Buying a franchise: who can set your selling prices?

A consistent brand identity across a franchise network does not mean that every franchisee must charge the same prices. Before buying a franchise in Slovenia, check who sets the price list, who approves discounts and who bears the cost of joint promotions. Limited pricing freedom can significantly affect your outlet’s profitability, and some contractual terms may also breach competition law.

1. First, establish who actually sells to the customer

Start with your role in the business. A franchisee generally trades in their own name and for their own account: they invoice the customer, pay employees and bear the commercial risk. Selling prices are therefore not simply a matter of internal brand instructions.

Before signing, clarify who the seller is for purchases made in-store, through the online shop, via an app and on a delivery platform. Different sales channels may operate under different arrangements within the same business model. Also check who covers discounts, refunds and intermediary commissions.

Ask for a walkthrough of the entire sales process: from displaying the price and placing the order to issuing the invoice and transferring payment to your outlet. If the franchisor claims that an intermediary or agency relationship entitles it to set prices itself, ask a lawyer to review how risks are actually shared. The title of the agreement alone does not determine how competition rules apply.

2. What Slovenian and EU rules say

Slovenia has no dedicated law comprehensively regulating franchising, no generally prescribed franchise disclosure document and no mandatory dedicated franchise register. The contractual relationship is governed primarily by the Slovenian Obligations Code, including the principle of good faith and fair dealing and the rules on negotiations. The absence of a specific franchising law therefore does not mean there is no legal protection.

The Prevention of Restriction of Competition Act (ZPOmK-2) is relevant to pricing agreements. Where an agreement may affect trade between EU Member States, Article 101 of the Treaty on the Functioning of the European Union also applies. Commission Regulation (EU) 2022/720 and the accompanying European Commission guidelines are important when assessing vertical agreements.

Setting fixed or minimum resale prices is generally prohibited and constitutes a hardcore restriction under that regulation. This also includes indirect methods, such as limiting the maximum permitted discount or threatening to withdraw benefits because a franchisee charges a lower selling price.

Recommended and maximum resale prices may be permissible, provided that pressure or incentives do not turn them into fixed or minimum prices. The block exemption under the regulation has additional conditions, generally including a market share of no more than 30% for both the supplier and the buyer on their respective relevant markets. Exceeding this threshold does not in itself make an agreement unlawful, but it requires an individual assessment.

3. Check the agreement, operations manual and till system

Do not stop at a statement saying that franchisees set their prices independently. The actual restrictions may be hidden in the operations manual, promotion rules or software settings. Review all documents referred to in the agreement, along with the provisions governing subsequent changes to them.

During a demonstration of the system, ask for answers to the following questions:

• Can I change a standard selling price without approval?
• Can I introduce my own discount or benefit for regular customers?
• Does the system simply record a price change, or can it block it?
• Does departing from the recommended price list affect support, supplies or renewal of the agreement?
• Are there restrictions on the prices I may advertise?

Restricting the advertising of lower prices can also be an indirect form of resale price maintenance. Pay particular attention to emails in which the franchisor explains how to use price lists: something politely labelled a ‘recommendation’ is not truly voluntary if departing from it triggers a penalty.

Ask to test a price change in a demonstration environment. The technical setup should support the independence agreed in the contract, not undermine it.

4. Assess joint promotions from both a legal and a financial perspective

A joint promotion can benefit the whole franchise network, but you need to understand its economics. For a sample promotion, calculate revenue excluding VAT, then deduct the cost of goods, commissions, packaging and other direct costs. Check whether the franchise fee is calculated on actual discounted sales revenue or on some other defined basis.

Set out in writing who funds the discount, how reimbursement is calculated and when you will receive it. Pay particular attention to vouchers, loyalty schemes and online platform promotions, where another party may promise a benefit while your outlet bears the cost.

Mandatory uniform promotional prices are not automatically permissible simply because a promotion is short-lived. For certain coordinated short-term promotions, the European Commission’s guidelines allow scope for an efficiency justification, but this is not a blanket exemption for franchises. Have a competition law specialist review any such arrangement before you sign.

5. Turn the agreement into clear, verifiable contractual rules

The agreement should clearly distinguish between recommended price lists, any maximum prices and the rules for participating in promotions. If recommendations are intended to be non-binding, it should expressly state that departing from them does not in itself trigger penalties or the loss of contractual benefits.

Also establish a procedure for disputed instructions: whom you should send an objection to, who will consider it and how quickly you will receive a response. Describing a contractual provision as ‘compliant with the law’ does not remedy a specific unlawful restriction. If you suspect a breach, keep copies of the instructions and seek legal advice; the Slovenian Competition Protection Agency is also responsible for enforcing competition rules.

Practical takeaway: before signing, check three things together: the wording of the agreement, how pricing works in practice and the financial impact of promotions. Pricing freedom must be workable in day-to-day trading, not merely promised at a meeting.