Burger King is trying to suspend its operations in Russia, but that is proving difficult. The company said a business partner that controls 800 restaurants “refused” to close.
The burger chain, owned by Restaurant Brands International, has a joint venture partnership with Russian businessman Alexander Kolobov. RBI controls only 15% of Russia’s Burger King business, and Kolobov is responsible for the “day-to-day operations and oversight” of the company’s locations in the country.
That means Burger King can’t just snap and close the store.
“We start the processing [of] David Shear, RBI’s president of international operations, said in an open letter. our existing joint venture agreement. “
In contrast, McDonald’s fully owns more than 80% of its restaurants in Russia. That makes exiting the country significantly easier.
Shear said that the RBI had “ask” the joint venture to immediately shut down Burger Kings, but Kolobov “refused to do so.”
Burger King entered Russia about a decade ago, running a joint venture with Kolobov, Investment Capital Ukraine and VTB Capital, a Russian bank that has been sanctioned.
Shear explained that a “complicated legal process” is preventing the closure of partnerships and businesses.
“There is no legal provision that would allow us to unilaterally change the contract or allow any partner to waive or overturn the entire agreement,” Shear said. “No serious investor in any industry in the world would agree to a long-term business relationship with flimsy termination terms.”
Last week, Burger King solicited company support from its businesses in Russia, including suspending operations, marketing and supply chain support.
This issue highlights the problems some Western companies and banks face when pulling out of Russia, complicated by joint ventures or partnerships over which they do not have full control. For example, a Papa Johns franchise in Russia refused to close about 200 locations even after the pizza chain halted business support for it.
Contact
Do you have both Ukrainian and Russian family members? How are you handling the crisis? Email dotcom@bellmedia.ca.
- Please include your name, location and contact information if you would like to speak to a journalist with CTV News.
- Your comments may be used in a CTVNews.ca story.
