The owner of Burger King said the operator of its 800 stores in Russia has “refused” to close the locations despite calls for trade to be suspended.
Restaurant Brands said it contacted its local partner Alexander Kolobov to close stores following the Russian invasion of Ukraine.
But it said “complicated” contracts with foreign partners meant it was unable to “walk away” from those deals.
Many Western companies have closed or suspended their Russian operations.
However, a small number, including Burger King and UK retailer Marks and Spencer (M&S), have been unable to do so because their stores are operated by franchisees under “complex” legal arrangements.
- Western brands cannot leave Russia
- More and more companies are withdrawing from Russia
In a letter to employees, Restaurant Brands International President David Shear said: “We have contacted the company’s main operator and requested that Burger King’s restaurant operations in Russia be suspended.
“He refused to do this.”
Mr Shear added that changes to his local Burger King store “would ultimately require the support of Russian authorities on the ground, and we know that’s unlikely to happen any time soon”.
Burger King entered the Russian market 10 years ago. It trades there through a joint venture partnership with Mr. Kolobov – the general manager of day-to-day operations – as well as with Russia’s VTB Capital and a Ukrainian investment firm.
VTB Capital is a subsidiary of VTB Bank, Russia’s second largest financial institution sanctioned by the US, UK and other European countries.
Mr Shear said Restaurant Brands has a 15% minority stake in the Russian joint venture, which is being wound up.
“While we would like to do this immediately, it is clear that this will take some time due to the terms of our existing joint venture agreement,” he said.
Meanwhile, Restaurant Brands has ceased supply chain, operations and marketing support for Russia. She will also turn down new offers to invest and expand in Russia.
Western companies are still under pressure to withdraw from Russia after the attack on Ukraine. On Thursday, a group of four Ukrainian MPs told British Prime Minister Boris Johnson that M&S in Russia is still open.
MP Alona Shkrum said: “It is very important to isolate Putin and that he knows he will not get a handshake from the world, he will not get a handshake from business, there will be no support for him because he killed children in Ukraine.”
Complex franchise agreements have prevented some western brands from closing their stores in Russia. However, they have publicly shunned the country over its invasion of Ukraine.
Marks & Spencer stores are operated by a Turkish company called FiBA, which has owned the rights to sell the retailer’s products throughout Eastern Europe since 1999.
M&S said it has suspended shipments of its goods to FiBA, which operates Marks’ 48 stores in Russia.
Meanwhile, German carmaker Audi has warned that the war in Ukraine will cause “enormous disruptions” to supply chains.
“We will see enormous interventions in all supply chains, not just in the chip business, but in all international supply chains,” said Audi CEO Hildegard Wortmann.
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