Buying a franchise: protecting your freedom to set prices

Joining a franchise network gives you the benefit of a shared brand without becoming a branch of the franchisor. You remain an independent business owner, responsible for your own profitability. Before buying a franchise in France, check who really decides the prices: the agreement matters, but promotional campaigns and software settings can also limit your independence.

1. Distinguish between recommended and imposed prices

In principle, franchisees are free to set their own resale prices. A franchisor may communicate recommended prices or set maximum prices, subject to compliance with competition law. However, imposing a fixed or minimum resale price is a particularly serious restriction that may lead to penalties.

In France, this issue falls notably under Article L. 420-1 of the French Commercial Code and, where trade between Member States may be affected, Article 101 of the Treaty on the Functioning of the European Union. EU Regulation 2022/720 governs the exemption of certain categories of vertical agreements: a price described as recommended or maximum must not become a fixed or minimum price as a result of pressure or incentives.

The label alone is therefore not enough. A ‘recommended’ price backed by threats to suspend deliveries, impose penalties or withdraw benefits may indicate genuine coercion. Conversely, receiving an indicative price list does not, in itself, mean your freedom is compromised.

Ask the franchisor to confirm in writing which prices are indicative, which are ceilings and how you can depart from them. Have any claimed exception reviewed by a lawyer rather than accepting a commercial justification alone.

2. Review the agreement alongside the commercial tools

Do not limit your review to the clause headed ‘pricing policy’. Obligations may be spread across the agreement, its schedules, operating procedures and the terms of use for digital tools.

In situations covered by Article L. 330-3 of the French Commercial Code, introduced by the Doubin Law, the franchisor must provide the pre-contractual disclosure document and draft agreement at least twenty days before signing or, where applicable, before any advance payment. These rules apply where a trade name, trade mark or trading identity is made available in return for an exclusive or near-exclusive commitment in carrying on the business. Use this time to clarify the pricing rules; it is not a general cooling-off period after signing.

Gather the available documents, then look in particular for:

• an obligation to participate in all national promotions;
• an approval process for changing a price;
• penalties for failing to follow a price list;
• benefits conditional on applying recommended prices;
• different rules for in-store, delivery and online sales.

For each point, note the written rule, how you are told it works and the clarification you need. A verbal promise of independence is no substitute for consistent contractual wording.

3. Test promotions and till software

A protective clause is of little use if the system makes price changes impossible. Ask for a demonstration of the till software and, if you will be required to use it, the online ordering interface.

Ask to test practical scenarios: changing a product’s price, removing a local discount, scheduling a temporary offer and reverting to the usual price. Check who has administrator access and whether a central update overwrites your changes. Shared settings can make management easier; they must not conceal a policy of imposed prices.

Next, examine a representative promotional campaign. Ask:

• Who decides whether the outlet takes part?
• Who funds the discount and any associated costs?
• What price does the customer see before choosing their store?
• How are refunds, vouchers and loyalty schemes handled?

Calculate the margin remaining after the discount, purchase cost and variable costs. The aim is not to redo your entire financial forecast, but to identify offers that could leave you selling without a sufficient margin.

Shared campaigns can raise specific legal issues. Do not assume a promotion is lawful simply because it is temporary or runs across the whole network.

4. Check the answers against actual practice

Speak to several franchisees without asking them to coordinate their future prices with you. Ask about their independence: can they change a price without approval? Have they ever declined to take part in a promotion? How did the franchisor respond?

Compare their accounts with the documents and the software demonstration. Any discrepancy calls for a written explanation, not necessarily an accusation. If a restriction remains unclear, have it reviewed before making any commitment and, where necessary, request changes to the agreement or technical arrangements.

Key takeaway: before signing, obtain three things that align: a clear clause, a system that genuinely allows you to adjust your prices and practices consistent with that freedom. Your commercial independence must be verifiable, not merely promised.