Burger King Continues Operations in Russia amid Ukraine Conflict despite Promise to Withdraw

Burger King continues to operate as usual in Russia despite the owner's previous announcement of plans to leave more than a year ago. Restaurant Brands International (RBI), which owns 15% of the fast-food franchise business in Russia, recently stated that it had no new updates regarding its exit from the country. In March 2022, RBI announced its intention to withdraw from Russia, but the process has been delayed. Since the conflict in Ukraine began, Western companies have faced pressure to discontinue their operations in Russia. Critics have accused RBI of supporting Putin's regime by maintaining its stake in the Russian business. RBI, one of the world's largest fast-food restaurant companies, has cited its complex franchise agreement as a major hurdle in exiting the country. The company has a joint venture with three other partners that oversees approximately 800 restaurants. In March 2022, RBI's president, David Shear, mentioned that Burger King's main operator in Russia refused to close the outlets despite the attacks on Ukraine, but the company had initiated the disposal process for its 15% ownership stake, which would take time. When asked about the progress made since the pledge, the spokesperson for RBI stated that there were no updates available. Critics have criticized RBI's use of franchise agreements as an excuse, pointing out that other companies like Starbucks have managed to terminate their contracts in Russia. Steven Tian, a researcher at Yale University, argued that RBI's claim was a convenient smokescreen and asserted that by continuing to do business in Russia during the conflict, the company was indirectly supporting Putin's regime. RBI's spokesperson stated that the company had refused new investment and supply chain support and had not made any profits from Burger King in Russia since early 2022. Mark Dixon, founder of the Moral Rating Agency, urged RBI to disclose its specific actions in attempting to exit Russia and emphasized that it needed to be willing to break its agreement and accept the legal risks. Franchising is a popular business method for expanding into new markets, allowing companies to distribute their products or services through franchisees. While Burger King remains operational in Russia, its main competitor McDonald's has successfully withdrawn from the country, mainly due to corporately owned restaurants. Yum! Brands, the parent company of KFC, has also sold over 100 restaurants to a local operator in Russia, which were rebranded as Rostic's. Legal expert David Bond noted that RBI's 15% stake in the joint venture limited its control over the closure of Burger King branches. He stated that franchising companies would be hesitant to walk away from agreements due to potential legal consequences and damage to their reputation. However, Bond mentioned that RBI could terminate the franchise arrangement if it was determined to do so, although it may not result in the disappearance of the Burger King brand in Russia. Many "de-branding" initiatives in the country have been accomplished through agreed sales with local businesspeople who are willing to rebrand in exchange for discounted prices. The joint venture responsible for Burger King's franchise in Russia comprises RBI and three other entities.