Burger King’s Russian partner refuses to shut 800 stores that are currently in Russia. Burger King has been trying to join the mass exodus of companies from Russia but one of their partners refused.
When the Ukraine invasion began, many huge companies also began to boycott Russia. Companies like McDonald’s, Starbucks, Heineken, and Carlsberg have already exited the country. For Burger King, it could be a little complicated.
“We started the process to dispose [of] our ownership stake in the business,” said David Shear, president of RBI’s international operations, in an open letter. “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.”
Burger King is under the Restaurant Brands International. RBI partnered with Russian businessman Alexander Kolobov to open stores in Russia. In their agreement, RBI controls only 15% of the venture and Kolobov has the majority. He is the one who handles “day-to-day operations and oversight” in Russia.
In comparison to McDonald’s which owns 80% share of its ventures, it is easier to shut down the business. RBI has demanded to shut its businesses in Russia and end the venture but Kolobov has “refused to do so.”
“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 pulled out its corporate support from Russia including suspending operations, marketing, and supply chain assistance.
RBI is not the only one experienced joint venture complications. Papa John’s partner in Russia also refused to close over 200 stores in Russia.