Yum! Brands announced Wednesday that it terminated a partnership with 537-unit Turkey franchisee IS Gida after the operator failed to meet brand standards.
The move impacts 283 KFC and 254 Pizza Hut restaurants in Turkey. The stores are expected to close temporarily. Recent sales in Turkey-based restaurants were significantly below KFC and Pizza Hut’s global average sales per unit, according to Yum! Because of this, the loss of royalties from closures will not have a material impact on core operating profit in 2025 and beyond.
CFO Chris Turner said Yum! engaged with IS Gida over several months to help resolve key issues. Still, the franchisee could not maintain compliance with company standards and align with provisions in the franchise agreements. Yum! said the poor sales performance was directly related to the franchisee and market.
“Having ‘3C’ franchisees that are capable, capitalized and committed is essential to our business, and we strive every day to provide them the necessary support and tools for success, while asking our partners to deliver high-quality experiences for our customers,” Turner said in a statement.
The same entity also served as Yum!’s Germany master franchisee for KFC and Pizza Hut locations over the past two years. In December, Yum! re-acquired the master franchising rights and took over management of the market.
Yum! expects a $60 million hit in the fourth quarter related to the cost of terminating the Turkey franchise partnership and acquiring the Germany market.
“Protecting our brands is fundamental to our role as franchisor, and we will take all measures necessary to ensure compliance with our operational standards so that our brands deliver consistent quality dining experiences that our customers expect and love,” Turner said. “Yum! and its brands look forward to again serving our customers in the Turkey market in the future.”
