Yum Brands has terminated its franchising agreements with IS Gida A.S., a subsidiary of IS Holding which owns and operates all KFC and Pizza Hut restaurants in Turkey, after its failure to meet the franchisor’s standards.
“Due to issues specific to this franchisee and market, recent sales in Turkey restaurants were significantly below the global average sales per restaurant for each brand,” the company said.
The termination impacts 537 total restaurants, including 283 KFCs and 254 Pizza Huts. Yum Brands said it expects the restaurants to close temporarily but remains committed to the 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,” chief financial and franchising officer Chris Turner said in a statement. “Prior to termination, Yum Brands engaged with IS Gida over several months to provide assistance and resolve key issues, but IS Gida was ultimately unable to maintain compliance with our standards and adhere to fundamental provisions of our franchise agreements.”
Yum is separately taking legal action pursuant to the terminated franchise agreements.
The owner of IS Holding had also franchised KFC and Pizza Hut locations in Germany for about two years, until Yum reacquired the master franchise rights in the market in December 2024. The company said the recent termination will have no impact on the German business.
Further, with the termination, Yum forecasts a pre-tax special charge of approximately $60 million for the fourth quarter of 2024 consisting primarily of transaction costs associated with the German acquisition and termination-related costs associated with the Turkey business. The loss of royalties from store closures is not expected to have a material impact on Yum’s core operating profit.
The Turkey closures will be reflected as a reduction in the company’s reported unit counts at the end of the first quarter of 2025, however Yum expects no further impact on its global unit growth trajectory.
“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 added. “Yum and its brands look forward to again serving our customers in the Turkey market in the future.”
Yum Brands operates more than 60,000 restaurants in more than 155 countries and territories under the KFC, Taco Bell, Pizza Hut, and Habit Burger & Grill brands.
Contact Alicia Kelso at [email protected]
