Burger King is trying to suspend operations at its locations in Russia, but a business partner who controls 800 restaurants has “refused” to do so.
Restaurant Brands International (QSR) owns the burger chain, which has a joint venture in Russia with Russian investor Alexander Kolobov.
RBI owns only 15% of Burger Kings in Russia, and Kolobov is in charge of the company’s “day-to-day operations and oversight.” Therefore, Burger King cannot just close its doors.
“We started the process to dispose [of] our ownership stake in the business,” said David Shear, president of RBI’s international operations. “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.”
RBI has “demanded” that the joint venture close the Burger Kings immediately, according to Shear, but Kolobov has “refused to do so.”
Burger King first opened its doors in Russia over a decade ago, as part of a joint venture with Kolobov, Investment Capital Ukraine, and VTB Capital, a Russian bank subject to sanctions.
Shear claimed that the partnership and companies are unable to be closed due to a “complicated legal process.”
“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 said. “No serious investor in any industry in the world would agree to a long-term business relationship with flimsy termination clauses.”
Burger King withdrew corporate backing from its Russian operations this week, including stopping operations, marketing, and supply chain support.
This topic underlines the difficulties faced by some Western corporations and institutions in exiting Russia, which are exacerbated by joint ventures or partnerships over which they do not have complete authority.
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