US-based quick service restaurant company Yum! Brands has ended its franchise agreements with IS Holding’s subsidiary IS Gida, which owns and operates all KFC and Pizza Hut outlets in Turkey.
The decision comes after IS Gida failed to uphold the standards required by Yum! Brands.
Yum! Brands has expressed gratitude for the loyalty of its Turkish customers and reaffirmed its commitment to the region.
The termination will result in the temporary closure of 283 KFC and 254 Pizza Hut restaurants across Turkey.
Yum! Brands is taking legal action following the termination and aims to reopen as many locations as possible.
Yum! Brands chief financial and franchising officer Chris Turner stated: “Having ‘3C’ franchisees that are capable, capitalised 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.
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By GlobalData“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.”
The owner of IS Holding served as master franchisee of the brand in Germany for two years.
Yum! Brands re-acquired the master franchise rights for KFC and Pizza Hut in Germany from IS Holding’s owner in December 2024.
The move has allowed Yum! Brands to resume direct management of the German market, which remains unaffected by the Turkish franchise termination.
Yum! Brands expects to incur a pre-tax special charge of $60m in Q4 2024, mainly covering transaction costs from the acquisition of a German business and expenses linked to terminating the Turkish franchise.
The recent sales at Turkey’s restaurants were notably lower than global averages for both brands, indicating that royalty losses from these closures will not materially affect Yum!’s profitability in 2025 and beyond.
Turner stated: “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. Yum! and its brands look forward to again serving our customers in the Turkey market in the future.”
IS Gida stated that its operations align with quality standards and are ongoing without interruption.
The company has seen a substantial increase in its restaurant count to 537, marking a 300% growth since incorporating the KFC brand in 2020 and the Pizza Hut brand in 2022.
It said in a statement: “The compliance of all our KFC and Pizza Hut restaurants with global operational standards is regularly audited by Yum! Brands-approved independent auditing organisations, and since our operation meets these quality standards, it continues its activities uninterruptedly.”
