May 20, 2022

Days after McDonald’s announced it would exit the Russian market and sell its entire Russian portfolio, the company reached a sale and purchase agreement with its existing licensee Alexander Govor.

Govor will acquire the entire Russian McDonald’s restaurant portfolio and operate the restaurants under a new brand. Govor has served as a licensee since 2015 and has operated 25 restaurants in Siberia.

McDonald’s said the agreement remains subject to certain conditions, including regulatory approval, with closing expected to occur in the coming weeks.

The sale and agreement will see employees be retained for at least two years, on equivalent terms, McDonald’s wrote in a press release. Govor has also agreed to fund the salaries of corporate employees who work in 45 regions of the country until closing, as well as fund existing liabilities to suppliers, landlords and utilities.

Foodmarket.com covered McDonald’s move to leave Russia on May 17, after the brand decided to shutter over 800 locations following Russia’s invasion of Ukraine.

“The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald’s to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald’s values,” the company said in a statement.

McDonald’s said it is undergoing a “de-Arching process for the sale where the buyer will not be able to use the McDonald’s name, logo, branding, and menu, though the Company will continue to retain its trademarks in Russia.

McDonald’s President and Chief Executive Officer, Chris Kempczinski, said:

“We have a long history of establishing deep, local roots wherever the Arches shine. We’re exceptionally proud of the 62,000 employees who work in our restaurants, along with the hundreds of Russian suppliers who support our business, and our local franchisees. Their dedication and loyalty to McDonald’s make today’s announcement extremely difficult. However, we have a commitment to our global community and must remain steadfast in our values. And our commitment to our values means that we can no longer keep the Arches shining there.”

Prior to the sale announcement, McDonald’s said it expects to record a charge, which is primarily non-cash, of approximately $1.2-1.4 billion to write off its net investment in the market and recognize significant foreign currency translation losses previously recorded in shareholders’ equity.

Photo Credit: Vytautas Kielaitis / Shutterstock.com

Ryan Doyle
Urner Barry
1-732-240-5330
rdoyle@urnerbarry.com