Franchise pricing: rules for franchisors in Croatia

When expanding an existing business through a franchise network, you cannot simply turn the price list used in your own outlets into a binding instruction for independent businesses. A shared identity and consistent offering do not automatically give you the right to set their selling prices. Before signing your first agreement, distinguish between recommendations, promotional activities and decisions that remain with the franchisee.

1. Understand the legal framework for pricing

Croatia has no specific franchise law and no general requirement to register franchise agreements in a dedicated franchise register. Nor is there a specific statutory franchise disclosure document that must be provided before the contract is signed. However, this does not mean a franchisor is free to impose any form of price control through the agreement.

The Croatian Civil Obligations Act applies to the agreement, including its principles of good faith and fair dealing. The Croatian Competition Act is relevant to relationships between independent businesses, as is Article 101 of the Treaty on the Functioning of the European Union where an agreement may affect trade between Member States.

Commission Regulation (EU) 2022/720 provides a block exemption for certain vertical agreements from the prohibition on restrictive agreements. Imposing fixed or minimum resale prices is considered a hardcore restriction, which prevents the agreement from benefiting from that block exemption. Any individual exemption requires a separate, rigorous legal assessment; it is not a basis for a standard franchise agreement template.

Practical rule: do not impose a minimum selling price or a mandatory uniform price list on franchisees. Recommended and maximum prices may be permitted, but must not become fixed or minimum prices through pressure or incentives. They must also be assessed in the context of the contractual relationship as a whole.

2. Turn your own price list into a genuine recommendation

In outlets operated by your own business, pricing decisions are made internally. A franchisee is an independent business that bears its own costs and commercial risks. Any document you provide should therefore clearly distinguish recommended selling prices from binding product or service standards.

Prepare a pricing template that includes:

• a description of the product or service covered by the recommendation;
• the recommended price and the date of the recommendation;
• an explanation of the cost assumptions, without any guarantee of profit;
• an explicit statement that the franchisee sets its selling prices independently.

Simply labelling a price as “recommended” is not enough if the franchisor's conduct suggests otherwise. Threatening to withdraw support, impose less favourable terms or terminate the agreement because a franchisee sells at a lower price can turn a recommendation into unlawful resale price maintenance. The same applies to rewards conditional on following a specific price list.

Check your software too. If the point-of-sale system locks prices and the franchisee has no genuine ability to change them, a contractual statement of independence will not resolve the problem. Set permissions so that franchisees can easily change their own prices, with technical support that does not make changes conditional on the franchisor's commercial approval.

3. Plan joint promotions without hidden coercion

Promotional campaigns often create the greatest pressure for a uniform price. The franchisor prepares advertisements, publishes an offer and only then tells franchisees that they are expected to participate. This creates both contractual problems and a risk of misleading customers.

Before publishing any campaign, establish who is taking part, who is funding the promotional benefit and who is the seller to the customer. Make specific arrangements for vouchers, loyalty schemes and orders placed through a shared website. Do not assume that a shared platform in itself gives you the right to set prices for independent franchisees.

For example, for a seasonal offer you could prepare shared photographs, a description and a recommended price, while franchisees decide their own prices independently. Advertisements should then accurately state the terms and the locations where the offer applies. If you want a different model, such as a campaign with a maximum price, obtain a legal review of the specific rules before putting it into practice.

Sales to consumers are also subject to the Croatian Consumer Protection Act. Check the rules on displaying prices and announcing price reductions for the type of offer concerned. For goods, the requirement to show the lowest price charged during the 30 days before the reduction is particularly important. The information must relate to the relevant seller and outlet, rather than simply reflecting the price in a central template.

4. Align your agreement, technology and day-to-day communications

Before bringing your first franchisee on board, review every point at which pricing decisions are made. Cover the agreement, marketing templates, point-of-sale system, online sales and messages sent by the support team.

The agreement should clearly describe the franchisee's independence in setting prices and the process for preparing joint promotions. Do not undermine that independence with a clause allowing the franchisor to declare any price list binding at a later date.

Explain to the support team that a complaint from one franchisee about another's “excessively low prices” is not a reason to coordinate their prices. Also avoid meetings at which franchisees agree future prices or discounts with one another. A franchise network is not exempt from competition rules.

Practical conclusion: before expanding, check that the franchisee can genuinely set prices independently under the agreement, in the point-of-sale system and in day-to-day operations. If the answer is unclear, change the process first and only then launch the joint campaign.