Sub-franchising in Belarus: how to prepare your business for growth

An established business owner can grow a franchise network not only through direct agreements, but also through a partner authorised to grant sub-franchises. This changes the management structure itself: another party sits between the owner of the business model and the end franchisee. Before offering this arrangement in Belarus, you need to define the intermediary’s authority and assess whether the business can support a two-tier network.

1. Distinguish sub-franchising from opening multiple outlets

A partner who opens several outlets of their own and a partner who enters into agreements with other entrepreneurs perform different roles. In the first case, the partner exercises the rights granted to them directly. In the second, they can grant those rights to others within the limits set by the agreement.

Avoid grouping these models under the general label of ‘regional partner’. Ambiguity can arise as early as the negotiations: the owner expects a single operator, while the buyer intends to sell franchises and collect payments from independent businesses.

Before preparing an offer, answer three questions in writing:

• Who will enter into the agreement with the end franchisee: the business owner or the intermediary partner?
• Who will directly train, support and monitor the end franchisee?
• Which rights may the partner grant to others, and which remain exclusively with the owner of the business model?

If the partner merely finds candidates and the rights holder signs agreements with them, this is not the same arrangement as sub-franchising. Choose the contractual structure according to the parties’ actual roles, rather than an attractive package name.

2. Define the legal limits of the partner’s authority

In Belarus, franchising is specifically regulated by Chapter 53 of the Civil Code, ‘Comprehensive Business Licence (Franchising)’. There is no separate franchising act, but that does not mean there are no specific rules. The Code permits a comprehensive business sublicence — the legal structure used for a sub-franchise.

The authority to grant the licensed bundle of rights, or part of it, to others must be based on the main agreement. That agreement must define the limits of any such grant. The right to use a business model should not be treated as automatic permission to resell it to other entrepreneurs.

The term of a sub-franchise cannot exceed the term of the main agreement. You therefore cannot promise an end franchisee a full multi-year operating period if the partner granting the rights has a main agreement that expires sooner. An intention to renew the relationship later is no substitute for a valid contractual basis.

Under Article 910¹ of the Civil Code, a franchise agreement must be made in writing and registered with the patent authority — the National Centre of Intellectual Property. Failure to complete the mandatory registration renders the agreement invalid. When preparing a sublicensing structure, check the applicable documentation and registration requirements for the entire chain of rights separately: commercial agreement between the parties alone is not enough.

A useful practical tool for this review is a rights matrix. For each element, identify the rights holder, the recipient, the permitted use, whether the rights may be granted to others, and the expiry date. This will make it easier for a lawyer to compare the agreements and identify promises that exceed the partner’s authority.

3. Assess the partner’s ability to manage a network

Someone who manages their own outlet well may not necessarily be able to support other businesses. Sub-franchising requires an additional capability: coordinating independent franchisees without taking over their management or distorting the original model.

Before granting this authority, it is useful to review the proposed management arrangements internally. Ask the prospective partner to work through a hypothetical launch: allocate tasks among the parties, draw up a timetable for coordination and demonstrate how they would handle a problem they cannot resolve themselves.

Assess concrete resources rather than the persuasiveness of the presentation:

• a designated manager responsible for the end franchisees;
• staff able to explain and apply the model in practice;
• time and budget to support other operators’ outlets;
• a procedure for escalating complex issues to the business owner;
• a system for keeping documents up to date and acknowledging receipt of instructions.

It is particularly important to check whether the entire operation depends on one person. If their absence brings launches and support to a halt, an extra management tier is more likely to increase that dependency than reduce the owner’s workload.

For the first agreement, it is sensible to discuss a limited scope of authority and the conditions for expanding it later. This is a management recommendation, not a legal requirement. The conditions should be clear and verifiable, rather than dependent on a vague assessment of the partner’s ‘success’.

4. Agree how the three parties will work together

The main agreement and the sublicence agreements need to be reviewed together. Otherwise, the end franchisee may receive a promise that the intermediary partner cannot fulfil without the rights holder’s involvement, even though the rights holder has not accepted that obligation.

Create a single coordination matrix covering each action, the responsible party, the deadline, evidence of completion and the escalation procedure. For example, if the owner of the business model approves a launch, define who gathers the supporting materials, who sends feedback to the franchisee and who confirms that any issues have been resolved.

Also establish a clear channel for direct contact with the rights holder on matters affecting the rights granted or the integrity of the model. This channel should not become a competing source of instructions: the end franchisee needs to understand whose decisions are binding and how conflicting instructions will be resolved.

Before signing, test several scenarios: a delayed response from the intermediary partner, a dispute over authority and the approaching expiry of the main agreement. Agree solutions with a lawyer, taking account of the mandatory provisions of the Civil Code, rather than relying on a promise to ‘deal with it as it arises’.

Practical takeaway: start preparing a sub-franchise arrangement by mapping the rights and allocating responsibilities. If that map does not clearly show who grants what to whom, and until when, it is too early to sell this growth model.