Buying a Franchise: How to Assess Pricing Authority

When buying a franchise, looking at the brand’s menu or product labels is not enough; you also need to understand who can change those prices and within what limits. With rent, staffing and delivery costs varying between outlets, a centrally managed promotion could reduce your earnings. Before joining a franchise network in Türkiye, reviewing pricing authority is essential to assessing both your commercial independence and compliance with competition rules.

1. Understand the legal limits of pricing authority

Türkiye has no dedicated franchise law governing franchise relationships. Nor is there a specific mandatory pre-contractual disclosure document for franchise agreements or a general franchise registration system. This does not mean that every pricing clause in an agreement is valid.

The Turkish Code of Obligations No. 6098 provides the general framework for forming and performing contracts, while the Turkish Commercial Code No. 6102 governs commercial relationships. The Industrial Property Law No. 6769 is relevant to trade mark licensing. For intervention in selling prices, however, the principal legislation is the Law on the Protection of Competition No. 4054.

The Competition Board’s Communiqué No. 2002/2 on Block Exemption for Vertical Agreements and the related guidelines are relevant when assessing vertical restraints in franchise relationships. Setting a fixed or minimum resale price for an independent franchisee is a hardcore restriction that prevents the agreement from benefiting from the block exemption. The legal consequences of any particular arrangement require separate assessment; signing the agreement does not remove a competition law issue.

Recommended or maximum selling prices must not become fixed or minimum prices in practice through pressure or incentives. Look beyond the label used in the clause to how it operates day to day.

2. Gather pricing instructions outside the agreement too

Do not limit your review to the main agreement. Pricing is often governed by the operations manual, software settings, promotional calendar or notices sent to outlets. Before signing, request up-to-date copies of these documents and establish which form part of the agreement.

Ask the franchisor the following questions in writing:

• Can an outlet sell below the recommended price?
• If a maximum price applies, can the outlet freely set its prices below that ceiling?
• Who can change prices in the till and online ordering systems?
• Will an outlet charging different prices face warnings, delayed supplies or other sanctions?
• Are bonuses, discounts or promotional support conditional on following a particular selling price?

The phrase “recommended price” is not a safeguard on its own. Withholding a bonus or restricting system access because an outlet charges lower prices may indicate that there is no genuine pricing freedom.

When speaking to existing franchisees, do not simply ask, “Can you change prices?” Ask what approvals were required for their most recent change and how head office responded. Where possible, review records of example cases, while protecting personal data and trade secrets.

3. Test promotional participation against the contribution per sale

Alongside its legal assessment, a pricing clause needs a separate commercial assessment. In particular, if it is unclear who funds discounts in joint advertising campaigns, higher order volumes may not leave your business with more cash.

Prepare a simple spreadsheet for each promotion. Calculate the contribution per transaction by taking net sales revenue excluding VAT and deducting the variable cost of the product or service, packaging, payment processing fees, delivery costs and other sales-related deductions. This contribution is not net profit; it must also cover costs such as rent and fixed staffing expenses.

Run the calculation separately for ordinary sales, discounted sales and sales through delivery platforms. Include support from head office only if its amount, conditions and payment timing are confirmed in writing. Support credited against amounts due at a later date will not immediately cover today’s cash shortfall.

Look for the following details in the promotion documentation: duration, products covered, sales channels, allocation of discount costs, the support payment date and how returns and refunds are accounted for. The statement “Promotions are determined by head office” explains none of these points on its own.

4. Match authority with responsibility in digital sales

Prices shown on the brand’s app, website or a delivery platform may differ from in-store prices. However, you cannot properly assess the arrangement without understanding who legally makes the sale and who bears the cost of the discount.

Establish who enters into the sales contract with the customer, issues the invoice, receives payment and handles refunds. An arrangement in which head office sells in its own name is not the same as one in which it acts as an intermediary for the franchisee’s sales. The competition law assessment of pricing authority also depends on the true nature of the relationship.

Request a software demonstration: can prices be changed locally, which account bears a voucher discount, and how is the previous price restored when a promotion ends? A locked system setting can make a right apparently granted by the agreement impossible to exercise. Compare written explanations with how the system actually works.

5. Prepare a clear pricing and promotions schedule before signing

Work with your lawyer to ensure that the pricing policy is consistent across the main agreement, operations manual and digital system rules. The schedule should clearly set out the status of recommended and maximum prices, the outlet’s freedom to set prices, promotion notification procedures, cost sharing and the reconciliation process. Have your lawyer review the scope of any power granted to head office to make unilateral changes.

The absence of a mandatory franchise-specific disclosure document does not mean that misleading information or conduct contrary to the duty of good faith has no consequences. Keep meeting notes, responses about pricing policy and agreed schedules. Put verbal assurances into the signed documents, and remember that simply giving a problematic pricing practice a different name will not make it lawful.

Practical takeaway: Before signing, verify three things together: who actually sets the price, who funds the discount, and whether the system genuinely allows you to exercise the pricing authority granted by the agreement.