Franchise owners looking to operate the KFC brand in Russia urged authorities to pause the sale of the Russian arm of Yum! Brands, known as Smart Service, managed by the Izhevsk-based company. This call for a temporary halt came from the regional Ombudsman responsible for the Moscow restaurant market, who voiced concerns about the implications for local franchisees. The update was reported by the national agency RIA Novosti.
In October, Yum! Brands announced a deal that would transfer 70 KFC locations to the Smart Service franchisee in Izhevsk. The agreement included requirements to rebrand the network and to maintain employment for the existing Russian team. Subsequent reporting indicated that the network would transition to a new brand named Rostics as part of the broader shift.
Key players in the dispute include Konstantin, one of the owners of Smart Service, who indicated that the deal would compel the franchise group to operate under the Rostics banner. The acquisition of the Rostics brand from Rostislav Ordovsky-Tanaevsky in 2009 is cited as a significant factor in this brand transition, according to the Ombudsman.
The franchisees voiced frustration over the lack of direct communication about the deal’s terms. They were informed that royalties and marketing fees would remain in the same range, amounting to around 11 percent, but would be owed to Rostics rather than KFC itself, raising concerns about brand alignment and long-term profitability for the local operators.
Despite the RD (rebranding decision) and new branding obligations, franchisees must also invest in marketing and brand promotion to establish Rostics in a market where KFC enjoys near-universal recognition. Industry observers note that roughly one-fifth of the country’s population has some awareness of Rostics, but this familiarity does not match the entrenched position of KFC. The restructuring involves considerable marketing muscle, including a substantial dedicated team in Dallas focusing on KFC technology and promotional systems, alongside new, well-funded marketing campaigns for Rostics as it seeks to grow in a challenging environment.
According to the Ombudsman, the proposed agreement is currently undergoing review by a government commission, signaling that regulatory scrutiny will shape the final terms and timing of the transition. The process may influence how quickly franchisees can align with the Rostics brand and how the new corporate structure affects ongoing operations across the Russian network.
In related developments, reports earlier this week indicated that the Polish conglomerate AmRest, which holds a 20 percent stake in all KFC restaurants in Russia, has contemplated selling its Russian portfolio to a local buyer, Almira, with a valuation of at least 100 million euros. This potential sale reinforces the broader strategic realignment of fast-food assets in the region and underscores the fragility of cross-border brand ownership during periods of market reorganization. The evolving ownership landscape adds another layer of consideration for local franchisees navigating updated royalty structures and branding commitments, as well as the potential implications for employment terms and supplier relationships. (Source attribution: RIA Novosti, industry analysis)