McDonald’s, Burger King and other chains can’t close all Russian locations because of franchising agreements.
Some local operators are staying open without corporate support.
Franchise agreements stop corporations from having unilateral control over operations.
Since Russia attacked Ukraine in February, many Western companies have pulled out of Russia.
McDonald’s was the first major fast-food chain to announce it was temporarily closing locations in Russia, followed by Starbucks, Papa John’s, Burger King, and others.
The franchising model, common in the fast-food business, makes it difficult for chains to close Russian restaurants.
Chains enter long-term agreements that permit third parties to use their brands, which means that they don’t have full control over those locations and decisions to close them.
Christopher Wynne, an American from Colorado, owns a company that operates 190 Papa John’s locations in Russia. He has no plans to close them, and even hopes to expand the business, according to the New York Times.
Source: The New York Times
Papa John’s corporate says it isn’t making any income from Russia any longer, but “we cannot unilaterally cause the independent franchisees that operate there to stop operations,” the chain told Insider.
McDonald’s first announced that it would shut down Russian locations on March 8.
McDonald’s has nearly 850 locations in Russia, making up about 9% of international revenue.
McDonald’s says it will continue paying its 62,000 workers in Russia.
There are currently no plans to reopen, and McDonald’s will continue monitoring to “determine if any additional measures are required,” CEO Chris Kempczinski said in a note.
McDonald’s owns the majority of its Russian locations, so it actually does have the authority to close them.
These locations closed down and sent workers home at the orders of corporate headquarters.
The remaining locations, however, are operated by franchisees.
McDonald’s confirmed that some restaurants do remain open despite the closure order.
Many of the remaining open locations are located in Moscow’s airport and train stations, McDonald’s said.
McDonald’s opened its first Russian location in Moscow in 1990, when it was still the Soviet Union.
That original location in Pushkin Square remains open.
Burger King is facing the same challenges as McDonald’s and Papa John’s.
Burger King’s parent company, Restaurant Brands International, wants to close its hundreds of Russian locations, but it can’t.
“Would we like to suspend all Burger King operations immediately in Russia? Yes. Are we able to enforce a suspension of operations today? No,” President David Shear told employees in a letter on Thursday.
Shear says closing the Russian restaurants is difficult thanks to a “complicated legal process.”
The main operator of the Russian locations “refused” to suspend operations, Shear said.
Since then, RBI removed all corporate support for Russian restaurants, which includes marketing and supply chain assistance.
The chain is also working to divest ownership in the Russian business.
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