QFA Hong Kong issues franchise pricing guidance: distinguish recommended prices from mandatory pricing

Quality Franchise Association (QFA) Hong Kong issued guidance on franchise pricing and promotional arrangements on 9 November 2026, warning businesses preparing to franchise against simply turning their company-owned outlets’ price lists into mandatory standards for franchisees. Focusing on retail pricing autonomy, the guidance notes that consistent brand quality and identical prices are not the same thing. Franchisors should clarify rights and responsibilities before recruiting franchisees.

A franchise licence does not exempt pricing arrangements

The guidance notes that Hong Kong has no franchise-specific legislation, nor a dedicated statutory regime for franchise disclosure, registration or mandatory codes of conduct. Franchise relationships nevertheless remain subject to general contract law and relevant legislation, including the Misrepresentation Ordinance, Trade Marks Ordinance and Competition Ordinance. Consumer-facing price advertising also requires attention to the Trade Descriptions Ordinance.

For pricing arrangements, the guidance specifically urges businesses to review the First Conduct Rule under the Competition Ordinance. This prohibits undertakings from making or giving effect to agreements, and engaging in related concerted practices, that have the object or effect of preventing, restricting or distorting competition in Hong Kong. Franchise agreements are not automatically exempt simply because they involve brand licensing.

For Hong Kong’s franchise community, the guidance addresses commercial arrangements within the existing legal framework; it does not announce new franchise legislation. Even where a franchisor and franchisee have signed a contract, their mutual agreement alone does not establish that its pricing provisions are free from competition law risk.

‘Recommended prices’ must be assessed in practice

The guidance states that requiring franchisees to adopt fixed or minimum resale prices may constitute resale price maintenance and must be assessed in light of the specific arrangements. This does not, however, mean that all pricing recommendations should be regarded as unlawful.

The key question is whether a recommendation is genuinely non-binding. Providing an indicative selling price is different from using fines, withholding supplies or withdrawing benefits to force franchisees to follow it. If franchisees can raise prices but cannot reduce them, the arrangement cannot be assumed safe merely because the contract uses the word ‘recommended’.

The guidance also says that any requirement to notify the franchisor in advance should have a clearly stated purpose. If notification is intended to keep customer information up to date, this should be explained. An approval process should not be used to block franchisees’ price reductions. Pricing autonomy is therefore more than a contractual statement: it also depends on how the franchisor handles outlets’ price changes in practice.

For brands preparing to launch a franchise programme, the guidance recommends having the arrangements reviewed beforehand by a Hong Kong solicitor familiar with competition law, rather than waiting for a dispute to arise.

Allocate responsibility for in-store, platform and member prices

At an operational level, the guidance recommends that franchisors first compile an inventory of all customer-facing prices, including in-store prices, delivery-platform prices, meal or product bundle prices, and member offers. For each, they should establish who sets the price, who enters it into the system and which business entity makes the sale to the customer.

This means a franchise agreement should not treat a single statement that ‘the franchisor retains final pricing authority’ as an adequate allocation of responsibilities. The arrangements need to explain how prices are set and changed, and who is responsible for updating customer-facing information.

The guidance separates these responsibilities into several areas. Franchisors may specify product names, portions, quality and presentation formats, but should not confuse brand standards with mandatory selling prices. When recommending prices, they should explain the cost assumptions and market positioning behind them, and clearly state whether the recommendations are non-binding.

The scope for outlets to adjust prices independently should also be clearly defined, alongside responsibility for updating price displays, till systems and delivery-platform information. By addressing contracts and system settings together, the guidance urges businesses to work out how pricing authority will operate in practice before recruiting franchisees.

Clarify promotional participation and who bears discounts

Alongside everyday prices, the guidance identifies participation in promotions and responsibility for funding discounts as matters franchisors should clarify. When brand campaigns involve franchisees, a consistent public-facing offer should not be the only consideration. Franchisees’ role as independent operators must also be respected, to avoid promotional arrangements becoming compulsory price co-ordination.

The guidance is not asking brands to abandon quality standards. Rather, it calls for quality requirements, price recommendations, outlet-level decisions and information updates to be handled separately. Prospective franchisees assessing an agreement should likewise examine both their pricing freedom and the associated operational responsibilities, rather than looking only at price lists or promotional plans.

Practical takeaway: Before opening a business to franchising, set out pricing authority across each sales channel, rights to amend system settings, arrangements for participating in promotions and responsibility for funding discounts. Have these reviewed by a solicitor familiar with Hong Kong competition law. Do not judge risk solely by the label ‘recommended selling price’: review how the arrangements will work in practice as well.