October 4, 2022

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Burger King caught in complex legal web, thwarting Russia exit

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NEW YORK — For at least a decade, Burger King’s formula for European expansion has relied on a joint venture partnership, including a master franchisee, to open and operate new locations.

But now the fast-food chain has a whopper of a problem in Russia. It hasn’t been able to exit its partnership or close its roughly 800 franchised locations following Russia’s February invasion of Ukraine.

Burger King halted corporate support for its Russia locations in March. Parent company Restaurant Brands International Inc (RBI), which was formed in 2014 when Burger King merged with Tim Hortons, said on March 17 that it was trying to sell its stake in the joint venture.

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However, the restaurants remain open and thriving in locations such as central Moscow where queues have become the norm. Demand has been helped by rival McDonald’s currently being closed ahead of a reopening under new branding later this month.

“I usually go to Burger King, I don’t care about McDonald’s,” said university teacher Elena Aleksandrova, 37, as she picked up a Whopper and soda on Friday at a Burger King in an underground shopping mall just outside the Kremlin.

McDonald’s struck a deal last month to sell its Russian business to one of its local franchisees, retaining an option to buy the business back within 15 years. Burger King’s exit is proving far more problematic.

Current sanctions by western countries against Russia sharply limit the pool of possible buyers, one person familiar with the matter said.

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Reuters could not determine the status of any negotiations.

Part of the problem, lawyers said this week, is the complexity of its…

Reuters

2022-06-03 12:36:44

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