Exiting a Franchise in Belarus: What to Agree Before You Buy

When buying a franchise, entrepreneurs usually calculate the cost of opening, but not the cost of leaving. Yet a closed outlet can continue to generate obligations to the franchisor, landlord, suppliers and customers. Before entering the Belarusian franchise market, agree a clear procedure for ending the relationship. This is not a sign of distrust: it is a way to protect your investment and avoid a dispute if you have to stop trading.

1. Distinguish between closing the outlet and ending the agreement

Franchising in Belarus is specifically regulated by the Civil Code: Chapter 53 covers the comprehensive business licence. Article 910 defines the agreement under which a rights holder grants a user a package of licensed rights 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 (NCIP).

Simply switching off the till and taking down the sign is therefore not enough. Ceasing to trade does not, in itself, end the agreement or all payment obligations. The exit procedure needs to be checked against the Civil Code’s specific rules, its general provisions on obligations and the terms of the individual agreement.

Before buying, ask a lawyer to distinguish between four situations:

• expiry of the agreed contract term;
• early termination by mutual agreement;
• unilateral withdrawal, where permitted by law or the agreement;
• termination following a breach of obligations.

Draw up a separate sequence of steps for each situation. Clarify which documents will be needed and what registration procedures must be completed with the NCIP. Do not assume that the rules for one route apply to another: notice that you do not wish to continue the relationship is not always a substitute for a termination agreement.

2. Agree a workable early exit mechanism

The phrase ‘termination is possible by mutual agreement’ does not guarantee that the franchisor will agree to release you when you need to leave. If the ability to exit voluntarily is important to your financial security, discuss it before signing.

Propose a defined notice period, delivery method, recipient address and effective termination date. The terms should allow you to prove not only that notice was sent, but also that it was received. Specify separately who is authorised to sign these documents on behalf of each party.

When reviewing the draft, ask three questions:

1. Can you leave without a breach by the franchisor, and on what terms?
2. Which amounts become payable specifically because of early termination?
3. Which steps must be completed before the exit date, and which afterwards?

If there is an exit fee, ask for its calculation to be explained, along with how it relates to other claims for payment. Avoid a situation in which a single decision to leave triggers fixed compensation, all future payments and unspecified additional costs at the same time. A Belarusian lawyer should assess whether the proposed arrangement is legally permissible.

3. Decide what happens to remaining stock and branded items

Do not assume that the franchisor will automatically buy back unsold stock. Check the franchise agreement and supply documents for any right to return goods or require a buy-back. The supplier may be a separate company, and an arrangement with the brand owner does not, by itself, oblige that supplier to accept remaining stock.

Propose attaching a stocktaking procedure to the agreement. It should usefully specify:

• which categories of goods can be returned;
• requirements for packaging, condition and remaining shelf life;
• the formula for the buy-back price and the payment deadline;
• how transport and inspection costs will be allocated;
• the procedure for resolving discrepancies in quantities.

List packaging, staff uniforms, menus, signage and advertising materials separately. Each item needs a clear agreed outcome: return, removal of branding, destruction or another authorised use.

If you intend to sell off remaining stock, agree the legal terms in advance. Owning stock you have paid for does not mean you can continue to present yourself as part of the network after the agreement ends. The sell-off period, permitted appearance of the outlet and use of branding all need separate review.

4. Calculate the full cost of leaving

Prepare a separate budget for ceasing operations. Do not combine it with your reserve for the first few months after opening: you may need this money after that initial reserve has been spent.

Include contractual payments up to the termination date, potential early exit costs, removal of signage, reinstatement of the premises, transport of remaining stock and settlement of obligations to customers. Account separately for payments due to employees under employment law and obligations under the lease. Ending the franchise agreement does not automatically end other contracts.

Ask to agree a final reconciliation procedure covering the reporting date, required supporting documents, deadline for submitting the calculation and process for raising objections. Specify which payments are due for the final partial period and how they will be calculated. Do not accept wording such as ‘the final amount is determined by the franchisor’ without a verifiable calculation method.

It is useful to cost two scenarios: a planned exit and an urgent closure. In the latter case, there is usually less time to sell stock and negotiate with the landlord, so the financial burden may be higher.

5. Document the end of the relationship

Before buying, propose agreeing the form of the final documentation: a termination agreement and, where necessary, a record confirming completion of the closing steps. These should record the date on which use of the licensed rights ends, the financial settlement, the return of property and any outstanding obligations.

Use photographs to evidence the removal of branding, signed handover records to document the transfer of property, and delivery confirmations to prove that documents were sent. List the obligations that survive the exit, such as agreed confidentiality requirements. Do not sign a declaration that you have no further claims until you have checked the accounts and confirmed that the other party has fulfilled its obligations.

Practical takeaway: before paying for a franchise, prepare a one-page exit plan setting out dates, responsibilities, documents and costs. If a material point depends solely on the franchisor’s future consent, treat it as unresolved and take it back to the negotiating table.