Buying a Franchise in Belarus: How to Review Penalties and Inspections

Quality inspections help a franchise network maintain customer trust. But prospective franchisees need to understand in advance who will assess their work, which rules will apply and how much a mistake could cost. Before signing the agreement, review not just the size of the penalties, but the entire process: from recording a breach to remedying it and considering objections.

1. Separate legal requirements from network rules

In Belarus, franchising is specifically regulated by the Civil Code through what is legally termed a comprehensive business licence agreement. The absence of a separate law called ‘On Franchising’ does not mean there are no specific rules. Articles 910-3, 910-4 and 910-6 of the Civil Code are particularly important when reviewing quality provisions.

Article 910-4 sets out the obligations of the licensee — the franchisee — including ensuring that the quality of its goods, work or services is at least as high as that of equivalent goods, work or services provided by the rights holder, or franchisor. The franchisee must also comply with the franchisor’s instructions and directions concerning the use of the licensed package, as required by law. Seeking to remove quality control entirely is therefore not a sensible negotiating objective.

However, the statutory duty to maintain quality does not, in itself, impose a specific penalty for every failing. The grounds for contractual sanctions, the procedure for applying them and their relationship with the general rules on liability need to be reviewed separately.

Under Article 910-3, the franchisor must provide the information and documentation needed to use the licensed package, along with appropriate instruction. Prospective franchisees should agree the sequence: first, receive the applicable requirements and instruction; then, be assessed on compliance.

Practical step: ask a lawyer to divide the draft agreement into three groups of provisions: mandatory legal requirements, contractual obligations and additional powers granted to inspectors. This will show which terms are negotiable without trying to override a statutory duty.

2. Make standards measurable before signing

A clause imposing a ‘penalty for failure to comply with network standards’ is risky if the prospective franchisee has not seen those standards. Request the current list of requirements, the inspection checklist, the scoring system and the list of breaches that carry sanctions. Confidential materials can be reviewed under agreed access arrangements.

For each requirement, it should be clear exactly what will be checked. For example, ‘insufficiently attentive service’ is open to interpretation. A requirement to carry out specific actions when taking an order is easier to check — and to challenge if the assessment is wrong.

Prepare a working table with the following columns:

• the requirement and the document in which it is set out;
• the inspection method and supporting evidence;
• the severity of the breach;
• the deadline for remedying it;
• the consequences of a first and a repeat occurrence.

Discuss changes to standards separately. The agreement should specify how the franchisee receives an updated version, when it takes effect and how much time is allowed for the transition. If an update requires equipment to be replaced or the premises to be reconfigured, propose a separate process for agreeing timescales and costs.

Urgent action to address a safety risk should not be treated in the same way as a routine update to the décor. These situations need different procedures. Otherwise, a requirement to replace a decorative feature could carry the same consequences as a breach that puts customers at risk.

3. Agree evidence requirements and the right to object

Clarify who may carry out inspections: the franchisor’s employees, a contractor or a mystery shopper. Propose that the agreement define inspectors’ powers, permitted monitoring methods, access arrangements for the premises and limits on interference with the outlet’s operations. Scheduled and unscheduled inspections may need different notice requirements.

It should be possible to verify the findings of an inspection. Rather than a message saying ‘the outlet does not meet standards’, there should be a dated inspection report describing each breach, identifying the specific requirement and providing supporting evidence. The franchisee should receive a copy of the report and be able to attach their own comments.

Include the following in the agreement:

• a deadline for sending the report after an inspection;
• a period for submitting written objections;
• who will review a disputed assessment;
• the procedure for a follow-up inspection once a breach has been remedied;
• rules on storing and accessing inspection materials.

Photographs, videos and information about staff or customers may fall within the scope of Belarusian personal data legislation. The franchisor’s permission to take photographs or record video does not replace a lawful basis for processing that data. Before introducing monitoring, separately review the purposes, scope, transfer and retention periods for the information collected.

Speak to existing franchisees: have they managed to correct an error in an inspection report, have their objections been accepted, and does the actual process match the agreement? Ask them to describe a specific case without disclosing anyone else’s confidential materials.

4. Check how sanctions add up

Read penalty clauses alongside provisions on damages, suspension of access to operational systems and other consequences of a breach. A small individual penalty can become a significant risk if it is charged daily, applied separately to each item and imposed alongside other measures.

During negotiations, propose a distinction between failings that can be remedied, repeat breaches and cases requiring an immediate response. For the first group, a written warning and a reasonable period to put things right are useful. Also define what counts as a repeat breach and when several findings relate to a single breach.

Consider liability to third parties as well. Article 910-6 of the Civil Code provides for the franchisor’s subsidiary liability for claims concerning inadequate quality of the franchisee’s goods, work or services, and joint and several liability for claims against the franchisee as a manufacturer of the franchisor’s products. A penalty imposed within the network and a customer’s claim have different legal grounds: one mechanism does not replace the other.

Practical takeaway: before buying a franchise, obtain the standards, a sample inspection report and a complete outline of the sanctions. Sign only once you understand not just what triggers a penalty, but also how to demonstrate that no breach occurred, remedy a failing and secure a review of an assessment.