Franchising in Belarus: who sets customer prices?

Matching shop signs do not mean that every business in a franchise network must charge the same prices. For anyone buying a franchise in Belarus, this matters: local costs may differ from those of the flagship outlet, while a network-wide promotion may reduce an individual franchisee’s income. Before investing, establish not only the recommended mark-up, but also who actually controls prices, discounts and sales system settings.

What Belarusian law says

In Belarus, franchising is specifically regulated by Chapter 53 of the Civil Code. The legal name for the agreement is a comprehensive business licence agreement (franchising). Pricing policies therefore need to be checked both against your commercial interests and against the specific rules governing this type of agreement.

Article 910-5 of the Civil Code restricts the terms that parties may include in their agreement. In particular, terms granting the rights holder the power to set the prices at which the franchisee sells goods, carries out work or provides services, or to impose maximum or minimum prices, are null and void. The franchisee’s signature does not make such a term valid.

This does not mean that all pricing recommendations from the brand are prohibited. There is a fundamental difference between a reference price list that the business owner assesses independently and a mandatory price backed by penalties for non-compliance. The document’s title is not decisive: a ‘recommendation’ that must be followed requires the same legal scrutiny as an explicit instruction in the agreement.

Franchise agreements must be registered with the National Centre of Intellectual Property. Council of Ministers Resolution No. 346 of 21 March 2009 also provides for the registration of amendments to, and termination of, these agreements. Registration does not, however, replace a legal review of pricing restrictions or confirm that the proposed business model is commercially attractive.

Where to look for actual control over pricing

Do not limit your review to the section of the agreement covering the parties’ rights. Pricing procedures may be spread across the outlet’s operations manual, the marketing calendar, online ordering rules and till software settings. Ask to see the entire process, from the decision to change a price to the new amount appearing on the customer’s receipt.

Before signing, ask the franchisor specific questions:

• Who approves standard retail prices, and who can change them?
• Can the franchisee depart from the recommended price list without a penalty or other adverse consequences?
• Who sets discounts on the website, in the app and for delivery orders?
• Can the outlet manager change prices in the till system independently?
• How is participation in a network-wide promotion documented, and who funds the discount?
• Does every price change require prior approval?

Ask for a software demonstration using a test product. If the agreement promises independent pricing but only head office has editing access, there is a practical contradiction. Resolve it before launch, rather than after the first loss-making order.

Check separately what happens if you decline to follow the price list. A threat to disable order-taking, restrict support or impose a penalty may indicate that a recommendation is effectively mandatory. Any legal assessment needs to consider the full set of documents and actions, rather than a single sentence in the agreement.

How to assess discounts and network-wide promotions

A shared advertising campaign can benefit a franchise network, but every participating outlet needs to understand its financial implications. Pay particular attention to promotions where the brand promises the discount but the local business owner loses the revenue.

Choose one typical product or service and calculate the economics of a standard sale: the amount received from the customer, the cost of the goods or service, packaging, intermediary commission, variable costs and payments due under the franchise agreement. Then repeat the calculation for the promotion. Use actual supplier terms and the draft agreement, rather than relying solely on the mark-up advertised in the sales presentation.

Establish who acts as the seller when an order is placed through the shared website. If one organisation contracts with the customer and another fulfils the order, you need to examine the financial arrangements between them separately. You cannot automatically apply the rules for a standard sale at your own outlet to every online ordering model.

For each joint promotion, propose agreeing the following in advance:

• the products or services included;
• the promotion’s duration and sales channels;
• how the franchisee confirms participation;
• who funds the discount;
• the terms and timing of any reimbursement;
• how sales are reconciled and errors corrected.

Do not treat reimbursement as guaranteed income until the grounds for payment and the payment procedure have been defined. A statement such as ‘head office will support its partners’ is not enough on its own to calculate the promotion’s financial outcome.

What to agree before buying

Put the distinction between recommended prices and the franchisee’s own pricing decisions in writing. Propose an explicit statement that recommendations are non-binding and that setting prices independently will not lead to sanctions. A lawyer should review the final wording in the context of the full contractual arrangements.

Agree how this will work technically: who is responsible for changing prices, what access permissions are needed, and how discrepancies between the till, website and app will be resolved. Customers should not discover conflicting internal settings when they come to pay for their order.

If you find mandatory prices in the current draft, do not assume you can simply ignore them after signing. Require the agreement and related operating rules to be corrected beforehand. Otherwise, even a legally questionable requirement can cause real difficulties in day-to-day operations.

Practical takeaway: before buying a franchise, check three things: your right to set prices independently, your ability to exercise that right in the software, and the economics of shared discounts. All three must align, or pricing freedom will exist only on paper.