Restaurant Brands International Inc said it would need the help of the Russian government to enforce its contracts with franchisee Alexander Kolobov, but “we know this will practically not happen anytime soon,” according to a letter to David employees. Shear, president, international, of the company.
It was not immediately clear how to reach Kolobov for comment.
Shear’s lengthy letter highlights the many complications some US fast food brands face as they attempt to shut down operations in Russia after Moscow’s invasion of Ukraine.
It also exposes what can become a weakness in international franchising, which is how most US restaurant brands are expanding overseas: the relationships with their independent operators.
On March 8, Starbucks Corp and a wave of other companies followed McDonald’s Corp by saying they would suspend or limit operations in Russia.
Like Burger King, Starbucks owns or operates no more than 100 cafes there.
But unlike Burger King, it had a willing partner — the Kuwait-based Alshaya Group — that immediately agreed to close its Starbucks stores in Russia and support its 2,000 employees.
Restaurant Brands entered Russia ten years ago through a joint venture partnership with three entities: Kolobov, which controls day-to-day operations, private equity and asset management company Investment Capital Ukraine, and Russian state-owned bank VTB Bank, which has been hit by Western sanctions.
Restaurant Brands has begun the process to divest its 15% stake in the joint venture. It wants to do this immediately, Shear said, but it will take “some time” based on the terms of the agreement.
There are “no legal clauses that would allow us to unilaterally change the contract or just have one of the partners walk away or nullify the entire agreement,” Shear wrote.
“Would we immediately suspend all Burger King operations in Russia? Yes. Can we force a suspension of operations today?” He wrote. “New.”
This post Burger King says franchisee in Russia ‘refused’ to close restaurants was original published at “https://economictimes.indiatimes.com/news/international/world-news/burger-king-says-russia-franchisee-refused-to-shutter-restaurants/articleshow/90312343.cms”