Buying a Franchise in Belarus: Pre-Purchase Disclosure

Franchise buyers often receive a presentation before a draft agreement, and a request for payment before any explanation of the risks. To make an informed decision about joining a franchise network, agree in advance how information will be disclosed. This is not simply about checking individual promises: it is about arranging access to the documents you need to assess the purchase properly.

What Belarusian law provides

In Belarus, franchising is specifically regulated by the Civil Code, although there is no separate franchising act. Article 910 describes a comprehensive business licence agreement: in return for a fee, the rights holder grants the user a package of licensed rights, including the right to use a trade name, the intellectual property specified in the agreement and undisclosed information.

Article 910-1 requires the agreement to be in writing and registered with the patent authority — the National Centre of Intellectual Property. Failure to register renders the agreement invalid. Registration does not, however, mean that the state has confirmed the profitability of the opportunity or verified every claim in the seller’s presentation.

Belarusian regulation does not provide for a universal, mandatory pre-contractual disclosure document equivalent to the specific disclosures required in some other jurisdictions. You should therefore not assume that the seller will automatically provide a standard information pack common to all brands, or allow a statutory review period specifically for franchise disclosures.

However, the absence of a standard disclosure document does not remove the rights holder’s statutory obligations to supply the documentation and information needed to use the licensed rights package. It is important to distinguish between performance of an agreement already signed and the information you need before making a commitment. Arrangements for advance access are best agreed separately.

Make a request that can be answered with documents

Do not simply ask the seller to ‘tell you about the franchise’. Send a consolidated written request and ask them to identify which materials are available now, which can be accessed after signing a confidentiality agreement, and which they will not provide at all.

It is useful to divide the information pack into four categories:

• Transaction documents: the draft agreement, schedules, a list of fees and any documents the agreement refers to as binding.
• The basis of the offer: details of the rights holder, the contents of the licensed rights package and documents substantiating the rights being granted.
• The network’s actual operations: a dated list of company-owned and franchisee-operated locations, information on openings and closures, and available franchisee contact details.
• Evidence supporting financial claims: the period covered by the calculations, the characteristics of the locations concerned, the costs included, and an explanation of which figures are actual results and which are forecasts.

Do not present this list as a statutory duty to disclose every document requested. It is your own set of requirements for making an investment decision. If the seller is unwilling to disclose material information, you can take that into account when deciding whether to continue negotiations.

Identify an acceptable alternative for each item. For example, instead of a particular franchisee’s full accounts, you could discuss anonymised data accompanied by an explanation of the methodology. But a promotional chart with no reporting period or breakdown of included costs does not become evidence simply because the underlying documents are confidential.

Arrange access without paying prematurely

Disclosure can take place in stages. First, obtain a basic information pack that allows you to understand what the transaction involves. Then sign a reasonable confidentiality agreement and review the sensitive materials. After that, pass the documents to a solicitor and an accountant for assessment.

Before signing the confidentiality agreement, check whether you may share the materials with your professional advisers and on what terms. Otherwise, you could receive the documents only to find that the agreement prevents a full independent review.

Full disclosure of technical trade secrets before a transaction is not always justified. Instead, you could agree to review the contents page of the operating manual, see selected sections or inspect the materials in a controlled setting. The purpose of preliminary due diligence is to establish that the materials exist and understand their content and practical relevance — not to obtain the means to replicate the business for free.

If access is only available at a meeting, clarify in advance whether you may take notes and receive written answers to your questions. An on-screen presentation is no substitute for a draft agreement that you can read in full at your own pace.

Do not treat a paid brand reservation as a step without consequences. If payment is required to access information, first establish its legal basis, the refund terms and what happens if you decide not to proceed with the main transaction. Calling a payment a ‘reservation fee’ guarantees nothing in itself.

Record the gaps and make a decision

Create a table with five columns: material requested, version received, date, source and outstanding question. For financial information, also note whether it relates to Belarus, a location owned by the rights holder or an independent franchisee.

Pay particular attention to undated documents and schedules that the seller promises to show you only after signing. If the agreement requires you to comply with a document you have not seen, this is more than a shortcoming in the presentation: you do not yet understand the extent of your future obligations.

Before making your final decision, send the seller a list of unresolved questions. Divide them into three categories: questions that must be answered before the transaction can proceed; questions whose answers affect the price or terms; and questions that can be clarified later without significant risk. This helps distinguish genuinely critical gaps from a desire to obtain every possible piece of information.

Practical takeaway: before paying, assemble a dated set of documents, ensure your advisers can access them and identify critical gaps in writing. Buy a franchise only after reviewing enough information to make an informed decision, rather than expecting to receive it after the deal.