Business

The Western brands unable to leave Russia

Written by The Frontier Post

MOSCOW (BBC): The invasion of Ukraine has led many Western brands to shun Russia, but some still have outlets open in the country and say they are not able to shut them.
Marks and Spencer, Burger King, and hotel groups Marriott and Accor are restricted by complex franchise deals preventing them from withdrawing.
The firms have outsourced the Russian businesses to third parties and do not own the operations bearing their name.
Together the firms have almost a thousand outlets still open in Russia.
M&S has 48 shops and Burger King has 800 restaurants still open, whilst Marriott and Accor have 28 and 57 hotels open respectively.
The BBC understands the brands are locked into legal franchise agreements, making it difficult for them to remove their name from Russia’s High Streets and shopping malls.
A lot of Western firms have held such agreements for decades. For example, Marks and Spencer stores have been operated by a Turkish company called FiBA, which has held the rights to sell the retailer’s products across Eastern Europe, since 1999. The retail giant has said it has suspended shipments of its goods to FiBA in response to the war.
Meanwhile, Burger King’s owner Restaurant Brands International also told the BBC its restaurants are run by franchisees. These “long-standing legal agreements are not easily changeable in the foreseeable future,” it said.
It is understood hotel groups Marriott, IHG and French chain Accor, which has Ibis and Novotel among its brands, are all operating in Russia under similar deals.
Marriott told the BBC its hotels in Russia were owned by third parties but said it would “continue to evaluate the ability for these hotels to remain open”, suggesting it was looking into its franchise agreements.

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