Earlier this month, Burger King announced plans to suspend its operations in Russia, but the company now says its franchisee in the country refused to close its 800 restaurants.
As CNN reports, the Restaurant Brands International-owned burger chain franchised the Burger King name to 800 restaurants in the country with Russian businessman Alexander Kolobov and investors. Since Burger King’s parent company only owns 15 percent of its business in the country, and Kolobov is in charge of “day-to-day operations,” it has proved difficult to suspend operations there.
“We started the process to dispose our ownership stake in the business. While we would like to do this immediately, it is clear that it will take some time to do so based on the terms of our existing joint venture agreement," said RBI's president of international operations, David Shear. "We contacted the main operator of the business and demanded the suspension of Burger King restaurant operations in Russia. He has refused to do so.”
McDonald’s announced plans to suspend business in Russia earlier this month, and since the company owns 80 percent of its locations in the country it was substantially easier for them to cease operations. Shear said that RBI has since committed to redirecting profits from its Russian locations to the United Nations’ refugee agency, since there’s a “complicated legal process” getting in the way of Burger King immediately shutting down its partnership with Kolobov.
"There are no legal clauses that allow us to unilaterally change the contract or allow any one of the partners to simply walk away or overturn the entire agreement," Shear added. "No serious investor in any industry in the world would agree to a long-term business relationship with flimsy termination clauses."
A large number of western companies have since suspended business in Russia amid president Vladimir Putin’s invasion of Ukraine, including Starbucks and McDonald’s. Papa John’s, however, is not one of those companies. In a statement about staying open in the country, franchisee Christopher Wynne said, “At the end of the day, they appreciate a good pizza.”
