Markets

Was Klein's Departure From Burger King Linked to Franchisee Ad Lawsuit?

By Jim Edwards

Updated on: November 12, 2009 / 11:59 AM EST / MoneyWatch

Russ Klein, the Burger King (BKC) chief marketing officer who mysteriously disappeared to go sword-sharpening and dragon-slaying in September, has resigned. His departure occurs as a $65 million lawsuit between BK and its restaurant owning franchisees over their advertising budget has ground to a halt in federal court. By amazing coincidence, the last filing in the suit was also in September.

There are two reasons why lawsuits go dark: The parties are in settlement talks, or the parties are waiting for a judge's ruling. Could it be that Klein's departure has something to do with the suit?

In the suit, the franchisees are complaining that Burger King is attempting to divert $65 million in funds dedicated for restaurant maintenance to advertising instead. The money -- generated by sales of Coca-Cola at the restaurants -- is being wrongly claimed by BK's corporate HQ, the complaint states.

Franchisees have also disliked much of the advertising produced by Klein's chosen ad agency, Crispin Porter + Bogusky. And they hate the $1 menu promotion, because they claim they cannot make money on it. (They also believe BK attempted to rig a franchisee vote on the issue.)

As you can see, BK is a mess right now.

So it's not completely implausible that Klein might be used as a fall guy by BK to mollify its angry franchisees.

Here's Klein's statement, via Ad Age:

"After thoughtful consideration, I have decided that now is the time to write the next chapter of my life. ... I feel certain that the marketing group will continue to excel under the leadership of Peter Robinson, who brings both the right credentials and experience to the interim post. I wish the entire Burger King family much continued success."

The other unanswered question: With CP+B's client gone, does the agency have a future wth BK? New client execs tend to want their own agencies. Again, a promise to franchisees to ax Klein contains the implicit promise that CP+B will go as well for that very reason. It's just a theory ... Time will tell.