2024-03-22 20:15:06
More than two years ago, Russia attacked Ukraine, and many Western companies withdrew from the country – but not all.
Most major Western fast food chains have withdrawn from Russia following the Russian invasion of Ukraine in February 2022. They closed their businesses and sold assets. These included McDonald’s, Domino’s Pizza, Starbucks, KFC, Pizza Hut, the Hard Rock Cafe and the Jamie Oliver Group. However, six US fast food chains are still active in the attacker’s country two years after the attack, reports the Ukrainian newspaper “Kyiv Independent”.
Subway, Burger King, Papa John’s, Carl’s Jr., Costa Coffee and TGI Fridays franchises will continue to operate as usual. Ukraine even added Subway to its list of “international war sponsors” in January because more than 500 of the company’s restaurants continue to operate on the Russian market and pay “hundreds of thousands of dollars in taxes to the budget of the Russian Federation.” You can read more about the listing here.
Burger King: Can’t just pull the plug
Subway and Carl’s Jr. have been operating in Russia since the collapse of the Soviet Union, writes the Kyiv Independent. Experts say that companies may be hiding behind their franchise models in order not to give up their business in Russia. Many of them claim that their brands operate independently of master franchisees in Russia and that they themselves have little control over the brand’s activities in the country.
Burger King also argues this. The company announced its intention to withdraw from Russia in March 2022, shortly after the Russian attack. That obviously didn’t work and here too, according to the company, the franchise model is the reason.
Also in March 2022, the company’s parent company stated that it “has long-standing (franchise) agreements that cannot be easily changed, (meaning we) cannot simply pull the plug on these restaurants like other brands, including McDonald’s, have done in Russia.”
Companies declare restaurants are “independent”
And Subway also told the Kyiv Independent that all of its restaurants are “operated independently by a master franchisee, an independent US company called Subway Russia,” because there are “no company-owned restaurant operations in Russia.”
Carl’s Jr.’s parent company told US broadcaster CNN in July 2023 that the 17 franchise restaurants in Russia were all independently owned and operated.
And the restaurant chain TGI Friday’s also stated in March 2022 that the decision as to whether a restaurant would remain open could only be made by the local franchisees. However, the company decided to donate all income from the Russian franchise fees.
Expert doubts claim
Jeffrey Sonnenfeld of the Yale School of Management questions companies’ claims that they have no control over their brands under a franchise model. He explains to “Kyiv Independent” that even when companies have independent franchises in Russia, the parent company of catering establishments such as Carl’s Jr. or Subway still retains complete control over the use of their brand, logo and other intellectual property in marketing.
Other Western companies, such as McDonald’s or Starbucks, withdrew from Russia after the Russian war of aggression despite their franchise models. Russia replaced these places by usually not changing much except the name. Here you can read more about it.