Buying a Franchise in Belarus: How to Review Non-Compete Restrictions

Buying a franchise may restrict not only how you run your new outlet, but also your other business ventures. Read non-compete provisions particularly carefully if you already own a shop, café, service business or a stake in another company. In the Belarusian franchise market, these terms warrant a separate discussion: agreeing to follow a brand’s standards should not become a vague ban on any independent business activity.

What exactly does the agreement restrict?

Start with the definition of prohibited activities, rather than the size of any penalty. Phrases such as ‘not compete with the rights holder’ and ‘not participate in a similar business’ do not, on their own, give a prospective franchisee clear boundaries. Establish which goods, services and business formats the parties consider competitive.

For example, someone buying a coffee shop franchise may already own a bakery that sells takeaway coffee. It is essential for them to establish in advance whether the bakery counts as a competing venture. A manager’s assurance that ‘this does not apply to your business’ is no substitute for an agreed contractual provision.

Check four aspects of the restriction:

• Activity: exactly which goods, services or business models the restriction covers.
• Involvement: whether it prohibits only managing a business, or also holding a stake, investing and providing consultancy services.
• Territory: where the restriction applies and how online sales are treated.
• Duration: when the restriction takes effect and when it ends.

Look separately for provisions on buying other franchises. A ban on obtaining similar rights from competitors could affect a second brand, even if you have no plans to establish your own network. Assess it against your expansion plans, not just your current activities.

What legal framework applies in Belarus?

Belarus has no standalone franchising law, but that does not mean there are no specific regulations. A comprehensive business licence agreement (franchising agreement) is governed by Chapter 53¹ of the Civil Code of the Republic of Belarus. Article 910 sets out the contractual framework for granting a licensee a package of licensed rights in return for payment.

When assessing a non-compete restriction, you need to consider both this chapter’s specific provisions on restrictive terms and the general rules of civil and competition law. You should therefore not assume that ‘anything signed must be legally permissible’. Equally, it is risky to declare an inconvenient restriction invalid yourself and continue operating in breach of the agreement.

Ask a Belarusian lawyer to assess the precise wording: whether it complies with the law, how clearly its scope is defined and what consequences a breach could have. Restrictions covering activities outside the agreed territory, connected persons or the period after the agreement ends require particular attention. They should not automatically be treated as permissible simply because they appear in an international network’s standard agreement.

The agreement must be in writing and is subject to state registration with the National Centre of Intellectual Property (NCIP). Resolution No. 346 of the Council of Ministers of the Republic of Belarus, dated 21 March 2009, also provides for registration of amendments to the agreement and its termination. Registration is not, however, a substitute for a full legal review: the parties remain responsible for ensuring that the agreement complies with the law. If an agreed exemption is documented as an amendment, clarify the registration procedure in advance.

How to protect your existing ventures

Before signing, draw up a list of your existing business interests. Include businesses you own, shareholdings, current franchises, online shops and projects already prepared for launch. For each, specify its actual activities, where it operates and your role. Share only the information needed to agree the restriction, without disclosing unnecessary commercial details.

Then compare this list with the agreement. A working table with three columns — ‘project’, ‘potential overlap’ and ‘agreed solution’ — can help. It will reduce the risk of discussing a single shop during negotiations only to find that the restriction’s wording covers your entire company.

If the franchisor agrees that your existing business can continue, propose putting the exemption in writing. It is useful to specify:

• the particular project or legal entity;
• the goods and services permitted;
• the sales channels allowed;
• whether expansion is permitted or requires separate approval;
• a prohibition on using the franchisor’s brand and the network’s protected information in that venture.

The last point matters to both parties. Permission to continue running your own business does not mean permission to transfer the franchisor’s materials to it. Keeping the ventures clearly separate helps protect the brand’s legitimate interests without imposing excessive restrictions on the franchisee.

How to agree a clear approval process

Even a detailed agreement cannot anticipate every future opportunity. Alongside the list of exemptions, agree a process for reviewing new ventures. Specify who should receive a request, what information it should contain, the deadline for a response and who is authorised to sign approval on behalf of the rights holder.

Do not treat a lack of response as permission unless that mechanism is expressly provided for in legally sound terms. Ask for a requirement to give reasons for the response: which features of the new venture create competition, and whether the overlap could be removed by changing the product range, format or sales channels.

Assess the economic cost of the restriction too. If buying the franchise means abandoning a project you have prepared or closing part of an existing business, that represents an opportunity cost in its own right. Compare it with the expected benefits of joining the network. Do not let promises of a future return on investment replace that assessment.

Practical takeaway: before buying a franchise, obtain three clear answers: what you are prohibited from doing, which existing ventures are permitted and how to obtain approval for new ones. If even one answer remains purely verbal, revisit the agreement before signing.