Buying a Franchise in Belarus: How to Verify Promised Profits

The promise of a quick payback helps sell a franchise, but proves nothing on its own. Anyone buying a franchise in Belarus should check not just the calculation, but also the source of every key figure. Trust in franchising grows when both parties agree in advance which results are supported by documents and which remain assumptions. Here is how to carry out those checks before signing a contract or transferring any money.

1. Clarify exactly what is meant by profit

Start with a written request: ‘How is the profit figure in the presentation calculated?’ The same word can refer to very different measures: revenue minus purchasing costs, operating profit, or the amount the owner can actually take out of the business.

Ask the franchisor to explain what the calculation includes:

• whether rent, wages and statutory payroll contributions are included;
• whether the manager’s remuneration and the owner’s own work are accounted for;
• whether taxes, franchise network fees and marketing costs have been deducted;
• whether write-offs, refunds and payment service fees are reflected;
• whether equipment maintenance and periodic replacement are accounted for.

If the owner works at the outlet every day without pay, the profit shown is not equivalent to a passive investor’s income. To compare opportunities fairly, add the market cost of that work as a separate line item.

Also distinguish between profit and cash flow. A sale may be recorded before payment arrives, while buying equipment may require an immediate cash outlay. Even an accurate reported profit does not substantiate a promise of monthly payments to the owner.

2. Ask for evidence, not another presentation

Verification requires a clear chain: the claimed result, the underlying report, supporting evidence and an explanation of any discrepancies. Request monthly figures for a full year if the outlet has been trading long enough. This will reveal seasonal patterns rather than simply highlighting a successful month.

A useful set of documents includes:

• a management income and expenditure report for the specific outlet;
• anonymised sales and refund data exports;
• details of major expenses, supported by documents;
• explanations of one-off income, rent concessions and launch promotions;
• a description of how shared costs are allocated between outlets.

Do not request customers’ or employees’ personal data. Aggregated information is usually sufficient for an initial review. If the material is confidential, suggest signing a non-disclosure agreement and reviewing it with an accountant, with restrictions on copying documents.

Refusing to disclose commercial information does not prove deception, but it leaves the forecast unverified. Record that status rather than automatically treating an advertised figure as reliable.

When reconciling the figures, allow for differences between sales, money received into the bank account and revenue recognised in the accounts. These may arise from payment timing, refunds or accounting practices. The aim is to obtain a verifiable explanation, not to force every figure to match.

3. Check how closely the selected outlets resemble yours

A flagship outlet’s results will not necessarily be replicated by a new franchisee. Ask why those particular outlets were chosen for the presentation, and request figures for several comparable locations rather than just the network’s top performer.

Compare the city, premises type, floor area, customer footfall, length of time in business and the owner’s involvement in management. Establish separately whether the outlet belongs to the franchisor or an independent franchisee. A company-owned outlet may use head office resources whose costs are not fully reflected in its accounts.

Ask about all outlets operating in the chosen format: how many have opened, how many are still trading, and how many have closed or changed hands. Clarify the period covered. Excluding closed outlets from the sample can make the picture look more attractive without directly misrepresenting the results of those that remain.

With their consent, speak to existing franchisees. Ask not only ‘How much do you earn?’ but also ‘Which costs turned out to be higher than forecast?’ and ‘When did performance stabilise?’ Assess results from other countries separately: differences in currency, taxation and consumer behaviour limit their relevance to Belarus.

4. Understand what Belarusian law requires

Belarus has no standalone franchising act, but these relationships are specifically governed by Chapter 53 of the Civil Code of the Republic of Belarus, entitled ‘Comprehensive Business Licence (Franchising)’. Article 910 defines the relevant agreement, while Article 910-1 requires it to be in writing and registered with the patent authority.

However, Belarusian regulations do not require a specific pre-contractual disclosure document comparable to the disclosure packages mandated for franchise buyers in some countries. Do not assume that the seller is automatically obliged to provide a full report on every franchisee’s profitability. The scope of due diligence and access to supporting material should be agreed during negotiations.

State registration of the agreement with the National Centre of Intellectual Property does not verify the promised profits. It is no substitute for financial due diligence. The parties’ relationship is also subject to general civil law provisions on obligations, contracts and liability; the legal consequences of inaccurate information must be assessed in light of the circumstances of the particular transaction.

5. Record your findings in writing

Create a table covering the metric, source, period, limitations and verification status. Use three statuses: ‘verified’, ‘forecast’ and ‘insufficient data’. Send the table to the franchisor for comment and retain the agreed versions of the material.

If particular information is critical to your decision to buy, discuss with a lawyer whether to include it in the agreement or an appendix. Clearly identify which figures relate to past performance and which are modelling assumptions. Do not turn a forecast into an apparent guarantee: even a reliable track record at another outlet does not ensure your future income.

Practical takeaway: base your decision on verified underlying data, not an attractive payback period. If a key figure cannot be checked, treat it as a material uncertainty in the transaction, not a proven strength of the brand.