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. Last Updated: 07/27/2016

Subway Usurper Closed Down

MTSubway's ownership disputes with Minutka started in the joint venture's first year.
ST. PETERSBURG -- The legendary Minutka sandwich shop on Nevsky Prospekt has shut down.

Only sandwich lovers would have noticed the closure had the shop on St. Petersburg's main drag not been the scene of a battle raging between its owners and the international Subway fast-food chain for the past five years.

Nevsky's Subway was one of the first restaurant joint ventures in the country. According to the fast-food chain's representatives, Mikhail Gorbachev initiated the project. During a visit to the United States, he is said to have decided that Russia needed the same kinds of eateries he saw there. East-West Invest, owner of the Subway brand in Russia, arrived in Russia on Gorbachev's invitation and decided to set up its business in St. Petersburg.

The cafe opened its doors on Nevsky in 1994 under the joint ownership of Subway and Russian company Minutka. By 1995, relations between the two owners had soured, and the St. Petersburgers threw out their U.S. partners.

East-West Invest filed suit, and in 1997 a Stockholm arbitration court upheld its claim and ordered Minutka to pay the U.S. company $1.2 million -- the total sum of its investment. The ruling was confirmed by the St. Petersburg City Court and later by the Supreme Court. Nevertheless, the ruling was not carried out. Minutka disappeared without a trace, and the Submarina company was registered in its place.

In the last few years, the city property committee has attempted to review Minutka's lease agreement. Last fall the committee was able to revoke the lease agreement through the courts. However, the sandwich shop did not close down. In the course of one day, Submarina was turned into Kerol, and then Kerol into Proksima.

The property committee then changed its strategy. Instead of going to court on the grounds of lost profits, it filed criminal charges against the ever-changing heads of Minutka, Submarina, Kerol and Proksima for handing property not belonging to them over to one another without government permission, and outside management was brought in to take control of the companies. Because of the frequent changes, the federal government loses 140,000 rubles ($4,480) per month in rent, according to property committee data.

In addition, Minutka is due to appear before the arbitration court May 29.

Last week, Minutka's management informed the property committee that it had shut down the cafe. It sealed the doors in the presence of police and committee representatives. No property inventory was made because the doors had already been locked when they were sealed.

Representatives of Subway Russia said they viewed the closure optimistically. According to Gennady Kochetkov, the company's vice president, it will now be possible to develop the brand in St. Petersburg. He said there are already four potential franchisers in the city.