The contract signed with the local franchises prevents them from unilateral termination.
Burger King will not be able to follow the many Western companies that have withdrawn from Russia in response to the special military operation launched on February 24 by Vladimir Putin in Ukraine.
In a letter sent to its employees on Thursday, the famous fast-food chain said that its local partners want to keep its 800 restaurants open and that legal agreements do not allow the company to unilaterally close them.
“Would we like to immediately suspend all Burger King operations in Russia? Yes. Can we enforce a suspension of operations today? No,” wrote David Shear, president of Burger King’s parent company, Restaurant Brands International (RBI).
Alexander Kolobov, the partner who operates Burger King outlets in Russia, has refused to close the restaurants, so the chain, which entered the Russian market 10 years ago, is legally bound by that decision.
In fact, for Burger King to force a suspension of operations, it would need the help of the Russian government, something that the company believes “will not happen anytime soon.”
Shear explained that the company’s legal agreements with partners and franchisees require long-term commitments from both parties.
“No serious investor in any industry in the world would accept a long-term business relationship with flimsy termination clauses,” the executive concluded.
“This is exactly why we say it’s a complicated legal process, when they ask us why we can’t just unilaterally close the deal,” he added.
RBI is trying to sell its stake in the Russian joint venture, but the process will take time, according to Shear. Meanwhile, the company has suspended all corporate support for its outlets in Russia, including marketing and supply chain support.
Burger King’s main rival, McDonald’s announced the closure of its outlets in Russia In the past week. That same day, other large food and drink companies, such as Coca-Cola, PepsiCo and Starbucks, followed suit.
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