Firing a Problematic Founder Can Backfire: TCU Research Explains the Consumer Loyalty Paradox

IN 2018, PAPA JOHNS FOUNDER JOHN SCHNATTER, who used a racial slur during a conference call, resigned.

Lan Anh Ton analyzed consumer responses to founder scandals like Papa John’s John Schnatter case, revealing the hidden tension between demanding ethics and preserving brand identity. Photo by Desiree Rios

Lan Anh Ton, intrigued by the event as a marketing incident, scoured social media for consumer sentiment. Some people called for Schnatter’s firing. Others contended that ousting him would disrupt the brand’s stable essence, called “continuity authenticity.” As Ton put it, sans the founder, “the brand is no longer itself.”

Ton, an assistant professor of marketing, discovered a fundamental tension in how consumers respond to founder scandals. Consumers demand both ethical behavior and unwavering authenticity, meaning faithfulness to what the brand fundamentally represents. When a founder, who may be linked to the brand’s essence, behaves unethically, consumers face a choice between these two values.

In a 2025 paper co-authored by Ton for the Journal of the Association for Consumer Research, she explores this conflict.

Consumer sentiment, after all, drives the economy. Ask Papa Johns, which lost almost 10 percent in total sales immediately following the Schnatter incident; its stock price took three years to recover.

In the wake of cultural movements like #MeToo, consumers have been vigilant in aligning their wallets with brands that uphold moral standards. Brand authenticity, however, also remains a salient motivator. This phenomenon is rooted in a theory that brands possess invisible essences, which usually spring from a company’s origins.

Essences encompass a brand’s values, its story, the place where it sprang to life. Take Levi Strauss & Co., which people view as authentic because it still manufactures jeans in the original San Francisco factory.

Founders, inextricably tied to these origins, are often perceived as the source of these essences.

TESTING ETHICS

Four scenarios constitute Ton’s paper. In each, researchers surveyed a random sample of consumers and asked them to evaluate how a fictional brand responded to its founder’s ethical misconduct.

In the first experiment, respondents evaluated a coffee company whose founder made a sexist comment during a conference call. Different subsets measured responses to the founder being fired or retained; respondents also indicated whether they intended to purchase from the company in the future.

The researchers observed no difference in respondents’ desire to buy from a company that fired the coffee magnate and one that retained him.

In the second experiment about the same coffee company, respondents evaluated whether the company had stayed true to its essence.

The effect of the company’s decision to fire or keep the CEO depended on whether the leader was the company’s founder, because firing a founder meant disrupting the brand’s essence; firing a leader who was not involved with establishing the company translated to an increased intention to purchase the coffee.

The third experiment centered on a clothing company founded on the core values of inclusivity and body positivity. In one version, the CEO criticized an employee’s weight; in the other, she antagonized an employee asking for a bonus.

“BEING A PERSON AND BEING A CONSUMER IS REALLY HARD TO SEPARATE.”
Julio Sevilla

The results: Prioritizing brand authenticity motivated the responses. When the CEO criticized an employee’s weight, her transgression compromised a core theme of the brand’s essence, and firing the founder boosted consumers’ intention to buy the company’s products. The disagreement over compensation was less of a big deal.

Participants in the fourth experiment evaluated a restaurant founder who, in one scenario, made a sexist comment;
in another, he coerced an employee into a sexual relationship under threat of termination, a fiction inspired by the real Harvey Weinstein scandal. The results showed that in cases of morally severe transgressions like sexual assault, firing the founder was the way to go.

Rosanna Smith, an associate professor of marketing and John M. Jones Faculty Fellow at the University of Illinois Urbana-Champaign, and Julio Sevilla, the L. Edmund Rast Chair of Business and professor of marketing at the University of Georgia, were Ton’s co-authors on the study. Sevilla said his advice to governing boards facing a dilemma over a founder’s poor behavior would be based on the context. “It depends on where the brand is,” he said. “Some situations may not be salvageable.”

FROM CURIOSITY TO CLASSROOM

After studies at the University of Economics Ho Chi Minh City and at South Korea’s SolBridge International School of Business, Ton pursued a doctorate at the University of Georgia, where she developed a passion for research. She collaborated with Smith and Sevilla to develop experiments that evaluated consumers’ perceptions of brand authenticity. “There was an opportunity,” Sevilla said. “It was new.”

He also believes in the importance of disseminating their new research. “Sometimes it takes a little bit of time to spread the word. I think that it’s going to be useful.” Sevilla said the consequences transcend consumer marketing.

“Ideas of authenticity and morality share personal values,” he said. “You get to express them when you are a consumer. Being a person and being a consumer is really hard to separate.”