The National Agency for the Prevention of Corruption has added the American multinational fast food franchise Subway to its list of international war sponsors. This was reported by the press service of NAPC.
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The agency noted that more than 500 of the company's restaurants continue to operate in the aggressor market, paying hundreds of thousands of dollars in taxes to the budget Russia.
Subway actively advertises its activities through sanctioned Russian social networks and delivers food through Yandex services that cooperate with government and law enforcement agencies of the aggressor country.
“Subway is one of the largest chains in the world in terms of the number of catering establishments. It is known for its sandwiches, salads and wraps. The company positions itself as a “healthy alternative to traditional fast food.”
The company claims to care about consumer health, but continues to operate in Russia, financing the murders of Ukrainians. The Russian Subway chain is now the third in terms of the number of outlets in Europe after the UK and Germany,” the report says.
The company has been operating in Russia for more than 20 years, has created about 6,000 jobs, and has 550 restaurants in 122 cities. After the start of the full-scale invasion, the company did not report any reduction in its activities in Russia.
“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,” added the NAPC.
The peculiarity of Subway's business is that they operate under a franchisee system, that is, there is a large network of legally separate entities operating under the Subway brand, generating income and paying taxes. In Russia, the Subway franchise is owned by Subway Russia Service Company, headquartered 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 its own franchisees does not correspond to reality and is actually misleading,” added the NAPC.
So, in May 2022, Russian banks began to block royalties (payments for using a franchise) because they were not ready to take responsibility for processing payments to a franchisor from an “unfriendly” state (USA). Clients could not obtain ownership rights from Russian franchisees and send payments to the USA.
In this regard, at the request of Subway, the Russian law firm Nevsky IP LAW carried out the necessary analyzes of contracts and sanctions legislation of the Russian Federation and found appropriate legal mechanisms to legally collect royalties from franchisees and direct them to the holding company.
As a result, the company helped the client (Subway) again receive royalties from Russian franchisees. Banks have resumed processing payments, and franchisees have returned to their duties of paying royalties.
Subway in Russia is actively conducting advertising campaigns through the social networks VK and Odnoklassniki, which belong to the legal entity of the sanctioned VK Company LLC. Subway also uses food delivery services through the Yandex.Food service.
NAPC recalled that this service is controlled by the Yandex group of companies, which cooperate with government and law enforcement agencies of the aggressor country, including FSB. Yandex services were previously included in the list of candidates for NAPC sanctions.
“There were no attempts to condemn Russia’s war against Ukraine from the company’s management,” the agency added.
