Post by account_disabled on Feb 27, 2024 23:27:11 GMT -5
Burger King tries to suspend operations in Russia... but its restaurants refuse
Burger King is trying to suspend its operations in Russia, but it is finding it difficult. According to CNN , a business partner that controls 800 restaurants has "refused" to close them, according to the fast food chain.
Burger King, owned by Restaurant Brands International, a quick service restaurant (QSR), has a partnership with businessman Alexander Kolobov in Russia, so it controls only 15% of its business in that nation, and its partner is responsible for the "daily operations and supervision" of the premises.
Suspending operations in Russia seems a distant option
Because of this partnership, Burger King can't snap its fingers and go out of business, as explained by David Shear, president of RBI's international operations:
We have begun the process to divest our stake in the business. […] Although we would like to do this immediately, it is clear that it will take some time for us to do so based on the terms of our current joint venture agreement.
David Shear, president of RBI's international operations.
For example, McDonald's (MCD) owns more than 80% of its Changsha Mobile Number List restaurants in Russia, which made it easier for it to leave the country. Shear claimed that RBI has "demanded" that Burger Kings be closed immediately, but Kolobov "has refused to do so."
The famous burgers arrived in Russia a decade ago, operating jointly with Kolobov, Investment Capital Ukraine and VTB Capital, a Russian bank that has been subject to sanctions.
Shear noted that a "complicated legal process" prevents them from suspending operations in Russia due to society and business.
There are no legal clauses that allow us to unilaterally change the contract or that allow either partner to simply abandon or void the entire agreement. […] No serious investor in any sector in the world would accept a long-term business relationship with weak termination clauses.
David Shear, president of RBI's international operations.
It's not easy to close
Recently, Burger King withdrew corporate support for its businesses in Russia, including suspending operations, marketing and supply chain assistance, all due to the conflict in Ukraine.
However, the fact that it cannot close its branches highlights the problems that some Western companies and banks face in withdrawing from Russia, due to contracts or partnerships over which they do not have full control.
Burger King tries to suspend operations in Russia... but its restaurants refuse
For example, a Papa John's Pizza franchisee refused to close about 200 locations, even after the pizza chain suspended its corporate support.
While any of the Western business pauses are unlikely to have an impact on the war compared to the economic sanctions imposed by the United States and European nations.
The truth is that with the uncertainty, the Russian government may retaliate against Western products and services with boycotts and blockades for the duration of the conflict.
Burger King is trying to suspend its operations in Russia, but it is finding it difficult. According to CNN , a business partner that controls 800 restaurants has "refused" to close them, according to the fast food chain.
Burger King, owned by Restaurant Brands International, a quick service restaurant (QSR), has a partnership with businessman Alexander Kolobov in Russia, so it controls only 15% of its business in that nation, and its partner is responsible for the "daily operations and supervision" of the premises.
Suspending operations in Russia seems a distant option
Because of this partnership, Burger King can't snap its fingers and go out of business, as explained by David Shear, president of RBI's international operations:
We have begun the process to divest our stake in the business. […] Although we would like to do this immediately, it is clear that it will take some time for us to do so based on the terms of our current joint venture agreement.
David Shear, president of RBI's international operations.
For example, McDonald's (MCD) owns more than 80% of its Changsha Mobile Number List restaurants in Russia, which made it easier for it to leave the country. Shear claimed that RBI has "demanded" that Burger Kings be closed immediately, but Kolobov "has refused to do so."
The famous burgers arrived in Russia a decade ago, operating jointly with Kolobov, Investment Capital Ukraine and VTB Capital, a Russian bank that has been subject to sanctions.
Shear noted that a "complicated legal process" prevents them from suspending operations in Russia due to society and business.
There are no legal clauses that allow us to unilaterally change the contract or that allow either partner to simply abandon or void the entire agreement. […] No serious investor in any sector in the world would accept a long-term business relationship with weak termination clauses.
David Shear, president of RBI's international operations.
It's not easy to close
Recently, Burger King withdrew corporate support for its businesses in Russia, including suspending operations, marketing and supply chain assistance, all due to the conflict in Ukraine.
However, the fact that it cannot close its branches highlights the problems that some Western companies and banks face in withdrawing from Russia, due to contracts or partnerships over which they do not have full control.
Burger King tries to suspend operations in Russia... but its restaurants refuse
For example, a Papa John's Pizza franchisee refused to close about 200 locations, even after the pizza chain suspended its corporate support.
While any of the Western business pauses are unlikely to have an impact on the war compared to the economic sanctions imposed by the United States and European nations.
The truth is that with the uncertainty, the Russian government may retaliate against Western products and services with boycotts and blockades for the duration of the conflict.