Yum! Brands Inc. (YUM, Financial) has announced the termination of its franchise agreements with IS Gida A.S., the franchisee responsible for operating all KFC and Pizza Hut restaurants in Turkey. This decision, effective January 8, 2025, impacts 283 KFC and 254 Pizza Hut locations, which are expected to close temporarily. The termination follows the franchisee's failure to meet Yum! Brands' operational standards.
In a strategic move, Yum! Brands also reacquired the master franchise rights for KFC and Pizza Hut in Germany from IS Holding A.S., the parent company of IS Gida A.S., in December 2024. This acquisition is part of Yum! Brands' broader strategy to strengthen its presence in key markets.
The company anticipates a pre-tax special charge of approximately $60 million in the fourth quarter of 2024. This charge primarily includes transaction costs related to the German acquisition and costs associated with the termination of the Turkish franchise agreements. Despite the closures in Turkey, Yum! Brands reports that the loss of royalties will not materially impact its core operating profit in 2025 and beyond, as recent sales in Turkey were significantly below the global average for each brand.
The closures in Turkey will be reflected as a reduction in Yum! Brands' reported unit counts at the end of the first quarter of 2025. However, the company remains optimistic about its global unit growth trajectory and expects no adverse effects on other markets from this termination.
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