Burger King forced to keep 800 Russian restaurants open Business

Burger King’s partner has refused to close its 800 Russian restaurants, blocking the US fast-food giant’s bid to close after Vladimir Putin invaded Ukraine.

Restaurant Brands International, owner of Burger King, said it asked its biggest franchise partner in Russia, Alexander Kolobov, to suspend operations, but “he refused to do so”.

David Shear, Chairman of RBI, told staff: “Do we want to suspend all Burger King operations in Russia immediately? Yes. Are we in a position to impose a suspension of operations today? No.”

He said the complicated franchise agreement in Russia meant the company was unable to unilaterally change the contract or allow either partner to walk away or cancel the arrangement.

The deal includes Mr. Kolobov, as well as Russian state-owned banking division VTB Capital and Investment Capital Ukraine. RBI has a 15% stake in the joint venture, which it is trying to sell.

Mr Shear 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 is a complicated legal process.

He added that changes to the deal “would ultimately require the support of the Russian authorities on the ground and we know that is hardly happening any time soon.”

Burger King said it had already suspended all corporate support for the Russian market, including operations, marketing and supply chain support, as well as withholding approvals for new investments and expansions.

It comes amid a wave of corporate exits from Russia, with Coca-Cola, Starbucks and Heineken among those who have severed ties.

Others have found it more difficult to do so. Marks & Spencer stores in Russia are still operating as the rights are controlled by a Turkish company, TiBA, which has refused to close them.

M&S suspended deliveries to its Russian partner two weeks ago and has no plans to resume them.

Lush, meanwhile, said last week it was unable to force its stores in Russia to close due to a franchise agreement in the country, but also halted shipments of inventory.

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This notice was published: 2022-03-18 14:19:33

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