Buying a Sub-franchise in Belarus: What to Check First

A franchise is not always sold by the brand owner. Sometimes the buyer signs an agreement with a partner authorised to develop the network and recruit other business owners. In franchising, this model is known as sub-franchising. For the buyer, it creates an additional dependency: the outlet’s operation rests not only on its own agreement, but also on the seller’s relationship with the rights holder. Check this contractual chain before making any payment or committing to a launch.

1. Establish who is granting the rights and on what basis

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, while Article 910-1 requires the agreement to be in writing and registered with the patent authority — the National Centre of Intellectual Property. A comprehensive business sublicence is the legal mechanism used to pass the licensed package of rights on to another operator.

Labels such as ‘official representative’ or ‘lead brand partner’ are therefore not enough. The seller must be authorised to grant sublicences on the specific terms being offered. Their authority may be limited by territory, duration or outlet format, or subject to the rights holder’s consent for each new partner.

Before discussing payment, request:

• the main agreement and any amendments, or certified extracts sufficient to verify the seller’s authority;
• the provisions governing the grant of comprehensive business sublicences;
• a list of the rights that may be passed on;
• evidence of registration of the relevant agreements;
• the rights holder’s consent to your transaction, if required under the main agreement.

Commercially sensitive information can be redacted or disclosed under a confidentiality undertaking. However, withholding provisions that determine whether the seller has the right to sell a sub-franchise poses a significant risk to the buyer. Also ask the rights holder to confirm the partner’s authority in writing: this is useful, but does not replace checking the documents.

2. Compare both agreements, not just your draft

The key question is not how convincing your own agreement looks, but whether it is consistent with the main agreement. A sublicence must not grant more rights than the seller has received. Nor can its term extend beyond that of the main agreement.

Create a table with three columns: ‘What I have been promised’, ‘What the seller is authorised to offer’ and ‘Which document confirms this’. Use separate rows for the operating address and territory, business format, package of rights granted, term, restrictions on use and required approvals. A gap in the final column marks an issue to resolve before proceeding.

Compare the dates particularly carefully. If the main agreement expires before the end of your planned operating period, the seller’s promise that ‘we will definitely renew’ does not secure your continued rights. The possibility of renewal is not the same as a renewal already agreed and documented. Do not base your investment projections on the assumption that negotiations with the brand owner have already concluded.

Also check who has the authority to change mandatory requirements. If the seller must pass on updates from the rights holder, the agreement needs a clear notification procedure. Otherwise, the buyer may learn about new restrictions only after receiving a complaint alleging non-compliance. Ask a lawyer to assess the entire contractual chain, including the governing law where a foreign company is involved, rather than isolated pages of the draft.

3. Examine what happens if the main agreement ends early

Belarusian law provides a mechanism for preserving relationships with sub-licensees: if the main agreement is terminated early, the licensee’s rights and obligations under the comprehensive business sublicence agreements it has entered into pass to the rights holder. However, this is not an unconditional guarantee: the agreement may provide otherwise, and the rights holder may refuse to accept those rights and obligations.

That is why a seller’s claim that ‘you will remain in the network whatever happens’ needs checking. Establish whether the main agreement excludes this mechanism and what position the rights holder takes. Consider expiry at the end of the agreed term separately: it cannot automatically be treated in the same way as early termination.

Before buying, propose agreeing a procedure for dealing with the end of the main agreement:

• who will notify you, within what timeframe, and how they will explain the grounds for termination;
• who will confirm the transfer of rights and obligations or the rights holder’s refusal to accept them;
• where payments and requests should be sent after the contracting party changes;
• how the necessary paperwork and registration formalities will be handled;
• who will settle advance payments, outstanding debts and unfulfilled obligations.

The seller cannot bind a rights holder who is not party to the transaction simply by making a promise. Ideally, therefore, the rights holder should be involved in agreeing the key arrangements for continuity of operations. Equally, do not stop making payments or change the recipient on the strength of an unofficial message: first obtain documentary grounds and legal advice.

4. Assess the cost of relying on an intermediary

A sub-franchise can be convenient: a local partner is closer to the outlet and more familiar with operating conditions in Belarus. But the buyer needs to understand which obligations that partner fulfils directly and which depend on the brand owner. Draw up a separate responsibility map showing who supplies documentation, responds to queries and ensures that obligations to you are met.

Allow for a change of contracting party in your budget. This is not an arbitrary addition to the franchise price, but a list of potential costs: legal support, revised paperwork, delays in performance and temporary working capital needs. For each cost, identify why it might arise and who is expected to pay. Do not treat a refund as guaranteed unless the relevant obligation is expressly documented.

Practical takeaway: buy a sub-franchise only after checking the entire chain of rights. Before paying, make sure you understand the seller’s authority, the maximum period for which you can operate and the consequences if the seller’s relationship with the rights holder ends. If these questions remain unanswered by the documents, postpone the transaction.