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Daily Mirror
Daily Mirror
Business
Emma Munbodh

Marks & Spencer unable to shut Russia franchise stores with 48 shops still open

Marks and Spencer says it is unable to close its 48 stores in Russia due to complex legal arrangements with local owners.

The franchise shops are operated by a Turkish company FiBA, which has held the rights to use the M&S name and sell its products since 1999.

M&S, which has stopped supplying products to the stores in response to the war, said it is unable to impose closures without legal consequences.

M&S told the BBC it was “absolutely committed” to the humanitarian cause in Ukraine and has pledged to offer Ukrainian refugee jobs.

It has pledged more than £1.5million to support refugees and is donating 20,000 coats and thermals to those that have fled their homes.

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A corporate exodus is underway, but some firms are still in business because of their legal arrangements (Alamy Stock Photo)

It is also raising funds for Ukrainian civilians in its stores, with shoppers prompted at the checkout to donate to Unicef UK.

Marks and Spencer head of partnerships Jo Daniels revealed last week that its total donations had reached £2.6million after customers donated £1.1million.

More than 30,000 customers had switched Unicef UK to their chosen Sparks charity, meaning every donation made in-store, online and via the app would be doubled by M&S.

Countries have retaliated to President Putin's attack on Ukraine by imposing sanctions on Russia and oligarchs such as Roman Abramovich, while large companies like Disney, Starbucks, McDonald's, and Coca-Cola have suspended business in the country.

The sanctions hope to freeze Russia's economy and cripple its funding of the war.

But, like M&S, many Western businesses say they are unable to shut shop because of franchise arrangements in the country.

As Apple, Samsung, Mastercard and more global corporations cut ties with Putin's economy, some businesses are still open to the public, as three million people flee their homes in Ukraine.

Burger King, and hotel groups Marriott and Accor are also understood to be restricted by complex franchise deals that prevent them from withdrawing.

Meanwhile, Subway’s 446 local franchises in Russia are still in business, but the US sandwich chain says it is donating its profits from Russia to humanitarian causes.

The company explained in a statement: "Our thoughts are with the people of Ukraine, and we are committed to supporting those impacted by the tragic events in the region.

"In addition to working with our franchisees across Europe to provide meals to refugees, we will redirect any profits from operations in Russia to humanitarian efforts supporting Ukrainians who have been affected by the war.

"Our restaurants in Russia are all independently owned and operated by local franchisees and managed by an independent master franchisee.

"We don’t directly control these independent franchisees and their restaurants."

Burger King’s 800 branches remain open for similar reasons.

The company has, however, halted corporate support for all franchised restaurants in the country.

It comes as rival fast-food chains KFC and McDonald's shuttered shops across the country.

"BK Russia is a standalone business owned and operated by our franchisees in the country," parent company Restaurant Brands International said in a statement.

"We have long-standing legal agreements that are not easily changeable."

Burger King has however said it will be donating profits from its branches in Russia towards efforts to support Ukrainian refugees.

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