The Bartle Bogle Hegarty-created spot for the Mini Chicken Fillet Burger is set in a train station and features a man singing to a woman, who has one of the burgers, asking for a bite.
Viewers complained about a close-up of the burger in the woman's hands, saying that the product available in KFC restaurants was smaller.
One viewer said that the ad showed the burger to be at least twice its correct size.
The advertising watchdog staff upheld the complaint after purchasing three Mini Fillet Burgers in central London.
The Advertising Standards Authority said: "We noted that the bun shown in the advertisement was significantly thicker than the burgers we purchased; there was more filling and the lettuce was a different type."
KFC said that the Mini Fillet Burger's name and 99p cost indicated it was smaller than a normal burger. It said the woman in the ad may just have had small hands but that the casting brief did not specify someone with small hands.
According to the ASA, this could have contributed to the misleading impression of the relative size of the burger.
"Advertisers are permitted to present their products in a favourable light but not in a way likely to mislead viewers," KFC said.
The Broadcast Advertising Clearance Centre said it had passed the ad because the product was clearly described as "mini".
A spokeswoman for BBH said that the ad had finished its run and there were no plans to show it again.
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