft-drink giant Tuesday by saying it's canning Pepsi and switching to rival Coca-Cola.

The move was the latest in a legal squabble over franchise issues between San Antonio-based Pizza Management and Pepsico, the parent of Pizza Hut Inc.

Pizza Management, which has 240 restaurants, sued Pepsico for damages in 1986 after the soft drink company refused to allow Pizza Management to become a publicly held entity. Pepsico countersued and the case remains unresolved.

In a statement announcing the soda switch, Pizza Management owner Arturo Torres made no mention of the fight with Pepsico.

He said Pizza Management was making the change because ''Coca-Cola is the clear-cut leader in providing drinks to the food service industry and can offer my company distinct technological and service advantages. More than anything else, Coca-Cola also has demonstrated a real commitment to helping us strengthen our business.''

Torres, a Cuban immigrant, started as a dishwasher at a Pizza Hut in Amarillo. Pizza Management operates Pizza Hut restaurants in Texas and five other states as well as the Virgin Islands, Puerto Rico and Spain and employs 5,300.

Among its restaurants is the Pizza Hut that will serve the Olympic Village in Barcelona next year.

The conversion to Coke's products is expected to be completed by Dec. 15.

Kenn Ross, a spokesman for Pepsi at the company's world headquarters in Purchase, N.Y., said the Pizza Management announcement would amount to an insignificant decrease in Pepsi sales.

''We're engaged with Mr. Torres in an ongoing legal dispute over actions he's taken to break his contract,'' Ross said. ''He's simply using today's action as a lever in this matter.''

At Coke's world headquarters in Atlanta, spokesman Randy W. Donaldson declined to comment on the Pepsi-Pizza Management dispute, but said of the switchover ''We're delighted to have the business.''