Burger King Says a Russian Franchisee is Refusing to Close Restaurants

While many companies cease operations in Russia over the country’s attack on Ukraine, Burger King has announced that a Russian franchisee is refusing to shutter its restaurants.

Burger King’s parent company Restaurant Brands International Inc. said on Thursday it has not been able to close its 800 restaurants in Russia because its independent operator there “refused” to do so.

The company said that to enforce its contracts with the franchisee, Alexander Kolobov, it would need the help of the Russian government, but “we know that will not practically happen anytime soon,” according to a letter to employees from David Shear, president, international, of the company.

Brands entered Russia a decade ago through a joint venture partnership with three entities: Kolobov, who controls day-to-day operations, private equity and asset management firm Investment Capital Ukraine, and Russia’s state-owned VTB Bank.

Restaurant Brands has started the process to dispose of its 15% ownership stake in the joint venture. Shear said the company wants to do so immediately but it will take “some time” based on the terms of the agreement.

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 wrote.

“Would we like to suspend all Burger King operations immediately in Russia? Yes. Are we able to enforce a suspension of operations today?” he wrote. “No.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.