May 19, 2022

Financial Times Quotes Michael Joblove on the Sale of McDonald's Russian Portfolio

2 min

On May 19, 2022, Michael Joblove was quoted in the Financial Times on the sale of McDonald's Russian portfolio to Alexander Govor, a local franchisee who operates 25 of the chain's restaurants in Siberia. 

Under the terms announced, Govor will take over the group's entire Russian portfolio of about 850 restaurants, operate them under a new brand, and offer a new menu. He will also take over McDonald's liabilities to landlords and suppliers and pay the salaries of local staff, who have been unable to work since the chain closed its operations in March 2022 following Russia's invasion of Ukraine.

During the Ukraine invasion, McDonald's had been spending about $55 million a month on rent and wages for its 62,000 Russian staff while its operations were suspended. The Chicago-based company this week said the Ukraine invasion had made its operation in Russia "no longer tenable" and that the departure—its first-ever exit from a large market—would result in a non-cash charge of as much as $1.4bn.

Michael Joblove, who is advising western franchisers on their options in Russia, said McDonald's was unusual among fast-food groups in having owned most of its outlets there. 

Most other franchisers were still "treading water," he said, caught between their pessimism about the outlook for Russia and the difficulty of enforcing their trademark rights in Russian courts should they terminate franchise agreements. If local operators veered from agreed standards, "there's no real lever of enforcement as things stand now," he said.