Franchising in Belarus: who pays for format updates?

A brand offers one outlet format today, then announces a new one after you open: a different interior, packaging, window displays and service model. For a franchise buyer, this creates a risk of unplanned investment. Developing the shared brand matters to everyone in the Belarusian franchise sector, but who pays for these changes should be agreed before you buy. Here is how to distinguish routine operating instructions from changes that require a new budget and further agreement.

1. Establish which changes the brand can require

Start by checking the franchisor’s powers, rather than asking whether there will be a rebrand. Find every reference in the draft agreement to standards, manuals, brand identity and mandatory instructions. Pay particular attention to wording that allows the franchisor to change these documents unilaterally and requires the franchisee to comply with every new version.

This arrangement may mean that the agreed opening costs place no limit on subsequent expenditure. Even without a change in royalty payments, an updated manual could require refurbishment, new signage or a complete outlet redesign.

Ask for future changes to be divided into three categories:

• Routine operational changes: for example, changing how customers are greeted without requiring additional investment.
• Changes required by law: changes genuinely needed to comply with applicable requirements, with the legal basis specified.
• Commercial brand updates: a new design, service concept or visual identity chosen by the franchisor to develop the network.

Each category needs its own notification, approval and payment arrangements. Do not accept an explanation that every brand decision automatically constitutes a legal requirement.

Ask to see the previous and current versions of the manual, along with examples of update notices. If the network is new, ask at least for its proposed procedure for introducing changes. What matters is not simply how often changes occur, but whether you can assess their implications in advance.

2. Set financial limits on updates

Look beyond the cost of new materials. A format update budget may include dismantling, delivery, installation, approvals, disposal of old fittings and branding, additional staff time and temporary restrictions on trading. It is best to calculate the cost of the update separately from the financial impact of closing the outlet.

Propose that the agreement specify which costs the franchisee must bear without further approval and which require separate written agreement. Possible points for negotiation include:

• a spending cap for each update;
• an overall cap on mandatory updates over an agreed period;
• a minimum interval between major design changes;
• a period after opening during which commercial redesigns cannot take place without the franchisee’s consent;
• a contribution from the franchisor towards the cost of replacing recently approved designs earlier than planned.

These are negotiating points, not benefits guaranteed by law. The parties determine the figures and conditions to suit the particular business.

Clarify how the agreed cap is calculated: does it include taxes, delivery, contractors’ fees and the costs of several successive stages? Otherwise, a single project could be presented as several smaller requirements, each technically falling within the limit.

Discuss remaining stocks of packaging and promotional materials separately. A practical solution may be to allow their use during a transition period, provided this is lawful and does not mislead customers. If the brand requires immediate replacement, agree in advance who bears the cost of writing off those stocks.

3. Distinguish operating instructions from contract amendments

Belarus has no standalone franchising law, but these relationships are specifically regulated by Chapter 53¹ of the Civil Code, entitled ‘Comprehensive Business Licence (Franchising)’. Article 910 defines the agreement, while Article 910¹ requires it to be in writing and registered with the patent authority, the National Centre of Intellectual Property. An unregistered agreement is considered invalid.

Resolution No. 346 of the Council of Ministers of the Republic of Belarus, dated 21 March 2009, is also relevant to format updates: amendments to franchise agreements must also be registered.

However, not every technical clarification in a manual necessarily constitutes a contract amendment. You need to examine which terms are set out directly in the agreement and its annexes, the status of the standards, and precisely what the new version changes. A statement that ‘uploading the document to the online portal is sufficient’ should therefore be no substitute for legal review.

Ask a Belarusian lawyer to assess the limits of the franchisor’s right to issue binding instructions. If an update changes contractual obligations, the procedure for documenting and registering the amendments must be established. It is useful for the agreement itself to identify who is responsible for filing the documents, how the associated costs will be shared and how the new terms will take effect in compliance with the law.

Keep the original versions of all documents. Without them, it can be difficult to establish which requirements applied when you bought the franchise and when a new obligation arose.

4. Agree on a clear implementation process

An update notice should give you enough information to make a business decision, rather than simply state a deadline. Propose that it include a description of the changes, the reasons for them, a list of works, estimated costs and a transition period.

The implementation deadline should reflect the practical stages involved: receiving the technical specification, preparing a cost estimate, obtaining necessary approvals and securing available contractors. Agree in advance how to submit reasoned objections and how long the franchisor has to respond. Submitting an objection should not be treated as automatically extending the deadline: the conditions for an extension need to be agreed separately.

Check whether exceptions are available for recently opened outlets, leased premises with restrictions on refurbishment, and sites where works require the property owner’s consent. It is also useful to establish who signs off the completed work and which document confirms that the update has been implemented.

Practical takeaway: before buying a franchise, agree on three things: a cap on mandatory expenditure, the time allowed to prepare for an update, and the procedure for formalising new obligations. The brand’s right to develop should not become an obligation for the franchisee to fund every change without clear terms.