Franchise pricing: what you can decide in Spain

Sharing a brand does not mean every outlet must always charge the same prices. Before joining a franchise network in Spain, you need to understand how much freedom you will have to set prices and take part in promotions. A pricing recommendation, a restriction in the till software or a compulsory discount can affect your day-to-day decisions. Check these arrangements before signing, rather than waiting until the first campaign launches.

1. Distinguish between recommended, maximum and mandatory prices

In a franchise, the franchisor and franchisee are normally independent businesses. Instructions on retail pricing are therefore subject to competition rules: belonging to the same franchise network does not allow the franchisor to impose any conditions it chooses.

There are three situations to distinguish:

• Recommended price: provides guidance for the franchisee, who must remain free to depart from it without pressure or incentives that effectively make it compulsory.
• Maximum price: sets a price ceiling. This may be permissible, provided pressure or incentives do not turn it into a fixed or minimum price in practice.
• Fixed or minimum price: requires the franchisee to charge a specific amount or prohibits selling below it. As a general rule, this constitutes a hardcore restriction of competition.

It is not enough for the contract to use the word ‘recommended’. If head office threatens penalties for charging less, withdraws benefits for departing from its price list or uses technical controls to block changes, you need to examine how the arrangement actually works.

Key question: ‘Can I change the selling price myself, and what would the consequences be?’ Ask for a written answer that is consistent with the contract and its schedules.

2. Understand the rules that protect your pricing freedom

The relevant legal framework includes Article 1 of Spain’s Competition Act (Law 15/2007) and, where trade between EU Member States may be affected, Article 101 of the Treaty on the Functioning of the European Union.

Regulation (EU) 2022/720, covering certain categories of vertical agreements, is also essential. Article 4(a) treats restrictions on a buyer’s ability to determine its selling price as hardcore restrictions, while allowing maximum or recommended prices under specified conditions. Such a restriction removes the agreement’s benefit of the block exemption; its legal assessment should not be reduced to reading a single clause in isolation.

The European Commission’s Guidelines on Vertical Restraints recognise that certain coordinated, short-term low-price campaigns may warrant an individual assessment of efficiency benefits. There is no blanket permission to impose prices simply because the business is a franchise. If head office relies on an exception, ask your adviser to review its basis and scope.

In addition, Article 62 of Spain’s Retail Trade Act (Law 7/1996) and Royal Decree 201/2010 govern specific aspects of franchising. Pre-contractual information must be provided in writing at least twenty working days before you sign a contract or preliminary agreement, or make any payment to the franchisor. Use this period to review the commercial policy, but do not confuse it with a general right to withdraw after signing.

3. Check how promotions and the till system work

The contract may appear flexible while day-to-day procedures prevent you from making your own decisions. Ask for a demonstration of the till software and review a complete example of a campaign, from its announcement through to the final settlement of payments.

Check the following points:

• Price changes: who can change prices, and whether prior approval is required.
• Discounts and vouchers: who funds them, and how their value is recorded.
• National campaigns: whether participation is voluntary, what conditions apply and how the campaign is presented to the public.
• Digital orders: who makes the sale, who takes payment and what price is displayed when an order is assigned to your outlet.
• Discrepancies: what happens if the advertised price differs from the price set in the till system.

For example, if head office distributes a voucher, ask whether its full value comes out of your revenue or whether you receive compensation. Also check whether percentage-based payments to head office are calculated on the amount before or after the discount.

Speak to existing franchisees to check what happens in practice: have they changed prices, declined a promotion or received warnings? Their answers can help identify issues that you should then verify against the documentation.

4. Resolve any uncertainties before committing

Prepare a list of discrepancies between the contract, operations manual, sales presentation and software functionality. Ask for important clarifications to be incorporated into the contractual documents, with a clear rule stating which document takes precedence.

Seek legal advice if you encounter minimum advertised prices, mandatory approval for discounts, penalties for departing from set prices or benefits conditional on following a price list. Do not assume a requirement is valid because others in the network accept it, or that you can ignore it without assessing the consequences.

Practical takeaway: before buying, insist on a clear pricing policy, test whether the till system gives you genuine pricing freedom, and put in writing who decides on each promotion and who pays for it.