The Coca-Cola Company is to pay the fast food chain Burger King US$21.1m in compensation for rigging a marketing test for Frozen Coke at its restaurants.
A deal was reached earlier this month, but details of the deal have only just become apparent.
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In a letter to the company’s franchisees Bradley D. Blum, Burger King’s chief executive said Coke will pay the Burger King Corporation US$6.4m, which will go toward the company’s advertising pool.
Coke will then pay US$1,000 for each restaurant that had an authorized Frozen Coke machine as of May 2000. That payout could total up to US$8.4m.
Furthermore, each restaurant that currently has the machines will have a $500 annual deductible for repair costs to the machines for three years, a sum that cold total US$5.4m for Burger King.
Finally any current Burger King franchises that have not recouped the financial investment on Frozen Coke machines through June 2003 will be reimbursed, which could cost Coke US$900,000.
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By GlobalData
”Resolving this matter in a fair and equitable manner now enables us to focus on our No. 1 priority of driving guest traffic into each Burger King restaurant,” Blum said in the letter. ”It will foster an even stronger partnership with the Coca-Cola Company.”
The payments still have to be endorsed by 8-% of Burger King’s franchisees before the deal is finally settled.
