Buying a Franchise in Belarus: How to Check the Seller

A well-known brand and a persuasive sales manager do not necessarily mean that the company offering you a contract is reliable. Several companies may operate behind the same brand: one runs the outlets, another sells franchises and a third receives payments. Before joining a franchise network, establish exactly who will owe you contractual obligations and whether they can fulfil them. Complete your checks before signing any documents or transferring funds.

1. Establish who you are contracting with

Start with the prospective contracting party’s full details, rather than its sales presentation. Request its name, registration number, address, details of its head and bank account details. For a Belarusian organisation, the key identifier is its taxpayer identification number, known as the UNP. Compare these details across the draft contract, invoice and correspondence: any discrepancies need explaining, even if all the companies use the same brand.

Check the organisation in the Unified State Register of Legal Entities and Individual Entrepreneurs. Confirm its status, registration date and any available information about changes. Save the results with the date of your check. If the transaction is delayed, repeat the search before signing: an old extract is not enough to assess the current position.

A recently incorporated company is not necessarily unreliable. However, claims that the network has been operating for many years should be distinguished from the history of the particular legal entity. Ask why a newly established company is selling the franchise, which functions have been transferred to it and what resources it has.

If an intermediary is conducting the negotiations, establish:

• on whose behalf they are acting;
• whether they are authorised to agree terms and accept payments;
• who is responsible for their written promises;
• whether they will become a party to any separate agreement.

For a foreign seller, request an up-to-date document from the register in its country of incorporation. Ask a Belarusian lawyer about the translation and formal requirements for foreign documents in the context of your transaction.

2. Check authority and the legal structure

Belarus has no standalone franchising act, but it does have specific rules: Chapter 53 of the Civil Code, ‘Comprehensive Business Licence (Franchising)’. Article 910 describes the granting of a package of licensed rights to a user for a fee. You therefore need to check not only that the seller exists, but also its role in the proposed contractual structure.

Under Article 910-1, the agreement must be in writing and registered with the patent authority, the National Centre of Intellectual Property. The registration procedure is set out, among other provisions, in Resolution No. 346 of the Council of Ministers of the Republic of Belarus, dated 21 March 2009. Failure to register renders the agreement invalid. Registration does not, however, confirm the seller’s financial stability or replace checks on the contracting party.

Request documents confirming the signatory’s authority. For the head of the company, these include appointment documents and provisions of the company’s constitutional document that affect their powers; for a representative, a power of attorney with an appropriate scope of authority. Check the power of attorney’s validity period and whether it authorises the representative to sign the specific agreement being proposed, rather than merely conduct negotiations.

Corporate approval of the transaction is a separate issue. Not every agreement requires a resolution of the shareholders or members, or another governing body. A lawyer should assess whether such a resolution is necessary in light of the legislation, the company’s constitutional document and the circumstances of the transaction. If approval is required, obtain it before signing.

Belarusian franchising rules do not require a specific pre-contractual disclosure document of the kind used in some other jurisdictions. It is therefore best to agree in writing what information is to be supplied, rather than assume that the seller will automatically provide a complete set of documents.

3. Assess the seller’s ability to fulfil its obligations

The purpose of financial due diligence is not to recalculate the projected profit of your future outlet, but to understand whether the contracting party can remain a viable partner. A company may be actively selling franchises without having the staff or funds to fulfil the contracts it has signed.

Request available financial statements for the most recent completed reporting periods, together with explanations of significant changes. Look for recurring losses, negative equity, substantial liabilities and reliance on income from new initial franchise fees. Each warning sign calls for an explanation, rather than automatic rejection of the deal.

Check available official information on liquidation, insolvency, enforcement proceedings and litigation. Bear in mind any access restrictions: finding no records does not guarantee that there are no problems. In court records, the subject matter and recurring nature of disputes matter more than the number of cases alone.

Ask the seller to provide documentary explanations of any concerns. For example, a statement that ‘the debt has been repaid’ should be backed by supporting documents. Establish whether any dispute affects resources needed to operate the network.

It is also useful to find out which company employs key staff. If they are employed by another group company, ask what arrangements make their services available to your contracting party. Common ownership does not mean that one company is automatically liable for another’s obligations.

4. Turn your findings into conditions of the deal

Create a table with four columns: issue, document received, risk identified and action required. This helps distinguish gaps that can be resolved from fundamental obstacles.

For example, a missing power of attorney needs to be obtained; a payment recipient that differs from the contracting party requires documentary evidence of the legal basis for the arrangement; and a seller’s dependence on another company calls for an assessment of the contractual links and possible security for its obligations. Do not transfer money to a third party simply because a sales manager asks you to do so in a messaging app.

Agree contractual assurances from the seller about its authority and material circumstances, along with the consequences of providing inaccurate information. A lawyer qualified in Belarusian law should check their wording and enforceability. Keep the documents and written answers together with the final version of the agreement.

Practical takeaway: before buying a franchise, establish the seller’s legal identity, the signatory’s authority and whether the seller has the resources to fulfil the agreement. Unexplained discrepancies in company details, payment arrangements or documents are grounds to pause the transaction, not to rush payment.