Burger King’s partner has refused to close its 800 Russian restaurants, blocking the US fast food giant’s bid to shut down there following Vladimir Putin’s invasion of Ukraine.
Restaurant Brands International, which owns Burger King, said it had demanded its largest franchise partner in Russia, Alexander Kolobov suspend operations but “he has refused to do so”.
David Shear, RBI president, told staff: “Would we like to suspend all Burger King operations immediately in Russia? Yes. Are we able to enforce a suspension of operations today? No.”
He said the complicated franchise deal in Russia meant the company was unable to unilaterally change the contract or allow any of the partners to walk away or overturn the arrangement.
The deal includes Mr Kolobov, as well as Russian state-owned bank division VTB Capital and Investment Capital Ukraine. RBI owns a 15pc stake in the joint venture, which it is attempting 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’s a complicated legal process.”
He added that changes to the agreement “would ultimately require the support of Russian authorities on the ground and we know that practically will not happen 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 refusing approvals for new investment and expansion.
It comes amid a wave of corporate exits from Russia, with Coca-Cola, Starbucks and Heineken among those to have severed ties.
Others have found it more difficult to do so. Marks & Spencer stores in Russia are still operating because the rights are controlled by a Turkish company, TiBA, which has refused to close them.
M&S stopped deliveries to its Russian partner two weeks ago and has no plans to reinstate them.
Lush, meanwhile, last week said it was unable to force its stores in Russia to close due to a franchise agreement in the country, but has also stopped stock shipments.
