McDonald’s announced on Monday its intention to sell a Russian restaurant. This is because the company faces the possibility of losing its trademark in the region, which could adversely affect the sale of its business.
What happened
McDonald’s plans to sell its Russian business due to the ongoing international crisis between Russia and Ukraine.
Escape from this area will take place after more than 30 years in the country. McDonald’s owns most of the 850 restaurants in the region, unlike some regions that rely heavily on franchisees to run their businesses.
McDonald’s temporarily closed the restaurant on March 8, 2022, and the original goal was to reopen the restaurant.
“Due to the humanitarian crisis caused by the war in Ukraine and the unpredictable deterioration of the business environment, McDonald’s can no longer maintain continued ownership of its business in Russia and is in line with McDonald’s values. We conclude that we haven’t, “the company said. press release.
McDonald’s plans to sell the restaurant to local buyers, who will no longer use the company’s name, logo, brand or menu. McDonald’s is looking for buyers who currently employ 62,000 people in the region.
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Important reason
While McDonald’s is looking for a buyer, there is a risk that the company will not move forward or that there will be less transactions than the restaurant company expects.
Benzinga previously reported that a trademark application for “Uncle Vanya” was filed in Russia on March 12 in the same color as the McDonald’s logo.
Trademark lawyer Josh Helben suggested that Russia could empower local businesses to hijack abandoned brands and locations in the country and operate under other names.
Russia has legalized the theft of patents from “unfriendly” countries, including the United States. Russia does not require compensation for companies that previously held trademarks or patents.
Russia can take advantage of the existing closed McDonald’s to have locals run it as McDonald’s or another restaurant. Given the tensions between the United States and Russia and trademark issues, the question arises as to whether a local Russian company will pay McDonald’s for its business.
McDonald’s will expense between $ 1.2 billion and $ 1.4 billion to amortize its investment in Russia. It’s unclear if this is based on receiving money from the sale.
“The loss of viable intellectual property rights in Russia could further isolate the country over the years to come,” Gerben said earlier.
According to Morgan Stanley analyst John Glass, Russia and Ukraine account for 9% of McDonald’s system sales and about 3% of operating profit.
Chris Kache
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