Franchise pricing: who sets discounts and promotions?

Trading under the same brand does not mean a franchisor can freely set an independent business owner's selling prices. Before joining a franchise network in Poland, check not just the price list but also the rules on discounts, how the app works and how promotions are funded. These details affect your margins and your ability to respond to local costs. The key question is: does the pricing freedom promised in the contract also apply at the till?

1. Understand the legal limits on price setting

Poland has no dedicated legislation comprehensively governing franchising. A franchise agreement is an ‘unnamed contract’ — a contract type not specifically regulated by the Polish Civil Code — entered into under the Code's general provisions, including the principle of freedom of contract in Article 353¹. However, that freedom does not allow parties to bypass mandatory legal provisions. Nor is there a general statutory requirement to provide a special franchise disclosure document 14 days before the agreement is signed. A voluntary code of good practice is no substitute for legislation.

The Polish Act on Competition and Consumer Protection, particularly its prohibition on agreements that restrict competition, is especially relevant to pricing policies. Where the arrangement may affect trade between EU member states, Article 101 of the Treaty on the Functioning of the European Union also applies. EU rules on vertical agreements, including Commission Regulation (EU) 2022/720, are also important.

If you buy goods and resell them in your own name and at your own risk, imposing fixed or minimum resale prices generally breaches competition rules. This also covers indirect price setting, for example by specifying the maximum discount you may offer.

Recommended and maximum prices may be permissible, but pressure or incentives must not turn them into fixed or minimum prices. What matters is actual practice, not simply the label used in the price list. If the network says it operates an agency model, ask a lawyer to assess how risk is allocated — calling someone an ‘agent’ does not settle the issue.

2. Check whether recommended prices really are optional

Ask for a demonstration of the till system and ordering portal. A sales representative's assurance that ‘every partner runs their own business’ is not enough. Check whether you can change a price yourself, who approves the change and whether any restrictions also cover online sales.

Before signing the agreement, ask specific questions:

• Does a local discount need head office approval?
• Does departing from a recommended price affect bonuses, deliveries or the outlet's performance rating?
• Does the system automatically restore the network's price list?
• Does the franchisor require you to report other franchisees who sell at lower prices?
• Does the price shown in the app also apply to purchases made directly at the outlet?

A mismatch between the paperwork and actual practice is a warning sign. The agreement may refer to recommended prices, while messages from your account manager warn of negative consequences for not following them. Monitoring prices alone does not establish a breach, but combining it with pressure requires scrutiny.

Ask existing franchisees about specific situations: when did they last change a price, and how did head office react? Also ask how pricing errors are reported outside office hours. A technical restriction can matter just as much as a contractual clause.

3. Establish who pays for the discount

A nationwide promotion may increase sales while reducing an individual outlet's profit. Assess the legality of the pricing mechanism separately from its commercial viability. A lawful maximum price does not, after all, guarantee that a sale will be profitable for you.

For each type of promotion, establish in writing:

• who funds the discount and which amount it is calculated against;
• whether reimbursement takes the form of a bank transfer, an invoice adjustment or a purchasing rebate;
• when you will receive the settlement statement and how you can challenge an error;
• whether app discounts, coupons and loyalty programme offers can be combined;
• who bears the costs of returns or complaints relating to promotional purchases.

Ask for a sample settlement statement from an actual campaign, with information identifying other businesses removed. Check the margin after allowing for the cost of goods, packaging, payment processing and any platform commission. Factor in the wait for reimbursement too: even a discount funded by head office can temporarily put pressure on your cash flow.

Establish who is the seller in relation to the customer in each sales channel. This matters for settlements and information obligations. When announcing price reductions to consumers, you must take account of the Polish Act on Information on the Prices of Goods and Services, including the applicable rules on displaying the lowest price charged in the 30 days before the reduction and the exceptions provided for by law.

4. Put the procedure in writing before opening the outlet

Include a clear description of the types of price lists, system permissions and arrangements for settling promotional costs in the agreement or an appendix. Avoid a blanket statement that the franchisee ‘accepts all future promotions’ without specifying how they will be funded and communicated.

Agree a deadline for communicating campaign terms, identify the person responsible for settlements and set out a procedure for raising concerns. If you are required to charge a specific price, have that requirement reviewed by a lawyer familiar with competition law. Do not assume that a promotion's short duration automatically makes every restriction lawful.

Practical takeaway: before investing in a franchise, carry out three checks: change a price in the demonstration system, work through the figures for one promotion and compare the results with the agreement. A well-run franchise network should be able to explain clearly both the limits of a franchisee's independence and how the costs of joint activities are shared.