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Marks & Spencer unable to exit Russia due to franchise agreements

By Don-Alvin Adegeest

Mar 17, 2022

Retail

Image: Saint Petersburg via Pexels

Western brands and fashion companies present in Russia that operate with franchise agreements are unable to exit Russia.

As sanctions continue to see international retailers pause their operations, shutter stores or cancel deliveries, other companies, like Marks & Spencer, remain at the behest of local partners.

M&S, which currently has 48 stores in Russia, has an agreement with Turkish operator FiBa, and closing stores would come with legal consequences.

M&S told the BBC it was “absolutely committed” to the humanitarian cause in Ukraine and further pledged to offer Ukrainian refugee jobs. The British news broadcaster also said M&S to date raised 2.6 million pounds, including its own donation. Currently its Russian stores are open, although shipments of goods may be delayed.

Marriott, the hotel chain, and Burger King are also tied to franchise agreements, and thus remain open.

Many brands when entering new markets opt to partner with a franchise in countries where they lack local knowledge. Some are worried of reputational damage if they continue to trade in Russia whilst the war in Ukraine continues.