Coca-Cola has apologised to Burger King for a rigged marketing test that led the chain to try to sell Frozen Coke to its customers.
Burger King outlets will get $1,000 each
Coca-Cola has agreed to pay Burger King $21m (£12m) in compensation after admitting that it faked tests in 2000 that led to the widespread adoption of Frozen Coke machines at the hamburger chain.
The settlement will resolve the ongoing dispute between the two companies, according to news agency reports, quoting a letter from Burger King head office to its local branches.
In June, the world's biggest soft drink company acknowledged that some of its employees undermined the test of Frozen Coke three years ago at Burger King restaurants in Virginia and said the workers had been disciplined.
Burger King franchise owners have been angry that sales of the slushy beverage have been disappointing.
Now each franchise which bought a Frozen Coke machine will receive $1,000 from Coke and up to $500 in repair costs.
Coke will also ensure that no franchise has lost money on their investment, and pay Burger King's head office $6.4m to advertise the brand.
Burger King, which reportedly invested $10m in promoting Frozen Coke, had threatened to abandon it in January after disappointing sales.
Burger King chief executive Bradley Blum said that the settlement was "fair and equitable" in a letter to franchisees, and urged them to approve the deal.
More than 80% of the franchise holders must agree to the deal in order for it to be approved.
Burger King operates 8,000 restaurants in the United States.
Last year it was sold to a private US equity firm for $1.5bn by its parent company, UK drinks giant Diageo.
The U.S. Attorney's Office in Atlanta is still investigating the allegations of a rigged test, first made in a whistleblower's lawsuit.