Non-compete clauses in Belarusian franchise agreements: what to cover

Before selling their first franchise, business owners often want to stop their partner from pursuing any similar activity. Yet a broad prohibition does not necessarily offer better protection: it can complicate negotiations and lead to legal disputes. To build a sustainable franchise network, it is more useful to establish in advance which competitive activities pose a risk, which restrictions Belarusian law permits and how the parties will monitor compliance.

1. Separate non-compete restrictions from information protection

Start with a list of specific risks rather than the wording of the agreement. For example, a partner might simultaneously develop a similar business of their own, use the franchise outlet’s resources to promote another business or acquire a competing franchise. These are different situations, and applying the same prohibition to all of them may not be justified.

Treat the disclosure of recipes, technical process sheets and other confidential materials as a separate issue. This is primarily a matter of protecting undisclosed information, rather than preventing competition. A non-disclosure obligation does not replace restrictions on competitive activity, while restricting activity does not, in itself, provide a comprehensive framework for protecting information.

Create a working table with four columns:

• the partner’s action that causes concern;
• the potential harm to your business model;
• how to prevent the risk;
• the circumstances in which no restriction is needed.

If the problem can be addressed by controlling access to documents or prohibiting use of the brand outside the agreed business, do not automatically add a blanket ban on other business activities. This table will help you explain the commercial purpose of each provision to a prospective partner.

2. Check the legal limits in Belarus

Belarus has no separate franchising act, but its Civil Code contains specific provisions in the chapter entitled ‘Comprehensive Business Licence (Franchising)’. It is therefore incorrect to treat the relationship between the parties simply as an ordinary services agreement.

Article 910-5 of the Civil Code allows an agreement to include restrictions on the parties’ activities. In particular, the law provides for the franchisee to agree not to compete with the rights holder within the territory covered by the agreement, in relation to activities carried out using the licensed package of rights. It also allows the franchisee to agree not to obtain similar packages from the rights holder’s competitors or potential competitors.

This does not mean that every prohibition is permitted. Restrictive provisions must be assessed in light of competition law. The parties’ agreement alone does not remove the risk that a provision may be legally impermissible. Nor should a non-compete restriction be treated as a right to control every commercial decision made by an independent partner.

Under Article 910-1 of the Civil Code, the franchise agreement itself must be in writing and registered with the National Centre of Intellectual Property. Registration is no substitute for a substantive legal review of the restrictions. Before signing, give your lawyer not only the draft agreement but also a description of how the business model works in practice: identical wording can have different implications for different activities.

3. Define the prohibited activities precisely

A phrase such as ‘the franchisee may not engage in a similar business’ leaves too many questions unanswered. What makes a business similar: its product range, service model, customer base or technology? Can the owner of a franchised coffee shop also own a bakery that sells coffee as an additional product?

For discussion with your lawyer, prepare a description of the restriction covering the following points:

• Activity: which goods, work or services genuinely compete with the franchise’s offering.
• Form of involvement: which actions by the franchisee you intend to restrict — setting up their own business, managing it or acquiring another franchise.
• Territory: where the particular restriction should apply.
• Duration: how long the parties intend it to last.
• Exceptions: which of the partner’s existing businesses are permitted, and on what conditions.

Do not assume that a restriction continuing after the agreement ends is permissible. Its legal basis and enforceability require a separate assessment; non-compete provisions that apply during the relationship cannot simply be carried over into the period afterwards.

Do not try to impose obligations on the partner’s relatives, employees or any associated companies through a single clause. They do not become parties to the agreement merely because it mentions them. If the risk concerns a separate company, discuss an appropriate legal mechanism with your lawyer.

4. Agree exceptions and compliance checks in advance

Before selling a franchise, ask the candidate to describe any existing businesses that could overlap with the proposed outlet. The aim is not to collect information about all their assets, but to identify specific conflicts of interest. Request only the information needed for that assessment.

For example, a candidate may already run a shop with a partially overlapping product range. Possible solutions include agreeing an exception, keeping the use of brands and resources separate, or deciding not to proceed if the conflict is fundamental. Do not rely on a verbal promise to ‘sort it out later’: any agreed exception should be recorded in the contractual documents.

Set out a clear process for discussing the partner’s new business ventures: what information they must submit, who reviews the request and how the decision is documented. If prior approval is required, specify response deadlines and what happens if no response is received, having first checked that the proposed arrangement is legally permissible.

Also describe how disputed circumstances will be investigated. Advertising for a similar business does not, by itself, prove a breach of a specific obligation: first establish the facts, the franchisee’s involvement and whether the restriction applies. Agree consequences for a breach that are proportionate to the interest being protected, without promising automatic recovery of every loss claimed.

Practical takeaway: before selling your first franchise, map the competitive risks, list the permitted exceptions and draft an approval procedure. Then review the restrictions with a Belarusian lawyer. A well-drafted non-compete clause protects a specific business model rather than preventing the partner from doing business altogether.