When the franchise account walks

Wave_goodbye_to_the_boss_button-p145449526970885710t5sj_400Burger King just fired Crispin Porter Bogusky as its advertising agency of record after a seven-year run. This is seismic news for a number of reasons:

– Within advertising circles, Crispin is arguably still the hottest thing since sliced bread and remains, to the best of my knowledge, the only ad agency to ever grace the cover of BusinessWeek.
– Along with its Mini Cooper work, CPB's edgy BK creative helped put it on the map and become the envy of agencies near and far.
– BK's $300 million budget loss will be a significant hit to Crispin's bottom line and slow down, if not halt entirely, its plans for a rapid global expansion.

Losing a franchise account is a big, big deal in the advertising and PR world. And, despite the best spin from agency management, it does a real number on internal troop morale. I know. I've been there.

I was at Hill & Knowlton in the 1980s when its franchise account walked. And, I was with Earle Palmer Brown in the early 1990s when the cornerstone client there said, 'Sayonara, Sam.'

We've been fortunate in our 15-plus years at Peppercom. We've never really had a franchise account that totally dominated our billings. We've had a few instances where a single client accounted for more than 30 percent of our fees, but we've always been fortunate to have three or four large accounts and multiple 'midsized' clients. That's enabled us to suffer a significant loss without having to take immediate, Draconian measures.

I can only think of only a few PR firms that have bona fide franchise accounts. Waggoner Edstrom is certainly one. It grew to become a huge, independent agency based upon its long-standing relationship with Microsoft. I've no idea how large a percentage Microsoft is to overall W-E billings, but a sudden departure would have to register a 9.0 on the Crispin/BK scale. Golin Harris is another PR agency with a franchise account: McDonald's. G-H has been Mickey D's AOR from day one. And, I couldn't imagine one without the other. But, then, who could have predicted BK's deep-frying of Crispin?

Collecting too many dollars from a single client is akin to making a pact with the devil. The client knows they wield enormous power over the agency, and the latter knows its fate could depend on the health and longevity of the current direct client contact (note: according to Ad Age, CPB's demise was caused by poor sales and constant senior management turnover at BK).

Crispin is a superb agency that will undoubtedly bounce back from losing this whopper of an account. But, just the same, it's a cautionary tale for any small, medium or large-sized firm in any professional services field: don't rely on one client to make your image and reputation and never put too many eggs in one basket.

4 thoughts on “When the franchise account walks

  1. I am SOOO sorry to be the bearer of bad news, but Sterling Cooper is FICTION. Don Draper is a CHARACTER. Mad Men is a TV show. Have the lines between reality and TV blurred THAT much! Ye gad! This reminds me of when Dan Quayle chastised Murphy Brown for having a baby out of wedlock. There are plenty of true analogies out there…!

  2. The Sterling Cooper analogy is spot on. Another good one would be the dotcom agencies from a decade past who found themselves in dire straits when the tech bubble burst. I still remember the chill that went up and down my spine when I read that Wilson McHenry, a red hot Bay area dotcom PR firm, had gone Chapter 11.

  3. I totally agree that having too many eggs in one basket is not good for business. Look what happened to Sterling Cooper when Lucky Strike bailed! A correlation can be made to the magazine industry. Conde Nast shuttered several publications last year, including Gourmet. But CN didn’t shut down because they also had a stable of successful magazines to fall back on, like Glamour.
    I would never want to give one client the power to decide whether my business thrives or dies. It’s better to balance the work more evenly over several mid-sized accounts.