Planning Franchise Pricing Policies in Australia

When you own every outlet, changing a price can be a straightforward management decision. Franchising your existing business changes that relationship: independent franchisees bear their own business costs and risks. Before offering your first franchise, decide how pricing will work without treating franchisees as branches you own. A clear pricing policy helps protect both commercial flexibility and trust within your franchising community.

1. Understand the boundary between guidance and control

Australia’s Franchising Code of Conduct is a mandatory code prescribed under the Competition and Consumer Act 2010. It regulates franchising relationships, including disclosure, agreement requirements and good faith. The Australian Competition and Consumer Commission (ACCC) regulates compliance with the Code and competition and consumer laws.

Following the Code does not remove your separate competition-law obligations. In particular, resale price maintenance is generally prohibited. This can arise when a supplier requires a reseller not to sell goods or services below a specified price. Franchise arrangements are not automatically exempt.

A franchisor may generally recommend resale prices, but the recommendation must genuinely be optional. Calling a price “recommended” will not resolve the problem if you penalise franchisees for discounting or make compliance a condition of continued supply.

Maximum resale prices are generally permissible, but the detailed arrangement still needs review. A supposedly maximum price should not become a fixed or minimum price through pressure or operating restrictions.

Ask a competition lawyer to assess your proposed policy alongside the franchise agreement. Do not assume that a franchisee’s signature makes a pricing restriction lawful.

2. Turn your existing price list into useful guidance

Start with the price list used in your existing business. Identify which amounts are customer-facing resale prices and which are charges you impose on franchisees, such as royalties or wholesale supply prices. These are different decisions and should not be mixed together in one policy.

For each customer-facing product or service, prepare a commercial explanation for any recommended price. Useful inputs include:

• Product, ingredient or service-delivery costs.
• Labour time and unavoidable operating overheads.
• Local demand and competing customer offers.
• Delivery, payment-processing and marketplace charges.
• The effect of discounts on contribution towards fixed costs.

Use these inputs to help franchisees make informed decisions, not to disguise a compulsory minimum margin. An outlet with higher rent or different delivery costs may reach a different pricing decision from your original business.

Explain the assumptions behind your guidance. A recommended price based on collection from a suburban outlet may not suit a delivered order or a labour-intensive appointment. Avoid presenting one price as evidence that every franchisee will achieve a particular profit.

3. Check whether your systems allow genuine choice

A policy can promise pricing discretion while the technology prevents it. Before launching the franchise, test your point-of-sale system, booking platform, online shop and delivery integrations from a franchisee’s perspective.

Can an authorised franchisee change a local price? Can they offer a lawful discount without asking head office to unlock the system? Does changing one channel automatically overwrite prices elsewhere? Identify restrictions before selecting software or committing to a central ordering model.

Central websites need particular attention. Establish who contracts with the customer, who receives payment and who fulfils the order. Those facts affect how pricing and customer obligations should be assessed; describing every transaction as a “national sale” is not enough.

For shared promotions, document the proposed participation arrangements, funding and discount mechanics. Have mandatory campaigns reviewed rather than assuming that a marketing obligation permits any form of price control.

Train support staff as well. A manager who threatens to withhold stock because a franchisee discounts can undermine an otherwise carefully drafted policy. Escalate pricing concerns for review instead of applying informal pressure.

4. Align documents and customer communications

Your franchise agreement, disclosure document, operations manual and software settings should tell a consistent story. Ask your solicitor to identify where pricing arrangements, online sales responsibilities and relevant restrictions need to be explained. Do not bury commercially important limits in a manual supplied after the franchisee has committed.

The Australian Consumer Law also matters when prices reach customers. Advertised discounts, comparison prices and statements about savings must not mislead. Where prices or participation vary between outlets, make those limitations clear rather than promoting an apparently universal offer that customers cannot obtain.

Allocate responsibility for checking national advertising, local price boards and online listings. Test a sample customer journey whenever a campaign changes: the advertised offer, checkout price and receipt should agree.

Practical takeaway: Before franchising, test one ordinary sale and one discounted sale through your proposed documents and systems. Resolve any mismatch between promised franchisee discretion, actual software controls and customer-facing prices before recruitment begins.