The National Agency for the Prevention of Corruption (NACP) has included the American multinational franchise of fast food restaurants Subway on the list of international sponsors of war. More than 500 restaurants of the company continue to work in the aggressor's market, paying hundreds of thousands of dollars in taxes to the budget of the Russian Federation. Subway actively advertises its activities through sanctioned Russian social networks and delivers food through Yandex services, which cooperate with the state and law enforcement agencies of the aggressor country.
Subway is one of the largest chains in the world in terms of the number of public catering establishments. It is known for its sandwiches, salads and rolls. The company positions itself as a "healthy alternative to traditional fast food." The company claims to be concerned about the health of consumers, but continues to work in Russia, financing the murders of Ukrainians. The Russian Subway chain is now the third largest in Europe after Great Britain and Germany.
The company has been operating in Russia for over 20 years, has created about 6,000 jobs, has 550 restaurants in 122 cities. Since the start of the full-scale invasion, the company has not reported any reduction in its operations in the Russian Federation. So, in addition to paying taxes to the state budget of the terrorist state, the company provides jobs to Russians, supporting the Russian economy and the level of employment of the population.
The peculiarity of Subway's business is that they operate under the franchise system, that is, there is a large network of legally separate entities operating under the Subway brand, generating revenue and paying taxes. In Russia, the Subway franchise is owned by the Subway Russia Service Company with its head office in St. Petersburg.
Subway said that all restaurants in the country are independently owned and operated by local and master franchisees, so the restaurants remain open in Russia. This statement regarding the inability to influence one's own franchisees is untrue and actually misleading.
So, in May 2022, Russian banks began to block royalties (payments for the use of a franchise), because they were not ready to take responsibility for processing payments to a franchisor from an "unfriendly" country (the USA). Customers could not obtain ownership from Russian franchisees and send payments to the US.
In this regard, on behalf of Subway, the Russian law firm Nevsky IP LAW conducted the necessary analyzes of contracts and sanctions legislation of the Russian Federation and found appropriate legal mechanisms that allow to legally collect royalties from franchisees and send them to the holding company's address. As a result, the company helped the client (Subway) to once again receive royalties from Russian franchisees. Banks have resumed processing payments, and franchisees have returned to royalties.
Subway in Russia actively conducts advertising campaigns through the social networks "VK" and "Odnoklassniki", which belong to the sub-sanctioned legal entity "VK Company" LLC. Subway also uses food delivery services through the Yandex.Eda service. We will remind you that this service is controlled by the Yandex group of companies, which cooperate with the state and law enforcement agencies of the aggressor country, in particular with the FSB. "Yandex" services have previously been included in the list of candidates for sanctions by the NACP.
There were no attempts by the company's management to condemn Russia's war against Ukraine.
NAKC is the body responsible for promoting the development of the compliance system in the private sector. During compliance procedures, counterparties are subject to integrity checks, including compliance with the norms of socially responsible business conduct in accordance with OECD standards. The list of "International Sponsors of War" on the "War and Sanctions" portal is a powerful reputational tool for achieving the integrity of supply chains in the international dimension, the exit of international business from Russia, therefore - reducing the financial and technological ability of the terrorist country to kill Ukrainians. One of the "pressure levers" of the platform is cooperation with the World-Check database , which is used by banks and insurance companies for risk assessment. That is why for global companies, the consequences of being on the list become worse than continuing to do business with the aggressor country.
