Franchising in Portugal: setting prices without imposing them

When you turn your own business into a franchise network, one fundamental change is that pricing is no longer simply an internal decision. At company-owned outlets, the business decides what to charge; at franchised outlets, it deals with independent business owners. A poorly designed commercial policy can turn a simple recommendation into a restriction of competition. Before expanding in Portugal, establish how you will communicate prices, organise promotions and configure sales systems without undermining that independence.

1. Understand the rules before standardising prices

Portugal has no franchise-specific law or dedicated compulsory register for franchisors. Franchise agreements are subject to the general rules of the Portuguese Civil Code, including freedom of contract and good faith. Where standard contract terms are used, the rules set out in Decree-Law No. 446/85 also apply.

Freedom of contract does not, however, allow businesses to sidestep competition rules. Particularly relevant to pricing policies are Law No. 19/2012, which establishes Portugal’s competition law framework, and Article 101 of the Treaty on the Functioning of the European Union, where an agreement may affect trade between Member States.

Regulation (EU) 2022/720 provides a block exemption for certain vertical agreements. Broadly speaking, it requires the supplier’s and buyer’s market shares each to be no higher than 30%, alongside other conditions. Setting fixed or minimum resale prices constitutes a hardcore restriction, removing the agreement’s eligibility for that exemption.

Falling outside the exemption does not automatically make the entire agreement unlawful: an individual assessment is required. Nor does staying below those thresholds make every clause permissible. Seek legal review before introducing a network-wide policy.

2. Distinguish recommendations, maximum prices and mandatory prices

In principle, a franchisor may recommend selling prices or set maximum prices, provided these do not become fixed or minimum prices through pressure or incentives.

The distinction must be clear both in the paperwork and in practice:

• Recommended price: guides the franchisee, who retains genuine freedom to charge more or less.
• Maximum price: sets a ceiling while preserving the option to sell below it.
• Fixed or minimum price: requires the franchisee to charge a specified amount or prevents them from selling below a certain level; this carries a high competition-law risk.

Imagine that head office sends out a list labelled ‘recommended prices’, but withdraws commercial benefits from franchisees who offer discounts. The label does not resolve the problem: the conduct may reveal indirect price enforcement.

The same caution applies to fixing franchisees’ margins, limiting the discounts they can offer and threatening to suspend supplies to secure a particular price.

Rule of thumb: the commercial team should not try to achieve over the phone what the contract cannot impose. Train the people who support outlets and handle requests for exceptions too.

3. Plan campaigns without creating disguised obligations

A shared promotion can help communicate the brand’s proposition, but it requires preparation. Before advertising a price, establish who sells to the customer, who funds the discount and which outlets are covered.

Prepare a brief for each campaign covering:

• The products or services included and the campaign period;
• Whether the advertised price is recommended or a maximum, depending on the legally reviewed approach;
• Participation and funding terms;
• Clear identification of participating outlets;
• A procedure for correcting inaccurate advertising or system settings.

Do not assume that a short promotion allows you to impose fixed prices. European guidelines recognise that certain co-ordinated campaigns may warrant a specific assessment of efficiencies, but this is not a blanket authorisation.

If you make participation voluntary, it must genuinely be so. Avoid hidden penalties for those who do not take part. And do not advertise an offer as available across the network when it is only available at some outlets.

When reducing the price of goods, also check the Portuguese rules on advertising discounts and the reference price. Compliance with competition law does not remove your obligations towards consumers.

4. Align the contract, technology and monitoring

A well-drafted clause can be undermined by invoicing software. Check that franchisees can change prices where they have the right to do so, and that central updates do not automatically reinstate prices that should only be recommendations.

Keep a record of who approves campaigns, who configures the system and how errors are resolved. On shared digital channels, clarify who makes the sale and how each outlet’s prices are displayed.

Monitoring should focus on implementation problems and consumer information, not on penalising departures from recommended prices. Also avoid circulating independent franchisees’ future pricing intentions among them without a legal assessment.

Practical takeaway: before the first franchisee joins, review a price list, a campaign and the sales system settings together. Commercial independence must exist both in the contract and in the franchise network’s day-to-day operations.