KFC National Council v. KFC

Summary

In this Food industry commercial litigation proceeding, plaintiff KFC National Council and Advertising Cooperative (NCAC) Inc, a special purpose entity formed to develop and manage the KFC’s domestic advertising and controlled by supermajority of KFC Franchisees sought to clarify its authority to control brand advertising. The dispute arose between the plaintiff and the defendant, over the two main function of NCAC - the generation of advertising plans for the KFC brand and the approval of specific KFC advertisements.

The plaintiff was represented by attorney John Bush. The defendant in this case, KFC Corporation was represented by attorney Kenneth Nachbar.

CVN webcast three prior hearings in the case, and a bench trial From September 20-24, 2010.

Post-trial arguments will be heard and webcast live November 1, 2010.

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Outcome

The court found that the franchisees were entitled to a declaration that the NCAC Committee had the authority under the Certificate to adopt the advertising program of the NCAC by majority rule. Included in that program were amendments to KFCC’s proposals approved by a majority of the Committee. The NCAC’s adopted program would necessarily provide guidance to KFCC on what products would be featured in the creative advertising process and when. KFCC had a duty to implement that plan in good faith. But KFCC did not have a duty, if it acted in good faith, to develop with the national advertising agency and the air commercials or to adopt advertising themes that KFCC and agency thought harmful to the KFC brand.