Why McDonald's, Burger King, and Papa John's can't just close all their stores in Russia

McDonald's, Burger King, and Papa John's are being criticized for having stores in Russia, but they are powerless to do anything about it.

Many western companies were able to stop business in Russia immediately after saying they would, but it has been more complex.

Many fast-food chains in Russia franchise out their brand to other third-party operators.

They enter into a long-term agreement that allows a third party to use their brand. Once they enter into this agreement, they won't have full control over these locations, but they will give guidance and support to ensure the quality meets their own criteria.

McDonald's was the first major US fast-food chain to leave Russia on March 8. The 100 franchise-operated Russian locations are still open.

Papa John's has had a similar problem with a franchisee that doesn't want to close. The New York Times reported that Christopher Wynne, an American from Colorado, owns a company that operates 190 Papa John's locations in Russia.

The companies are trying to distance themselves from their franchisees in Russia.

We stopped all corporate operations in Russia, including withdrawing any form of corporate support for the restaurants there. Papa John's told Insider that they can't force the independent franchisees to stop operations. We will not be operating in Russia as a company until that happens.

In a letter to employees this week, the president of Burger King's parent company was upfront about the limitations of a franchise agreement.

Is it possible to suspend all Burger King operations in Russia? Yes. Is it possible to enforce a suspension of operations today? He wrote that the complicated legal process prevents it from forcing franchisees to stop business.

There are no legal clauses that would allow us to change the contract or allow one of the partners to walk away.

Robert Lands is a lawyer at Howard Kenney who focuses on intellectual property law.

He told Insider that they can't rip up a franchisee agreement as the franchisee hasn't done anything wrong.

If a franchisee is acting in a way that harms the brand, they have the right to end the contract.

If they are not doing anything other than being in Russia, then you don't have the right to end the contract, so you have to wait until it comes up for renewal, or negotiate an exit.