Buying an Existing Franchise in Belarus: Due Diligence on the Outlet

Buying an operating outlet may seem easier than starting from scratch: the premises are fitted out, staff are trained and customers know the location. But the seller is not simply handing over a source of revenue — debts, disputed obligations and dependence on the previous owner may remain with the business. A franchise acquisition calls for specific due diligence: owning the business and having the right to operate under the brand are two different things.

1. Establish exactly what you are buying

An advert for a ‘ready-to-run franchise’ can cover several types of transaction. One seller may be offering a stake in a company, another equipment and stock, while a third promises to transfer the lease and the agreement with the rights holder as well. Before discussing the final price, ask for a written description of what the purchase includes.

When buying a stake in a company, the legal entity continues to exist. Its contracts and obligations generally remain with it, so you need to assess the entire company, not just the appealing outlet. It is particularly important to establish whether the company has other sites, borrowings, guarantees or unresolved disputes.

When buying individual assets, you acquire the agreed property, but this does not in itself make you a party to the seller’s contracts. Rights to use the premises, software and brand must be arranged separately, in accordance with the relevant contracts and the law.

Draw up a list of what you are buying: equipment with identifying details, stock, the lease deposit, rights to materials used by the business and any other agreed items. For each item, record its owner, supporting documentation, condition and method of transfer. If the seller includes a ‘customer database’ in the price, check separately whether the personal data can lawfully be transferred and used afterwards.

2. Check whether you can continue operating under the brand

In Belarus, franchising is specifically regulated by the Civil Code, although there is no separate franchising law. Article 910 provides for a comprehensive business licence agreement, under which the rights holder grants the user a package of licensed rights for business purposes in return for payment. Article 910-1 requires the agreement to be in writing and registered with the patent authority — the National Centre of Intellectual Property. Failure to meet the registration requirement renders the agreement invalid.

A branded sign, an operational till and years of trading are therefore no substitute for checking the agreement. Request its full text, schedules, amendments and proof of registration. Verify which legal entity is named as the user and whether the agreement covers the outlet you are buying.

Then distinguish between two scenarios:

• Ownership of the company holding the licence is changing. Check whether the agreement requires notification of the rights holder, consent to a change of control or any other steps or consequences arising from the change.
• A different legal entity will operate the outlet. Do not assume the agreement transfers automatically with the equipment. Agree with the rights holder how the new arrangement will be legally documented and what registration steps are required.

Contact the rights holder directly. Ask them to confirm their willingness to work with you, disclose any amounts the seller owes them and set out the conditions for continued operation. Establish whether fees and the contract term will remain unchanged, and whether training or a refit will be required. An agreement with the seller alone does not oblige the brand owner to accept a new partner.

3. Separate sustainable revenue from hidden liabilities

Past profits are useful only if you understand the income sources and costs behind them. Request financial statements and tax filings, sales records, bank statements and documents supporting the main expenses. An accountant should reconcile the figures: bank receipts, sales recorded in the accounting system and reported revenue may differ for legitimate reasons, but those reasons must be established.

Check separately for costs that will change after the sale. The previous owner may have managed the outlet personally without accounting for the market value of their work, paid a preferential rent or received discounts unavailable to you. Recalculate profitability using your expected management salary costs, the confirmed rent and the future franchise terms.

Prepare a separate checklist of liabilities:

• amounts due to the rights holder, landlord and suppliers;
• taxes, bank credit, other borrowings and security provided for third-party obligations;
• unpaid amounts owed to employees and employment disputes;
• litigation and enforcement proceedings;
• customer advance payments, gift vouchers and unfulfilled orders.

The final category is particularly important: the seller may have received the money, while you will be serving customers after the transaction. Who is legally required to meet these obligations depends on the structure of the purchase. Document how they will be reflected in the price and fulfilled, rather than relying on a verbal assurance that ‘everything has already been paid for’.

4. Link payment to readiness for handover

Before making the final payment, agree the conditions without which the purchase would make little sense: formalising arrangements with the rights holder, securing the right to use the premises, confirming the assets included and resolving any debts identified. A lawyer should determine how to incorporate these conditions into the transaction documents and what consequences should follow if they are not met.

Discuss staged payments or retaining an agreed portion of the price until specific obligations have been fulfilled. This is a matter for negotiation, not an automatic right of the buyer. Each stage needs a verifiable outcome, a deadline and documentary evidence.

Prepare a management handover plan. Specify the stocktake date, the process for handing over keys and access credentials, who is responsible for the till and remaining stock, and the seller’s involvement during the transition. Find out whether key employees are willing to stay: an outlet built on the owner’s personal relationships may operate differently once they leave.

Record the actual condition of the assets and any discrepancies in the handover document. This helps document the transfer but does not replace checks on debts and contracts.

Practical takeaway: buy an operating outlet only after agreeing three things — what the purchase includes, how you can lawfully continue trading under the brand, and who will be responsible for existing obligations. A sign already above the door does not mean the franchise is ready for a safe transfer.