Why Subway isn’t closing its Russian locations and what they’re doing instead

Russia At War

A Subway fast food restaurant’s sign is shown, Monday, Oct. 24, 2016, in New York. (AP Photo/Mark Lennihan)

(NEXSTAR) – Over 200 Western businesses have changed their dealings with Russia since the country invaded Ukraine in late February. Still, there are some businesses that haven’t announced any change.

Among those is Subway. Unlike McDonald’s, for example, which has closed 850 stores in Russia, Subway doesn’t appear to be closing any of its locations in the country.

In a statement released Monday, Subway explained it “has no corporate operations in Russia” and its roughly 450 restaurants “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, and have limited insight into their day-to-day operations,” the company added. McDonald’s, on the other hand, was able to close so many locations because it owns most of its Russian restaurants.

Instead, Subway said it will “redirect any profits from operations in Russia to humanitarian efforts supporting Ukrainians who have been affected by the war.” It is also working with its franchisees across Europe to provide meals to refugees.

As hundreds of companies have curtailed operations in Russia, President Vladimir Putin has threatened that if foreign companies shut down production in his country, he favors a plan to “bring in outside management and then transfer these companies to those who want to work.”

A draft law could allow Russian courts to appoint external administrators for companies that cease operations and are at least 25% foreign-owned. If the owners refuse to resume operations or to sell, the company’s shares could be auctioned off, the ruling United Russia party has said, calling it “the first step toward nationalization.”

The Associated Press contributed to this report.

© 1998 - 2022 Nexstar Media Inc. | All Rights Reserved.

Trending on NewsNation

Elections 2022

More Elections 2022