Burger King owner says operator in Russia refuses to shut shops
The owner of Burger King has said the operator of its 800 stores in Russia has “refused” to close them, despite its demand to suspend trading after the invasion of Ukraine.
Last week, Burger King, which is owned by Restaurant Brands International (RBI), said it had suspended all supply chain, operational and marketing support for the Russian operation.
RBI has been unable to close the operations directly, as rivals such as McDonald’s have done, because of a complicated legal contract with its main franchisee partner, Alexander Kolobov, with whom it has run the joint venture in Russia for a decade.
“We contacted the main operator of the business and demanded the suspension of Burger King restaurant operations in Russia,” David Shear, the president of RBI, said in a statement and letter to staff. “He has refused to do so. Would we like to suspend all Burger King operations immediately in Russia? Yes. Are we able to enforce a suspension of operations today? No.”
Burger King is one of a number of western companies, including Marks & Spencer and the hotel groups Marriott and Accor, that are prevented by complex franchise deals from withdrawing.
RBI said it is attempting to sell its 15% stake in the Russian operation. Shear said any profits from the business, and its ownership stake, have been redirected to the United Nations’ refugee agency.
“There are no legal clauses that allow us to unilaterally change the contract or allow any one of the partners to simply walk away or overturn the entire agreement,” he said. “No serious investor in any industry in the world would agree to a long-term business relationship with flimsy termination clauses. This is exactly why we say it’s a complicated legal process.”
Burger King’s main franchisee
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