Papa John’s agencies of record resign amid ethical crisis

Posted on Thursday, July 12, 2018 by Molly Ryan

In case you started your morning underneath a rock or were otherwise unreachable, Papa John’s founder, John Schnatter, is under fire for using the “n”-word on a May conference call and has resigned as chairman of the board. While this is certainly newsworthy in its own right, what is perhaps even more interesting is the way its two agencies of record reacted to the initial offense and subsequent fallout.

Laundry Service, the company’s marketing agency, was on the May call in which Schnatter used the slur and described in detail violent incidents he supposedly witnessed as a child. Almost immediately after the call ended, team members reported their uneasiness to owner Casey Wasserman, who moved to terminate Laundry Service’s contract with Papa John’s.

According to AdAge, Olson Engage, the company’s public relations agency also resigned the account after reports of Schnatter’s remarks emerged in July. The PR agency was not on the call, but was hired in February to help the brand and franchise “recover from recent controversies and connect with customers in new and exciting ways.”

In hindsight, it is clear both agencies did the right thing and responded swiftly, as was appropriate considering the gravity of Schnatter’s rant. But, in the moment, what might this have looked like in their respective offices? For Laundry Service, the team members on the call likely talked after it ended about how uncomfortable they felt and made the decision to report this to the firm’s owner, who then turned down what was almost certainly a considerable amount of cash to ensure his firm remained on the right side of history. This required trust in his team and a clear vision for his company’s culture.

And, Olson Engage, upon hearing what happened on the call, did not question Laundry Service’s judgment or consider what was also almost certainly a considerable sum of money to be worth more than their integrity. They too did the right thing and ended their relationship with Papa John’s.

In accounting, CPAs are considered trusted business advisors and expected to raise a red flag when they witness these types of incidents, too. This story serves as a reminder that sometimes doing the right thing means walking away from large contracts or giving up cash that may not pop up anywhere else. But, that doesn’t change the fact that it’s the right thing to do. So, bravo, Laundry Service and Olson Engage. Your example sends the message that racism will not be tolerated and ethics will prevail.


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