Noah Zivitz

Managing Editor, BNN Bloomberg

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The parent company of Tim Hortons said it can't quickly untangle one of its brands from Russia because it's not as simple as bailing on a "flimsy termination clause."

A senior official for Restaurant Brands International Inc. (RBI) said on Thursday the company tried to arrange for its Burger King banner to halt operations in Russia, but it was impossible to make that happen because of the structure of the business.

"We contacted the main operator of the business and demanded the suspension of Burger King restaurant operations in Russia. He refused to do so," David Shear, RBI's president of international operations, wrote in an open letter released Thursday afternoon.

RBI announced last week that it was suspending all corporate support for the 800 or so franchised Burger King locations in Russia. In Shear's letter, he shed more light on why the fast-food conglomerate couldn't simply join the stampede of companies that have suspended activity in Russia as the invasion of Ukraine persists.

Burger King operates in Russia under a joint-venture agreement, of which RBI owns 15 per cent, according to the letter. RBI's partners in the venture include VTB Capital, which has been sanctioned by several Western nations - including Canada - in recent weeks; a Ukrainian investment fund; and Russian businessman Alexander Kolobov, who Burger King aligned itself with in 2010 when the company (prior to RBI being established) expanded into Russia. Shear acknowledged the sanctions against VTB in his letter, and said RBI is "in full compliance."

Kolobov was described by José Cil, who now serves as RBI's chief executive officer, as a "huge asset" in a 2013 press release about Burger King's European operations. At the time, Cil was president of Burger King's Europe, Middle East, and Africa regions.

In his letter Thursday, Shear said RBI has initiated the process to exit its Russian venture, but cautioned that it will take time.

"There are no legal clauses that allow us to unilaterally change the contract or allow any one of the partners to simply walk away or overturn the entire agreement. No serious investor in any industry in the world would agree to a long-term business relationship with flimsy termination clauses."