In the Court of Chancery of the State of Delaware Kfc
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE KFC NATIONAL COUNCIL AND ) ADVERTISING COOPERATIVE, INC., ) ) Plaintiff, ) ) v. ) C.A. No. 5191-VCS ) ) ) KFC CORPORATION, ) ) Defendant. ) MEMORANDUM OPINION Date Submitted: November 13, 2010 Date Decided: January 31, 2011 Vernon R. Proctor, Esquire, Kurt M. Heyman, Esquire, Neal C. Belgam, Esquire, Melissa N. Donimirski, Esquire, PROCTOR HEYMAN LLP, Wilmington, Delaware; John K. Bush, Esquire, Janet P. Jakubowicz, Esquire, Mark T. Hayden, Esquire, Christie A. Moore, Esquire, Reva D. Campbell, Esquire, GREENEBAUM DOLL & MCDONALD PLLC, Louisville, Kentucky, Attorneys for Plaintiff. Kenneth J. Nachbar, Esquire, Megan Ward Cascio, Esquire, John A. Eakins, Esquire, MORRIS, NICHOLS, ARSHT & TUNNELL LLP; Layn R. Phillips, Esquire, David A. Schwarz, Esquire, Marshall A. Camp, Esquire, Garland A. Kelley, Esquire, IRELL & MANELLA LLP, Los Angeles, California, Attorneys for Defendant. STRINE, Vice Chancellor. I. Introduction Defendant Kentucky Fried Chicken Corporation (“KFCC”) and its franchisees are at odds over the authority the KFC National Council and Advertising Cooperative (“NCAC”) has to determine the national advertising strategy for the KFC brand. KFC is, of course, the moniker inspired by Colonel Harland Sanders’ famous creation, Kentucky Fried Chicken.1 The NCAC2 is a non-stock corporation that was founded over forty years ago and is licensed and authorized to serve as the advertising arm for the KFC brand in the United States, deploying advertising funds raised from KFC franchisees as part of their franchise agreements with KFCC. In lieu of a board of directors, the NCAC Committee (the “Committee”) serves as the NCAC’s governing body and consists of seventeen members, thirteen franchisee representatives and four KFCC representatives.
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