Yum! Brands terminates franchise agreement with IS Gida in Turkey

TURKEY – QSR operator Yum! Brands has announced it has terminated its franchise agreement with IS Gida, the subsidiary of IS Holdings, which operates all its Pizza Hut and KFC outlets in Turkey.

Yum! Brands has decided to terminate its franchise agreement with IS Gida after the latter failed to meet the required standards for operating KFC and Pizza Hut restaurants.

Yum! expressed appreciation for the loyalty of its Turkish customers and reiterated its commitment to the region.

The termination will lead to the temporary closure of 283 KFC and 254 Pizza Hut locations across Turkey. Yum! Brands is pursuing legal action following the termination and is focused on reopening as many outlets as possible.

Chris Turner, Yum! Brands’ Chief Financial and Franchising Officer, emphasized that it is crucial for franchisees to be capable, capitalized, and committed to the business.

He mentioned that Yum! provides continuous support to franchisees and expects them to deliver high-quality experiences for customers.

Prior to the termination, Yum! Brands engaged with IS Gida over several months to address key issues, but IS Gida ultimately failed to comply with the company’s standards and franchise agreements.

IS Holding, the parent company of IS Gida, previously held the master franchise rights for KFC in Germany for two years.

However, in December 2024, Yum! Brands reacquired the master franchise rights for both KFC and Pizza Hut in Germany, enabling the company to directly manage the German market, which remains unaffected by the termination in Turkey.

Yum! Brands has projected a pre-tax special charge of $60 million for Q4 2024. This charge will primarily cover transaction costs related to the acquisition of the German business and expenses incurred due to the Turkish franchise termination.

Despite recent sales at Turkey’s restaurants being below global averages for both brands, Yum! expects that the royalty losses from these closures will not significantly impact profitability in 2025 and beyond.

Turner reiterated that protecting the integrity of Yum! Brands’ franchises is a core responsibility, and the company will continue to ensure compliance with its operational standards to maintain consistent quality.

IS Gida, on the other hand, asserted that its operations are ongoing and uninterrupted, highlighting a 300% growth in its restaurant count to 537 since it began incorporating KFC and Pizza Hut brands.

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