by Harold Hutchison
Since the February invasion of Ukraine, a number of American companies announced they were suspending operations and pulling out of Russia, but one business says exiting the country is far from straightforward.
“There have been a lot of media reports about brands continuing to operate in Russia and internally, we have been working around the clock to do all the right things,” David Shear, the president of Restaurant Brands International (RBI), the company that owns Burger King and Popeye’s, said in an open letter Thursday.
Burger King is one of several companies that have received criticism on social media for not suspending operations in Russia as McDonald’s did earlier this month following the Russian invasion of Ukraine.
“We have been asked why we can’t unilaterally suspend operations. I want to answer that question directly,” Shear said, adding that the company signed a master franchise agreement ten years ago with “extensive commitments to long-term investments and accountabilities to grow the business together.”
“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. This is exactly why we say it’s a complicated legal process when we are asked why we can’t just unilaterally shut down the business.”
Burger King has over 800 restaurants in Russia, Yahoo Finance reported. Shear outlined actions that the company has taken in response to the invasion, including a suspension of corporate support for the franchisees, donation to the UN High Commissioner for Refugees, and providing vouchers for free Whopper meals to refugees from Ukraine.
Shear also explained that enforcement of any contract requires the support of authorities in Russia “that will not practically happen anytime soon.”
“This is also why you may see other brands in Russia with similar structures continue to operate in the market,” Shear said.
The comments from Burger King come in the wake of threats by Russian President Vladimir Putin to seize assets from companies that end operations in Russia.
“Would we like to suspend all Burger King operations immediately in Russia? Yes,” Shear added. “Are we able to enforce a suspension of operations today? No. But we want to be transparent with our actions and explain the steps we have taken to stand with the international business community in response to Russia’s attack on Ukraine and its people.”
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