Renewing a franchise in Belarus: what to agree before you buy

When buying a franchise, entrepreneurs usually discuss the launch rather than the next contract term. Yet by the time the agreement expires, the outlet will have staff, regular customers and money invested in the premises. Long-term franchise relationships need clear rules: check your options for continuing the business before making your first payment. The steps below focus specifically on renewal terms, not on leaving the network early.

1. Understand what the agreement promises when the term ends

Belarus has no standalone franchising law, but that does not mean there are no specific rules. Chapter 53¹ of the Civil Code of the Republic of Belarus, entitled ‘Comprehensive Business Licence (Franchising)’, applies. This is the legal term used for a franchise agreement in Belarus.

Article 910¹ of the Civil Code requires the agreement to be in writing and registered with the state. Under Resolution No. 346 of the Council of Ministers of the Republic of Belarus, dated 21 March 2009, amendments to and termination of these agreements must also be entered in the relevant state register. Registration is handled by the National Centre of Intellectual Property (NCIP).

A manager’s assurance that ‘we always renew our franchisees’ is therefore no substitute for a contractual mechanism. Ask to see the specific clause and establish what it provides for:

• Automatic renewal: the agreement remains in force if the stated conditions are met, for example if neither party gives notice of non-renewal by the deadline.
• Renewal by agreement: the parties must reach a further agreement; successful operation alone does not determine the future terms.
• Preferential right to renew: clarify separately how this right is exercised and when it applies. The name alone does not mean you can automatically continue at the same price.

Ask a Belarusian lawyer to check the proposed mechanism against the applicable provisions of the Civil Code. It is important to distinguish statutory rights from any additional guarantees the franchisor is willing to include in the agreement.

2. Draw up a renewal timetable before signing

A risky situation arises if you must submit a renewal request long before the agreement expires, but the franchisor is entitled to respond after that date. You are then left choosing between continuing to incur costs without certainty and preparing to stop trading under the brand.

Propose a written sequence of steps: the franchisee’s application, checks that the conditions have been met, the franchisor’s offer, agreement on the documents and registration formalities. Each stage needs a deadline and a responsible party. Agree separately what happens if a response is delayed, rather than leaving this to the network manager’s discretion.

The timetable should include:

• the deadline for requesting renewal;
• the deadline for providing a complete list of issues to be addressed;
• a period for remedying breaches that can be put right;
• the date by which you must receive the new financial terms;
• the deadline for signing and submitting the necessary documents for registration.

Specify the addresses and permitted methods for serving notices, how delivery is confirmed and what happens if contact details change. Messages sent to an employee’s personal messaging account are not a reliable basis for a procedure on which the continuation of your business depends.

Compare this timetable with your premises lease. If you must decide whether to renew the lease before the franchisor provides its terms, propose bringing the franchise renewal negotiations forward. This will not guarantee renewal, but it will help you make informed decisions about related commitments.

3. Establish the cost of the next term

The absence of a separate ‘renewal fee’ does not mean renewal will be free. The draft may require you to enter into a new agreement at the rates applicable at that time. In that case, your initial financial model tells you nothing about the cost of the next term.

Request a written breakdown of all costs arising specifically on renewal: a repeat initial franchise fee, document preparation, registration, a mandatory outlet assessment or refresher training. Clarify which costs are compulsory, who receives the payments and when the obligation to pay arises.

A useful basis for discussion is a table with four columns: cost, basis for the charge, method of calculating the amount and notice period. If the franchisor will not fix the future price, propose a clear formula or an obligation to disclose the full cost in advance. Any cap on increases must be expressly agreed, not assumed.

Pay particular attention to any payment required before the final decision. Check whether it is refundable if the franchisor refuses renewal or the parties cannot agree new terms. Calling it an ‘application processing fee’ does not, in itself, answer the question of refunds.

Prepare a separate financial assessment of continuing the business. Even an outlet that is profitable today may become less attractive if mandatory payments change. Treat the next term as a new investment decision, not an inevitable extension of the previous one.

4. Make the eligibility conditions verifiable

Wording such as ‘renewal is possible subject to satisfactory performance’ leaves too much uncertainty. Propose a list of specific criteria: no overdue debts, fulfilment of defined obligations and remedying documented breaches. For each criterion, the assessment period and supporting documents should be clear.

Check whether any breach during the entire term can prevent renewal, or only an unresolved material breach. Propose a procedure for notifying you of issues, an opportunity to challenge the findings and a period to put matters right. These are terms to negotiate, not a universal procedure guaranteed by law for every franchise network.

Before buying, ask to see a draft of the document normally used to formalise renewal. Check whether it requires you to accept an entirely revised set of obligations without reviewing them in advance. A sample helps you understand the franchisor’s usual practice, but it does not replace binding commitments in your own agreement.

Do not assume that acceptance of a further payment after the agreement expires automatically resolves whether your rights continue. Establish with your lawyer in advance which document is needed to implement the chosen mechanism and what registration formalities are required.

Practical takeaway: before buying, agree the renewal mechanism, decision timetable, future costs and verifiable eligibility criteria. If any of these remains no more than a verbal promise, do not treat another term trading under the brand as guaranteed.