This Article is From Mar 16, 2022

Explained: Why Nearly 1,000 Brands Are Unable To Leave Russia

Russia-Ukraine war: There are legal franchise agreements, which make it harder for these big firms to remove their names.

Explained: Why Nearly 1,000 Brands Are Unable To Leave Russia

Russia-Ukraine war: Marks and Spencer is operating 48 stores in Russia, according to reports.

Russia's invasion of Ukraine resulted in global criticism and a number of Western sanctions against Moscow. Several international companies also suspended their operations in the country, in solidarity with Ukraine.

But there are some leading brands, which still have outlets open in many Russian cities. This has often led to calls of their boycott on social media.

But why are these brands still operating in the "world's most sanctioned country"? Many of these firms have outsourced their businesses in Russia to third parties and do not claim ownership under their name.

Then there are legal franchise agreements, which make it harder for these big firms to remove their names. For example, a Turkish company called FiBA has been operating all M&S outlets in Russia since 1999 and Burger King is also being operated by franchisees.

The brands which still have outlets in Russia are: Marks and Spencer (M&S), Burger King, and hotel groups Marriott and Accor.

According to the BBC, 48 shops of M&S and 800 restaurants of Burger King are still operating in Moscow and other Russian cities. Similarly, Marriott and Accor have 28 and 57 hotels open respectively.

Together, these companies have almost a thousand outlets still open in Russia, according to BBC report.

The New York Times said in a report that these brands are under pressure to exit Russia entirely. Companies which have paused operations temporarily are being told take a more definitive break.

Procter & Gamble has, for example, discontinued all new capital investments and reduced product portfolio, but is continuing to focus on personal care items. Danone and PepsiCo have also made similar moves, but are continuing with dairy and baby products.

The situation is complicated for Proctor & Gamble. It's Gillette plant in St Petersburg exports having products to more than 50 countries and accounts for 70 per cent of Russian market.

There are also concerns about intellectual property theft.

For now, a debate is raging on social media platforms about whether these companies need to act more responsibly and help in the economic punishment implemented against Russia by the West.

.