Setting a Pricing Policy Before Franchising in the UAE

When turning an existing business into a franchise in the UAE, simply handing your original outlet’s price list to a franchisee is not enough. Rents, delivery costs and sales mix may vary between locations, while customers expect a consistent, clearly presented experience under the same brand. You need a pricing policy that distinguishes between protecting brand identity and interfering in an independent business’s decisions, and sets out how prices are proposed and promotions managed. This is an important step towards balanced relationships across the franchise network, not merely an appendix to the product list.

1. Separate customer prices from payments due to the franchisor

Start with two separate documents: a schedule setting out the amounts the franchisee pays the franchisor under the agreement, and a policy covering the prices charged to customers for products or services. Mixing the two may lead franchisees to believe that accepting franchise fees automatically means accepting every price or discount that management later introduces.

Review how pricing works in your existing business. Does the founder rely on personal knowledge of each product’s cost? Are regular customers offered discounts verbally? Do prices differ between the shop and delivery apps? Record these practices before turning them into instructions for the franchise network.

Create a costing sheet for each product or service, covering input costs, packaging, sales-related commissions and the impact of discounts. The purpose is not to guarantee the franchisee a profit margin, but to help them understand the economics of each sale. Also distinguish between the price displayed to the customer and the net revenue the business receives: strong sales at the original outlet do not prove that the same offer will suit every location.

2. Understand the legal limits before drafting the policy

The UAE has no standalone federal law governing franchising as a distinct business model, nor a general federal disclosure regime specifically covering all franchise agreements. However, the relationship remains subject to general contract and commercial transaction rules, trademark, competition and consumer protection legislation, and relevant local licensing requirements.

For pricing, Federal Decree-Law No. 36 of 2023 on the Regulation of Competition is particularly important. Pricing and discount provisions, and the exchange of commercial information, should be assessed against its provisions and implementing decisions. Do not assume that describing a clause as a ‘brand standard’ makes it permissible, or that all pricing arrangements receive the same legal treatment regardless of their details.

Federal Decree-Law No. 36 of 2021 on Trademarks also regulates the licensing of trademark use. A franchisor’s right to protect its brand and monitor quality does not give it unrestricted authority to impose commercial restrictions. Before adopting the policy, seek a legal review of the nature of the relationship, including whether Federal Law No. 3 of 2022 on Commercial Agencies could apply if the arrangements meet its conditions. Not every franchise is a registered commercial agency.

3. Define clear responsibilities rather than issuing conflicting instructions

Draw up a practical matrix showing who proposes prices, who decides them and who updates sales systems. If prices are recommended, communications and operational practices must genuinely reflect that status. Do not describe them as optional while imposing penalties or withholding support for departing from them: the document’s title alone is not what matters.

The policy should address recurring operational situations:

• Different prices for on-site orders and deliveries.
• Bundles containing multiple products or additional services.
• Franchisee-funded discounts versus franchisor-funded discounts.
• Vouchers sold at one location and redeemed at another.
• Price adjustments following changes in input costs or platform commissions.

For each situation, specify the reporting process and financial treatment, without turning a review of logo use or advertising design into an automatic requirement for approval of every pricing decision. Where you believe a particular offer needs to be standardised, have a legal adviser review how it will work before making it a contractual obligation.

4. Establish separate procedures for promotions

A joint promotion needs more than an attractive design. Prepare a campaign brief covering the products included, participating locations, offer period, eligibility conditions, funding for the discount and how amounts will be settled between the parties. Also explain how returns, unused vouchers and stock shortages will be handled.

In Dubai, Law No. 13 of 2011 Regulating the Conduct of Economic Activities, as amended, distinguishes between a licence to conduct business and a commercial permit for marketing activity, and requires prior permission for marketing activities. You should therefore check the relevant authority’s requirements for the proposed campaign, rather than relying solely on the business licence or the franchisor’s approval.

Do not assume that Dubai’s procedures apply across the other emirates or free zones. Appoint someone to check local requirements, and make confirmation of the necessary permits an internal condition for launching the campaign. If some locations are not participating, promotional materials should make the scope of participation clear so customers are not surprised at the till.

5. Test the policy before rolling it out

Trial the pricing procedures within your existing business: update a price list, launch a discount, end an offer and settle a voucher redemption. Check whether prices match across advertising, the point of sale and digital channels, and whether staff can explain the terms without having to improvise.

Keep a record of versions, changes and who is responsible for implementing them. When discussing performance with franchisees, avoid circulating future pricing plans or commercially sensitive information among them without assessing the need and the legal risks.

Practical takeaway: Before granting a franchise, prepare a policy defining pricing responsibilities, a promotional campaign template and a price-update procedure. Have them legally reviewed, then test them operationally. A consistent customer experience does not require you to disregard franchisees’ independence or differences in their costs.