Paul Musgrave, a University of Massachusetts political science professor, said the McDonald’s closures show how the quick and broad imposition of Western sanctions on Russia will have a lasting economic impact.
He also said the decision puts to rest the theory that business ties will inevitably lead to closer US-Russian relations. “It’s the spiritual end to any hope that commercial ties by themselves would sustain political integration.”
Added Jeffrey Sonnenfeld, a professor at the Yale School of Management who is tracking major companies’ stances on Russia: “I’m so glad that they realised it’s a complicated situation, and I’m glad they came around and made the right decision … It’s a really important impact, and it’s symbolic as much as it is substantive.”
Of its nearly 850 Russian McDonald’s locations, 84 per cent are owned by the company. The remainder are mostly operated by Moscow-based franchisee Rosinter Restaurants Holding.
Because McDonald’s owns many locations in Russia, it has more direct access to shutting operations. That may not be as easy for other fast-food chains in Russia – including Yum Brands’s KFC and Pizza Hut, Restaurant Brands International’s Burger King, Subway, Papa John’s, Starbucks and Domino’s Pizza. The companies’ Russian locations are almost entirely run by independent operators and subject to complex international franchise agreements.
For example, Burger King’s owner, Restaurant Brands, on Tuesday told Reuters that because Burger King “is a stand-alone business owned and operated by franchisees in Russia”, the company has “long-standing legal agreements that are not easily changeable in the foreseeable future”.
Some fast-food franchisees with locations in Russia are not even based in Russia, such as Netherlands-based DP Eurasia , which runs Domino’s restaurants in Russia, as well as in Turkey, Azerbaijan and Georgia.
“These are often long, complicated, heavily negotiated agreements. Every one of them can be different from everyone else,” said Larry Weinberg, who chairs the franchise practice at the law firm Cassels Brock & Blackwell LLP.