According to a top executive at the fast-food giant’s parent company, Burger King cannot close hundreds of stores in Russia because its main franchisee in the country “refuses” to do so, despite the ongoing war in Ukraine.
Restaurant Brands International President David Shear described the company’s dilemma in one Open letter to employees. Burger King operates in Russia through a “joint venture partnership” with businessman Alexander Kolobov, who handles the day-to-day operations and oversight of around 800 stores in the country.
RBI only holds a 15 percent minority stake in the joint venture – meaning it has little recourse if its partners don’t cooperate. As a result, Burger King locations will continue to operate even as hundreds of Western companies cut ties with Russia after the invasion.
“We contacted the main operator of the store and demanded the cessation of Burger King restaurant operations in Russia. He has refused to do so,” Shear said in the letter.
The Burger King owner’s other partners in the joint venture are Investment Capital Ukraine, a leading investment firm, and VTB Capital, a subsidiary of Russia’s VTB Bank. While several counties have sanctioned VTB Bank since the war began, Shear said RBI is “fully compliant with all applicable sanctions.”
Shear added that RBI “has started the sale process [of] our ownership interest in the company.” The company has ceased corporate support for its Russia business and plans to donate all profits from the partnership to the UN Refugee Agency.
“While we would like to do this immediately, it is clear that this will take some time due to the terms of our existing joint venture agreement,” he said.
Shear went on to say that RBI could not “unilaterally halt” operations in Russia unless Russian authorities agree to support the move locally — a requirement that “is not going to happen any time soon”.
“Do we want to stop all Burger King activities in Russia immediately? Yes. Can we enforce a cessation of operations today? No,” he said. “But we want to be transparent with our actions and explain the steps we have taken to stand by the international business community in response to Russia’s attack on Ukraine and its people.”
More than 400 Western companies have left Russia since the Kremlin ordered its unprovoked invasion of Ukraine. But some companies trying to leave, including McDonald’s, Burger King’s fast-food rival, have encountered difficulties.
While McDonald’s has closed all of its company-owned stores in Russia, some local franchisees have continued. And Russia has relaxed intellectual property laws for Western firms operating in the country – raising concerns that local operators will seek to exploit the new loopholes.
A Russian company called “Uncle Vanya” has introduced a logo almost identical to McDonald’s “gold arches” as part of its apparent bid to replace the chain in Russia – a move backed by the Kremlin.
https://nypost.com/2022/03/18/burger-king-says-franchisee-in-russia-has-refused-to-close-800-stores/ According to Burger King, the franchisee in Russia has refused to close 800 stores