In the recent interview with TheGamer it turns out that Harada's outrageous character ideas weren't limited with Negan from The Walking Dead and a playable Salmon in Tekken 3.
Michael Murray adds to this by explaining that perhaps KFC weren't fans of their founder and now mascot being seen in the context of combat. This isn't anything new for PR-conscious, yet mostly out of touch companies.
Some of you might remember similar issues with racing games and car damage models. Car manufacturers don't mind having their shiny new machines on display, as long as you don't let them crush those machines into piles of metal. After all, it might give them an impression that cars break when they slam into something at high speed, who would want to buy something like that?
With that said, we actually have seen KFC possibly warm up to the idea of the collaborations, as seen with the Colonel Sanders dating game, and more importantly, the Street Fighter 6 event where you could dress your character up as the mascot and go punch some people.