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Burger King Ad Fight: The Worst-Case Scenario for Crispin Porter + Bogusky

Burger King appears to be frittering away its hard-fought sales gains and Crispin Porter + Bogusky could end up being used as the fall-guy. Ad Age reports this week that BK's corporate HQ is trying to rig a vote that will force franchisees to accept a $1 for a double burger promotion -- the restaurateurs don't want it because they can't make money on it. HQ favors the promo because sales have declined this year while McDonald's have gone up.

To mollify the franchisees, BKHQ is promising to tone down CP+B's risque ads, which have included blow-job jokes,* racist stuff about Mexicans (see image), and inappropriate promotions targeting kids.

But Age neglected to mention the 800-pound gorilla in the room at BK: The federal suit in which franchisees accuse BKHQ of plotting to steal $25 million of their funds in 2010 and $40 million thereafter, in a conspiracy to reinterpret a contract with Coca-Cola and divert the money to advertsing. (Sounds complicated? It is. See the link for an explanation.)

In that litigation, BKHQ won the right to file a copy of its soft drink agreement with Coke under seal. That agreement is crucial because rebates from Coke's sales to BK fund BK's advertising under an agreement with the franchisees.

BK, in response, filed a motion arguing that the fight over the ads should be heard in a different court. It has yet to substantively address the claim on the facts.

On its own, that is not interesting except what it says about BKHQ's tactics: That it is going to litigate every single detail of this fight and drag it out as long as possible. With the first $25 million in jeopardy in 2010, it is foreseeable that the money will be diverted well before the legal fight is over.

So how might all this result in a worst-case scenario for CP+B? Doubtless, if BKHQ needs to settle the suit it will put the considerations of its $65 million Coke-rebate-ad-fund ahead of its expenses for CP+B. And with franchisees pissed that the agency's ads are no longer turning around sales, you can see that one possible compromise might involve BKHQ agreeing to jettison CP+B from the account in order to save its Coke money and make peace with the restaurant owners who have come to dislike the shop's work.

* Correction: The ad referred to was not one of CP+B's. The agency tells BNET:

Burger King Corporation (BKC) values and respects all of its guests. This advertisement is running to support a limited promotion in the Singapore market and is not running in the U.S. or any other markets. It was produced by a locally-based Singapore agency and not by BKC's U.S. advertising agency of record, Crispin Porter and Bogusky.
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