107032725 1647605714619 gettyimages 166059871 RUSSIA FAST FOOD

More than 400 corporations have been withdrawn from Russia. however some western manufacturers are off


The Burger King title seems in Russian exterior the Burger King quick meals restaurant on Friday, April 5, 2013 in Moscow, Russia.

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Ukrainian President Volodymyr Zelensky in his handle to the US Congress on Wednesday known as on all world manufacturers to tug out of Russia – a market “flooded”. [Ukrainian] Blood” – as part of ongoing efforts to apply economic pressure on the Kingdom of Pariah.

More than 400 companies have announced their withdrawal from Russia since the invasion of Ukraine began on 24 February. List Compiled by Yale School of Management.

For some brands, however, a clean break is easier said than done.

Fast food giants Burger King and Subway, British retailer Marks & Spencer and lodge chains Accor And Marriott are among several companies banned from withdrawing amid complicated franchise agreements.

“Unlike a company-owned operation, a franchise firm transferring into a global market creates a binding, long-term contractual dedication to a classy counter-party, often a franchisee or licensee,” said Dean Fournaris, Wiggins and Dana partner in the franchise and distribution of the practice, told CNBC.

Brands with only company-owned operations are in a better position to close locations quickly.

Ersa Jackson

Members of Clark Hill’s Franchise and Licensing Team

Under such contracts, a company – known as a franchisor – outsources its brand to a counter-party – known as a franchisee – who then owns and sells the brand in a specific location. operates. Companies looking to expand their footprint in a particular market may consider such agreements from an operational or financial perspective. But, as legally binding contracts, once signed, they can leave little room for maneuver.

This has complicated the efforts of some Western brands to withdraw from Russia – even as many peers have halted operations or completely rejected the invasion of Moscow and the logistical challenges that would arise as a result. But have gone out of the market.

“Only company-owned manufacturers are in a greater place to shut areas shortly as a result of they do not must cope with the layering of franchise relationships,” said Ersa Jackson, a member of Clark Hill’s franchise and licensing team.

withholding corporate support

Burger King, owned by Restaurant Brands Internationaldeclare Last week It had halted corporate support for more than 800 of its franchise restaurants in Russia and would decline approval for any expansion. However, the outlets remain in operation under a local master franchise.

Similarly, Subway has no corporate outlets in Russia, but its approximately 450 independently owned franchise restaurants continue to operate in the country. like that of the competitors McDonald’swhich owns most of its eating places in Russia, stated it might Temporarily close your 850 restaurants In the nation, an estimated lack of $ 50 million per thirty days.

The name Subway appears in Russian on a sign outside a Subway fast food restaurant on Sunday, April 7, 2013 in Moscow, Russia.

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“We do not directly control these independent franchisees and their restaurants, and have limited insight into their day-to-day operations,” Subway said. said in a statement.

Meanwhile, retailer Marks & Spencer, which has 48 stores in Russia, told CNBC that it has stopped supplying products to its franchisor, Turkish company FiBA, but both remain “underneath dialogue” about the brand’s continued operations. Has happened.

Hotel chains Accor and Marriott have also suspended the opening of new locations in Russia, but their existing locations are operated by third parties.

a legal battlefield

Brand reputation management


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