Franchising in Belarus: who is liable for customer claims?

Customers see the chain’s sign above the door, but it is often the individual franchisee who receives their claims. Who pays for a refund, an expert assessment or remedial work if the problem stems from the franchisor’s recipe, instructions or products? Before buying a franchise, check not only the service standards but also how liability is allocated. A shared reputation across a franchise network needs to be backed by a clear procedure for working together, rather than a promise to “sort things out as they arise”.

What Belarusian law provides

Belarus has no standalone franchising law, but it does have specific provisions: these relationships are governed by Chapter 53 of the Civil Code, “Comprehensive Business Licence (Franchising)”. It is therefore incorrect to treat them solely as a matter of agreement between the parties. Article 910 defines an agreement under which a rights holder grants a user a package of licensed rights for business purposes in return for payment.

The Civil Code provides for the rights holder’s subsidiary liability for claims against the user concerning inadequate quality of goods, work or services supplied under a franchise agreement. This is secondary liability: it does not mean that a franchisee can automatically redirect every complaint to the brand owner. Whether it applies depends on the nature of the claim and the statutory procedure for pursuing the liable parties.

A separate rule applies to claims against the user as a manufacturer of the rights holder’s products: for these claims, the rights holder is jointly and severally liable with the user. Unlike subsidiary liability, joint and several liability allows a claimant to seek satisfaction from the liable parties together or from any one of them, within the limits set by law. Ask a lawyer to check whether this rule applies to the particular production model.

If the customer is a consumer, the Republic of Belarus Law “On Consumer Protection” also applies. An internal agreement within the network on allocating costs does not override the customer’s statutory rights. In addition, Article 910-1 of the Civil Code requires a franchise agreement to be in writing and registered with the National Centre of Intellectual Property. Failure to register renders the agreement invalid; an annex dealing with customer claims will not remedy that defect.

Which situations to review before buying

Ask the franchisor for anonymised examples of customer claims and the procedures used to resolve them. This is a due diligence request, not a suggestion that the franchisor is obliged to disclose every customer complaint. The aim is to understand who made the decisions, what evidence was gathered and who paid to put matters right.

Work through at least four scenarios:

• A defect in a finished product. The franchisee sells products obtained from the rights holder or another supplier. Who checks the batch and brings a claim against the supplier?
• An error in mandatory instructions. Staff followed the network’s prescribed process, but the result was of inadequate quality. How can compliance with the instructions be demonstrated and the cause of the defect established?
• A failure at the outlet. The problem arose from storage, preparation or service. Which costs fall to the franchisee, and who helps deal with the consequences?
• A disputed cause. The franchisor blames the outlet, while the franchisee blames the process or raw materials. Who arranges an expert assessment and pays for it while the facts are being established?

Do not settle for a clause stating that “the party at fault will compensate for losses”. Without a procedure for establishing the cause, it leaves the central question unresolved. Scrutinise any offer where the franchisor dictates the entire operating process but seeks to place all responsibility for its consequences on the franchisee.

How to set out claims handling in the agreement

Separate two processes: meeting obligations to the customer and subsequently settling costs between the network’s participants. Customers should not have to wait while the franchisor, supplier and outlet resolve their differences. Internal approval procedures must not prevent compliance with statutory deadlines for handling claims either.

Propose including the following terms in the agreement or an annex:

1. Notification channel. Specify the address or system through which the franchisee submits details of a claim, and how receipt is confirmed.
2. Supporting materials. Define the documents required: the customer’s claim, sales and batch information, photographs, storage records and the version of the instructions in force at the time.
3. The outlet’s authority. Set out which decisions the franchisee can make independently and which require approval. Specify what happens if the franchisor does not respond.
4. Assessment procedure. Establish how an expert or testing organisation is selected, how samples are preserved and how findings are documented.
5. Reimbursement of costs. Describe the grounds for reimbursement, supporting documents, payment deadlines and the procedure for disputing an amount.

These are suggested contractual mechanisms, not universal legal requirements. A lawyer should check that they comply with mandatory rules. If the procedure changes after the agreement is signed, separately check whether those changes need to be registered: registration requirements for franchise agreements also extend to amendments and additions.

Which costs to consider and what to ask existing franchisees

The cost of resolving a claim is not always limited to refunding the purchase price. There may be costs for delivery, quality assessments, repeating work, storing disputed goods and legal assistance. Record which of these costs are reimbursable between the parties where the relevant grounds exist, and which require separate approval.

Distinguish between the obligation to satisfy a valid legal claim and a voluntary goodwill gesture. If head office proposes giving a customer an additional product to protect the brand’s reputation, it should be clear in advance who pays for that decision. Trading under the same sign does not, in itself, establish how costs are settled between the parties.

Speak to existing franchisees: did the rights holder respond on time, help investigate the cause and reimburse agreed costs? Ask them to describe the process without sharing customers’ personal data. Compare their answers with the draft agreement: consistent practice is useful, but it is no substitute for a binding contractual obligation.

Practical takeaway: before buying a franchise, work through one typical customer claim from receipt to final settlement of costs. If responsibility, deadlines, evidence and who pays are clear at every stage, the risk of an expensive dispute between the parties is significantly lower.