Setting Minimum Operating Requirements for Franchisees in Belarus

Before selling a franchise, a business owner needs to define not only the fees but also the scale of operations expected of the future partner. Is opening one outlet enough? Must the franchisee maintain a particular product range or level of service? Clear obligations are more useful to a franchise network than inflated sales targets: they help align expectations without turning an ordinary downturn in demand into a persistent breach of contract.

What the extent of franchise use means

In Belarus, franchising relationships are specifically governed by Chapter 53 of the Civil Code, entitled ‘Comprehensive Business Licence (Franchising)’. The absence of a separate act called the ‘Franchising Act’ therefore does not mean that there are no specific rules.

Article 910 provides for the licensed package of rights to be used to a defined extent, including the setting of minimum and maximum levels of use. For an established business owner, this is a reason to decide in advance what scale of operations they are genuinely prepared to entrust to a partner and support.

The extent of use should not automatically be interpreted as a mandatory revenue target. Depending on the model, the parties might consider the number of outlets, production workload or other operational measures. The appropriate way to describe this should be checked with a lawyer in relation to the particular package of rights being licensed.

When preparing the terms, distinguish between three concepts:

• Extent of use of the rights: the limits within which the partner may apply the business model provided.
• Development plan: the results the parties intend to achieve.
• Payment obligation: how much the franchisee pays and on what basis.

For example, a revenue forecast should not quietly become a guaranteed result. Nor does a minimum payment replace a description of the permitted scale of operations. These terms serve different purposes, even if they are linked in the financial model.

Choose a measure the partner can control

Start by asking why your business needs a minimum requirement. Possible reasons include maintaining the full business format, ensuring service availability or making effective use of dedicated support resources. ‘To make sure the partner makes an effort’ is not enough: it explains neither the level of the requirement nor the consequences of failing to meet it.

For each proposed measure, prepare a short summary covering:

• exactly what is measured and in which units;
• the period over which performance is assessed;
• the source of supporting data;
• which factors are within the franchisee’s control;
• which exceptions need to be taken into account.

Suppose your own workshop handles a steady flow of orders. Applying that performance to a new partner without adjustment is risky: your outlet already has regular customers, experienced staff and an established reputation. Order numbers can also conceal differences in the work involved. A few complex jobs may sometimes take more resources than many simple ones.

Distinguish between measures of activity and measures of results. A partner generally has more control over maintaining agreed opening hours than over the number of customer enquiries. However, opening hours are a separate operational requirement, not a universal substitute for a clause defining the extent of use of the rights.

Test the limits against data from your existing business

Use data from your own outlet covering periods with different workloads. Look separately at the start-up phase, normal operations and seasonal downturns. If the business has only a short trading history, do not present its observed performance as a proven minimum for every future outlet.

The assessment should answer several practical questions. Can the outlet meet the requirement with its regular team? Can it maintain quality at that workload? Does the owner regularly have to cover for staff? Is there enough equipment and working capital?

It is useful to draw up three scenarios: getting to grips with the model, steady operations and a temporary drop in demand. For each, describe the achievable level of activity and the resources required. This is a management tool, not a document format prescribed by law.

Check the upper limit too. If a higher workload requires different premises, additional equipment or a different way of organising operations, do not promise unlimited expansion within the original format. Specify when separate approval will be needed.

The assessment should produce a rationale that a prospective franchisee can understand. Rather than saying ‘all our partners must sell this much’, explain the conditions under which the measure is achievable and the limitations you have identified. If there is not yet enough supporting evidence, it is safer to revise the requirement before selling the franchise.

Define measurement rules and how departures will be handled

The contractual wording should allow two independent readers to reach the same conclusion about whether an obligation has been met. Clarify when measurement begins: signing the agreement, opening the outlet and completing the initial learning period are different events. Set rules for partial periods, returns and temporary closures where these affect the chosen measure.

Provide a sequence of steps for dealing with departures from the agreed level: notification, checking the data, discussing the causes and agreeing corrective action. Separately describe situations in which performance depends on the rights holder’s actions, such as supplying necessary materials on time. It is not sensible to make every decline in a measure an immediate trigger for a penalty or termination of the relationship.

In Belarus, franchise agreements must be made in writing and registered with the National Centre of Intellectual Property. Amendments to the agreement also require registration. Changes to the agreed scale of operations therefore cannot be left solely in correspondence or replaced by a unilateral update to an internal planning spreadsheet. The procedure for formalising changes should be checked with a lawyer in advance.

Practical takeaway: before offering a franchise, prepare a single operating-requirements summary covering the measure, its rationale, the measurement period, exceptions and the review procedure. If you cannot explain these elements to a prospective franchisee in plain language, the clause is not yet ready for the agreement.