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Russia Oligarch Refuses to Close His 800 Burger King Restaurants

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Russia Oligarch Refuses to Close His 800 Burger King Restaurants

Russian Oligarch Alexander Kolobov the owner of 800 Burger King franchises has told the US parent company to pound salt and refused to close his restaurants over the war in Ukraine.

To enforce its contracts with the franchisee, Alexander Kolobov, Restaurant Brands International Inc said it would need the assistance of the Russian government, but “that will not happen anytime soon,” according to a letter from David Shear, international president of Restaurant Brands International Inc.

In his lengthy letter, Shear highlights the many complications facing some American fast-food brands as they seek to halt operations in Russia following Moscow’s invasion of Ukraine.

It also reveals a weakness in international franchising, which is how most American restaurant chains expand overseas: relationships with their independent operators.

Starbucks Corp. followed McDonald’s Corp. in suspending or limiting its Russian operations on Mar 8.

Like Burger King, Starbucks doesn’t own or operate the hundreds of franchises there.

Burger King Russia a Joint Venture

The Burger King chain, unlike Starbucks, did not have a willing partner like Kuwait-based Alshaya Group, which immediately agreed to close its Starbucks locations in Russia in support of 2,000 employees.

Burger King entered the Russian market a decade ago through a joint venture partnership with three entities: Kolobov, who controls day-to-day operations, Investment Capital Ukraine, a private equity and asset management firm, and the state-owned VTB Bank, which has been subject to Western sanctions.

Restaurant Brands has begun the process of selling its 15% ownership stake in the joint venture.

Based on the terms of the agreement, the company wishes to do so immediately, but it will take “some time.”

We cannot unilaterally change the terms of the contract or allow one of the partners to walk away or overturn the entire contract, Shear wrote.

Yes, we would like to immediately suspend Burger King operations in Russia! Can we put an end to our operations as soon as possible?” No, he told Reuters.

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