Assessing Pricing Control Before Buying a Franchise

When considering a franchise offer, there is another question just as important as the initial fee: who will set the prices you charge customers? With your business bearing the cost of rent, staff and delivery, the way pricing decisions are made directly affects the investment’s viability. Before joining a franchise network, review not just the price list, but also discount instructions, participation in promotions and access permissions in the point-of-sale system. The aim is to distinguish between the brand’s consistent customer experience and your independent business’s freedom to set prices.

1. Find out who really controls pricing

Being told at the first meeting that “our prices are recommended” is not enough. The agreement, operating manual, promotional announcements and software must all work consistently. A price left to your discretion in one document may effectively become compulsory through another practice.

Ask the franchisor for a sample price list and the implementation instructions for a previous promotion. Then submit these questions in writing:

• Can the franchisee sell below or above the list price?
• Is approval required to change a price and, if so, on what grounds?
• Who has permission to change prices in the point-of-sale system?
• Does a franchisee charging different prices face warnings, withdrawal of support or any other consequences?
• Can separate prices be set for in-store, delivery and online sales?

Turn the answers into a pricing authority matrix. For each sales channel, identify separately who recommends the price, enters it into the system and can change it. This lets you assess day-to-day practice as well as the wording of the agreement.

In particular, ask whether terms such as “brand consistency”, “head office approval” and “standard practice” extend to pricing decisions. These phrases do not, in themselves, establish that a pricing restriction is lawful.

2. Understand the legal distinction between recommended and mandatory prices

Türkiye has no dedicated franchise law governing franchise agreements. Nor is there a general mandatory pre-contractual disclosure document or franchise registration system specifically for franchising. This makes it important to request documents explaining the pricing policy before signing.

The contractual relationship is subject to the Turkish Code of Obligations, Law No. 6098, and the Turkish Commercial Code, Law No. 6102. Pricing restrictions must be assessed particularly under the Law on the Protection of Competition, Law No. 4054. The Block Exemption Communiqué on Vertical Agreements, No. 2002/2, is also relevant to provisions in franchise relationships that constitute vertical agreements. The former franchise block exemption rules under Communiqué No. 1998/7 are no longer in force.

Fixing an independent buyer’s resale price, or setting a minimum resale price, carries serious competition law risks. Recommended or maximum prices must not become fixed or minimum prices through pressure or incentives. Labelling a document “recommended” does not automatically make the practice lawful.

For example, arrangements under which a franchisee loses benefits for selling below the recommended price, or is prevented by the system from changing prices, require further scrutiny. Ask your lawyer to assess the incentives and sanctions, not just the wording of the agreement. Exemption conditions and any possible exceptions must be considered in relation to the specific agreement; the same conclusion cannot be drawn for every pricing clause.

3. Calculate the cost of promotions per order

Do not limit your pricing policy review to legal checks. Calculate how much the business retains from a promotional sale as well. The same discount can have different effects on two businesses with different rental and delivery costs.

Choose a sample product or order and prepare separate calculations for a normal sale and a promotional sale. Clarify the treatment of tax with your accountant, then compare these items consistently:

• The selling price collected from the customer;
• Product, consumables and packaging costs;
• Payment processing, platform and delivery charges;
• Sales-linked franchise payments;
• Any contribution from the franchisor towards the discount.

Remember that the resulting figure is not net profit: rent, fixed staffing costs and other overheads still need to be covered. A promotion may increase sales volume while reducing the amount retained per order.

Also pin down what “head office covers the discount” means. Which sales qualify for support, what documentation will be used to calculate it, and when will it be paid? Support credited later does not remove the need for cash during the promotion.

4. Put the limits of promotional participation in writing

Review obligations to participate in nationwide promotions as a separate issue. The duration, products covered, sales channels and cost-sharing arrangements should be understood in advance. Do not accept broad wording such as “unconditional participation in all promotions” without calculating its impact.

Ask for a clear process covering:

• How much notice the business will receive of a promotion;
• How the cost of the discount will be shared between the parties;
• What happens if stock runs short or a technical fault occurs;
• How differences in local operating costs will be taken into account;
• How support payments will be checked and disputed.

Promotional clauses are also subject to competition law scrutiny. Including consent to participate in the agreement does not, by itself, make a pricing restriction lawful.

Before signing, run through a promotion from start to finish as a desk-based exercise: who takes action when the announcement arrives, how will the point-of-sale price change, how will the discount be shown to customers, and on what date will the support payment reach your account? Request written clarification for every step that remains unclear.

Practical takeaway: Make the way prices are set—not just the price list—part of your investment decision. Before signing, have a pricing authority matrix, a promotional cost calculation and a competition law review prepared. Do not settle for a verbal promise of pricing freedom.