KFC announced the company that is going to purchase all KFC restaurants and franchise rights in Russia.
Yum! Brands, the corporation operating the brand KFC, on October 24 announced in a press release it entered into a sale and purchase agreement to transfer ownership of all KFC assets in Russia.
Smart Service Ltd, one of the existing KFC franchisees in Russia, will buy the 70 restaurants owned by Yum! as well as the operating system and master franchise rights. It therefore includes franchise right contracts for the network of all KFC franchised restaurants.
Smart Service is managed by Konstantin Yurievich Kotov, an entrepreneur who also used to be part of the douma in the 650,000-people city of Izhevsk, and Andrey Eduardovich Oskolkov. They were already franchisees of 41 KFC restaurants.
KFC didn’t communicate on the sale price. According to Kommersant, a Russian business newspaper, the sale is close to 1.3 billion rubles (21 million dollars). It adds that all KFC restaurants, including franchisees, will need to be rebranded for Rostic’s, a Russian fast food company serving fried chicken that already had several restaurants co-branded with KFC. Rebranding could cost another 1.3 billion rubles for Smart Service.
However, it’s unsure whether all restaurants will accept becoming a franchisee for Rostic’s. Unlike McDonald’s which had only three franchisees and already left Russia, the almost 1,000 KFC restaurants located in Russia are managed by many independent owners.
Yum! in July announced that it had transferred ownership of all its Pizza Hut franchise assets to a local operator who initiated the process of re-branding locations to a concept unrelated to Yum!.
Expected later this year, the completion of the sale of KFC in Russia remains subject to regulatory and government approvals.