For the record, Karl's burnt down on October 21, 2005.
In 2006, Cumberland Farms had an option on the property, but their plan to build a convenience store there was turned down by the City of Laconia planning board because they felt that it would cause traffic havoc, with there being enough problems already at the Malfunction Junction without adding a whole lot more. Cumberland Farms later built their store further up Route 3 at the top of Tower Hill.
Regarding Malfunction Junction, the latest word is that the State of NH plans to build a roundabout there. A meeting was held at the Weirs Beach community center on August 13, 2009 to discuss the State's plan.
Here is a link to a Laconia Citizen article with coverage of the meeting.