PR firm Thox dumps Diner En Blanc! Part 3

This is part 3 of Limpeh's coverage of the Diner en blanc fiasco. If you haven't already read part 1 and part 2, I suggest you start there. Moving on, no doubt some of you would've read the story that has emerged on social media today that PR firm Thox has dumped Diner en blanc as their client.  Allow me to quote from the MSN article:

The split was finalised on August 24, the same day public backlash started on Twitter. This was before a statement of apology from the Singapore and international organisers was made on August 25. In it, the organisers said they "had some misfortunes in communicating the right information" and stressed that local food was allowed, although 'junk' or 'fast' food is discouraged. When contacted, a representative from Thox would only say that the organiser's actions were "against agency ethics" and disagreements over handling matters happened even before public backlash occurred last Friday. The representative also said that the statement discouraging local food was not made by Thox.

Thanks to the various people who have brought this piece of news to my attention and have asked me to respond to it. Well quite frankly, it doesn't surprise me - Thox risked their long term business prospects in continuing to be associated with DEBS after the major gaffe they made with Daniel Ang. They were unwittingly shoved in the front line after they were the ones who had to ask Mr Ang to remove his blog post regarding the local dishes he suggested that diners could bring to DEBS.

Now the question that I want to answer is this: "What are the contractual implications for breaking a contract like that, so close to the actual event?"

I am only able to speak from experience having dealt with PR contracts within the world of financial services, and speculate on what the implications are as every contract is unique. The contract that Thox has signed with DEBSOC/DEBI is confidential so I am only discussing about the issue hypothetically rather than guessing what has happened. Frankly, unless an insider wants to speak up and share the lurid details with us, we will never know.

What kind of working relationship did Thox have with DEBSOC?

Firstly, DEBSOC/DEBI would've paid a hefty price for Thox to handle the PR for the event - now I imagine that a contract like that usually would not require payment up front, but the payment would be staggered over the run up to the event as such.

• 50% up front, upon signing the contract 
• 20% one month before the event 
• 20% the day after the event 
• 10% a month later (as the PR company would need to follow up after the event) 

Now I am not suggesting that this is the payment schedule agreed between Thox and DEB - but this is pretty typical as it is designed to protect the client. So if the PR company fails to deliver what was agreed in the contract, the client hold the next installation of the payment ransom and delay payment and use that to coerce the PR company to deliver what was agreed. The PR company will need some payment up front to cover their expenses - hence the 50% up front which is quite average in this business. The PR firm has to offer terms favourable to the client as this is standard practice, otherwise the client will simply say, "I don't like your terms and conditions" and use a different PR firm who will offer favourable T&C. 

Have you read the small print on the contract? 

However, what happens when one party breaks the contract? Ah, the first question is this: is it the client or the PR firm who wants to break the contract? After all, there are always terms and conditions that would punish the party who breaks the contract. There are three possibilities: 

• Thox dumps DEB
• DEB dumps Thox
• Both parties mutually agree to split 

From the story on MSN, it does seem that it was Thox who dumped DEB as a client. I could be wrong, but I am basing that on the report on MSN. Thox seems pretty anxious to distance themselves from the DEBS fiasco, telling MSN that "the organiser's actions were "against agency ethics" and disagreements over handling matters happened even before public backlash occurred last Friday. The representative also said that the statement discouraging local food was not made by Thox."

Clearly the folks at Thox have nothing against local cuisine. 

In terms of the money Thox would've been paid by DEBS, it is clear that they are willing to forgo the remaining installation(s) of payment in breaking the contract like that. Now depending on the T&C of the contract, given the way Thox has unceremoniously dumped DEBS days before the event, creating even more controversy and making DEBS look even worse - DEBS could argue that Thox had failed to deliver the kind of PR which was required of them as per the contract and could even demand part or all of the initial payment back. Indeed, there probably would be some clause in the contract defining what would happen if one party were to break the contract and what kind of clawback could apply in such situations. 

What happens next? Well, Thox could either be nice and just refund whatever DEBS demands, or they could play hard ball and refuse on the grounds that the client was uncooperative and difficult to work with.  DEBS may wish to avoid further negative publicity (as if there isn't enough already!) by simply letting the matter rest with Thox by not applying the clawback clause - lest it led to a court case where both parties end up suing each other and Thox could be in a position to make the people at DEBSOC look very bad (as if they don't look bad enough already!). The possibility exists for DEBS to sue Thox for unceremoniously dumping them last minute days before the event, rendering it very hard for DEBS to replace them - but it would be highly unlikely for DEBS to pursue this given that Thox would have a pretty good defence and they may lose an expensive legal battle (which they can ill-afford at this stage). Don't forget, DEBS is a commercial event and with this much crap going on - will they be able to generate a profit at all? 

How will Thox and DEBS settle this issue? 

I cannot predict what Thox would do - but I give them credit for taking the very brave step in dumping DEBS as a client at this stage to save their reputation. It is the right thing for them to do and I would've done the same thing. After all, it can be very frustrating trying to do PR for a client who simply will not listen to you. What do you do in such a situation? 

Let me tell you this story from China. A very wealthy businessman walks into an exclusive restaurant in Beijing with his friends and demands to be served the very best, the most expensive and special dishes the restaurant has to offer. Rising to the challenge, the chef meets the wealthy businessman and makes a few suggestions along with the prices. The businessman is disappointed as the chef had suggested dishes he was already familiar with - he then caught sight of the ornamental pond in the corner of the room where there were a number of ornamental koi fish swimming around. "I want to eat fresh koi! How much for all of the fish in that pond there?"

The chef tried to explain - that is ornamental koi, the koi were selected for their colour, not for their taste, hence it was not on the menu. "If you wish to have a fish dish, I have various kinds of fresh fish available for your selection sir. Besides, the koi is very expensive..."

"I want to eat fresh koi," he said. 

At that point the businessman got angry and shouted, "You think I cannot afford to pay for your expensive fish?! Do you have any idea how rich I am?" He banged the table and made the manager an ultimatum: either all the ornamental koi were to be cooked for him and his guests, or they would leave immediately and spread the word that the restaurant was awful. The manager caved into pressure and ordered the chef to catch every single one of koi fish and cook them. The chef tried his best and used his best recipes with the koi - but it doesn't change the fact that koi isn't particularly suited for fine dining because they are a very bony fresh water fish. Such is the nature of fresh water fish. 

Needless to say, the businessman and his guests struggled with the very fine fish bones and then complained to the manager that the dishes were not good enough. When presented with the bill for the dinner, the businessman was extremely displeased and paid up - but swore that he would tell everyone he knew that the restaurant served overpriced bad fish. 

The restaurant manager was placed in a no-win situation. His reputation was going to be ruined anyway because the guest was unreasonable - the guest had refused to take the advice of the chef who knew how to prepare the most delicious cuisine. Whether or not he served the koi, the guest was going to leave the restaurant very unhappy. Such is the situation with Thox and DEBS - was Thox stuck between a rock and a hard place? Was Thox struggling with a client who refused to take their advice? 

How do you handle a difficult client?

There has to be some common sense and an effort to be reasonable by both parties in such a working relationship. When you go to a restaurant, you accept the better judgement of the chef to prepare the dishes according to his recipes. When you go to a club, you accept the better judgement of the DJ to play the best songs to create a party atmosphere. If you don't like the chef's recipes or the DJ's choice of music, then fine - you can always cook your own meals and create your own playlist with iTunes. If DEBS was prepared to hire Thox as a PR agent, then they should have been prepared to listen to them. Why did they bother with Thox in the first place if they were not prepared to listen to them and think they know better than Thox? 

I feel sorry for Thox really, but this is hardly the first time this has happened in the industry. I do feel that Thox should've had the balls to stand their ground and tell DEBS, "You cannot do this, you're making a terrible mistake!" But the fact that "disagreements over handling matters happened even before public backlash occurred last Friday" suggests that perhaps they did try to warn DEBS already but were ignored. What I really want to know is this: who was the idiot at DEBSOC who overruled Thox? Was it Clemen Chiang? Who should be the one blame? Who is most responsible for this PR fiasco? How I wish some insider would spill the beans!

Who is the culprit? Whose fault is it? 

Now the big question is: will DEBS be able to bounce back from this? Are they able to handle their PR on their own without any help from Thox? Would another local PR firm like to pick up where Thox left off? Have DEBS learnt their lesson from Thox's departure? Would DEBI ever trust this local team in Singapore ever again? Will the event be a success after all this controversy? What do you think? Leave a comment below, thanks. 

The saga continues...