Buying a Franchise in Belarus: Who Should Sign the Agreement?

A franchise is often chosen by one person, funded by several partners and intended to be operated by a company that has not yet been set up. Unless you identify the buyer in advance, the agreement, payments and actual business operations may end up in different names. Entering a franchise network is not just about choosing a brand: it also means deciding exactly who will receive the rights and take on the obligations.

Who can be a franchisee?

In Belarus, franchising is specifically regulated by Chapter 53 of the Civil Code. The legal term for the arrangement is a comprehensive business licence agreement (franchising). The buyer is referred to in the agreement as the user: they receive a package of rights for business purposes and undertake to comply with the conditions governing their use.

The user can be a commercial organisation or an individual entrepreneur — a registered business status in Belarus. A private individual who is merely planning to start a business should not be named as the buyer in the main franchise agreement. A prospective founder’s personal signature does not replace the need for the company to enter into the agreement once it has been incorporated.

Whether an individual entrepreneur may carry out the particular activity must be checked separately under current Belarusian rules. Being eligible to enter into a franchise agreement does not, in itself, mean that your chosen legal status allows you to run any type of business. Similarly, an agreement with a brand does not replace any necessary permits.

The agreement must be in writing and must be registered with the National Centre of Intellectual Property. The user’s details are therefore more than a formality: this is the person or entity that acquires the contractual rights and assumes the corresponding obligations.

Before agreeing the final wording, establish:

• who will sell the goods or provide the services;
• who will receive the revenue and keep the accounts;
• who will employ staff and sign the lease;
• who will be able to fulfil the obligations to the rights holder.

Choosing between individual entrepreneur status and a company

Do not choose a business structure solely on the basis of how easy it is to open a bank account or how much it costs to get started. First, assess how well it fits the activity, the ownership structure, the sources of funding and the allocation of risk. Tax implications should also be assessed against your particular business model, rather than relying on generic advice from the franchise seller.

An individual entrepreneur conducts business in their own name. A key consideration is personal liability for business obligations, subject to the exceptions provided by law. If the project involves substantial rent, equipment costs and mandatory payments, assess this risk before signing any documents.

If several people are investing, consider a commercial organisation, such as a limited liability company (known in Belarus as an OOO). Ownership interests, decision-making procedures and the director’s powers provide a legal framework for the relationship between the partners. However, registering an OOO does not, by itself, settle governance issues: these must be addressed in the appropriate documents.

Discuss in advance who can approve additional investment, who appoints the person running the business and what happens if the owners disagree. The rights holder generally deals with the contracting party, rather than resolving internal disputes between investors.

A company does not guarantee freedom from personal risk either. For example, an owner may separately agree to provide a personal guarantee. Check not only the main agreement but also any documents the founders are asked to sign personally.

Bring rights, funding and operations into one clear structure

Draw up a simple table listing each document, the contracting party, the signatory, the payer and the person or entity receiving the benefit. Include the franchise agreement, lease, equipment purchases, employment contracts and funding documents. This check can reveal inconsistencies before they become a problem at launch.

Example: an OOO signs the franchise agreement, its founder leases the premises as an individual entrepreneur, and a second owner buys the equipment personally. This structure requires additional legal arrangements allowing the company to use the premises and equipment. Common ownership does not turn separate persons or entities into a single franchisee.

For each inconsistency, establish:

• the legal basis on which the franchisee receives the assets or services;
• whether the agreement permits the proposed operating arrangements;
• which documents substantiate the expenses and payments;
• who is responsible to customers, the landlord and employees.

Take particular care when documenting funding. An owner’s contribution, a loan and payment of another party’s obligation are different transactions with different consequences. Choose the appropriate mechanism with an accountant and a lawyer. Do not assume that the payment reference alone will explain all the relationships between those involved in the project.

If the rights holder asks for payment before the company is incorporated, first agree a written basis for that payment. Clarify who is paying, what the payment covers, who is entitled to claim a refund and how the amount will be accounted for once the main agreement is signed.

What to check before signing

Before signing, verify the franchisee’s name, registration details and the signatory’s authority. If a representative is signing the documents, check that their authority covers the specific transaction. Internal company decisions and approvals must also be documented where required by law or the company’s governing documents.

Do not accept the approach of ‘we’ll sign in one name now and transfer it later’. Moving from individual entrepreneur status to an OOO, or replacing one company with another, is not simply a matter of updating the details. You will need to establish how the rights and obligations will be transferred, what consents are required and which registration steps must be taken. You cannot assume in advance that this will be possible.

Discuss your proposed structure with the rights holder before paying anything. If they require the owner’s personal involvement, approval of the director or notification of changes in ownership, clarify exactly what those conditions mean and the consequences of breaching them.

Practical takeaway: before buying a franchise, identify one clearly defined franchisee, align the main contracts with that person or entity, and document the investors’ involvement. The fewer unexplained discrepancies there are between the party holding the franchise rights, the payer and the actual operator, the easier it will be to manage the project and protect your interests.