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Burger King unable to close up in Russia, stuck with local partner

Burger King is having a hard time following McDonald’s and KFC/Pizza Hut’s lead in exiting the Russian market due to the refusal of a local business partner to close up about 800 locations he controls in the country, CNN Business reports. In contrast with McD’s, which wholly owns about 80% of its locations in Russia and as such could close up shop more or less unilaterally while pulling support for the remaining franchisees, Burger King’s corporate parent Restaurant Brands International Inc has only about a 15% stake in the brand’s operations there, with the rest controlled by oligarch Alexander Kolobov and his backers, with Kolobov overseeing day-to-day operations.

“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. No serious investor in any industry in the world would agree to a long-term business relationship with flimsy termination clauses,” wrote Restaurant Brands International operations president David Shear in an open letter.

While there’s no reason to doubt the situation is as Shear described, it’s hard not to see it how Burger King is having it their way – both ways. They get to publicly say “Hey, this is out of our hands, we want to leave Russia ASAP” but it’s buying them time after which – if there is a diplomatic solution found within the next few weeks – they’re much better positioned to walk it back and leave their brand more or less intact in Russia while McDonald’s there are converted to “Uncle Vanya’s” locations. Shame that we might never see what the “Burger Czar” logo would look like though.

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