What lesson should advertisers take from the downfall of Subway's spokesperson Jared Fogle in the wake of his plea deal on charges related to child pornography?
For starters, there is the importance of including a morals clause in an endorsement deal.
Jared Fogle was a Subway success story, rising to fame after eating the sandwich chain's products and losing more than 200 pounds while a college student. National media picked up a story in the college paper and Fogle became a household name as a Subway endorser. For 15 years he was the face of the company—he appeared in over 300 commercials, he was featured on the website, and he made public appearances on the company's behalf.
But that changed in July when federal authorities raided Fogle's home. The government did not specify why the endorser was being investigated, but less than two months earlier the president of the Fogle Foundation, a charitable organization established to teach children healthy lifestyle habits, had been arrested on charges related to child pornography.
Initially, Subway "suspended" its relationship with Fogle following the raid. References to Fogle were removed from the website, including a game on its children's site called "Jared's Pants Dance." The company had already stated that it had severed all ties with the Fogle Foundation's president.
In August Fogle reached a plea deal with federal authorities that included admissions of sex with minors and the possession of child pornography, with some images of children as young as six years old. Fogle will pay $100,000 in restitution to each of 14 minor victims, register as a sex offender, and undergo treatment for sexual disorders. Prosecutors agreed not to seek a sentence higher than 12 ½ years in prison and Fogle will not ask for fewer than 5 years.
Subway then officially cut ties with its former spokesperson in a tweet, stating, "We no longer have a relationship with Jared and have no further comment."
Why it matters: Subway may face an uphill battle regaining the trust of consumers, given its lengthy relationship with Fogle and the disturbing nature of the crimes committed. For other companies, the high-profile downfall of a celebrity endorser reiterates the importance of including a morals clause in endorsement deals, and providing a means to terminate an agreement or at least reduce the money owed when an endorser commits an act that falls within the provision. While the issue of whether particular acts fall within the scope of a given morals clause can be a point of intense negotiation and later disagreement, Fogle's guilty plea should make Subway's exit from the deal easy.