Franchise pricing: how to agree a policy in Venezuela

When you franchise your business, pricing is no longer an internal decision for a single company. Each franchisee bears its own costs and risks, even though it shares your brand. Before bringing new members into the franchise network, establish how prices will be communicated, who can change them and what legal review joint promotions will require.

1. Distinguish brand identity from pricing independence

A consistent brand experience does not necessarily require every outlet to charge the same prices. You can standardise menu presentation, service descriptions or the way promotions are communicated without automatically extending all your commercial decisions to another business.

The first step is to identify who sells to the customer through each channel. In a franchised outlet, this will usually be the franchisee’s company; in a company-owned outlet, it will be the company operating that location. For online orders, the answer must be equally clear: receiving an order does not necessarily mean making the sale.

Draw up a simple overview covering four points for each channel:

• The company making the sale and issuing the invoice.
• The person authorised to update the advertised price.
• Who bears the cost of discounts and refunds.
• The procedure for correcting discrepancies between the advertised price and the price charged.

This overview helps prevent a head-office decision from affecting another company’s revenue without an agreed rule in place.

2. Review Venezuela’s legal framework before setting restrictions

Venezuela does not have a comprehensive franchise law establishing a general pre-contractual disclosure regime equivalent to those found in other countries. A franchise agreement is a commercial contract without a dedicated statutory framework, governed by, among other legislation, the Civil Code and Commercial Code. Brand licensing also requires consideration of the Industrial Property Law.

The Antimonopoly Law, which regulates conduct capable of restricting competition, is particularly relevant to pricing policies. You must also review the Organic Law on Fair Prices and any provisions applicable to the product or service, including any relevant price controls. The absence of a comprehensive franchise law does not mean that any contractual term can be freely agreed.

Do not assume a clause is valid simply because it appears in overseas contracts or because every franchisee agrees to sign it. Mandatory prices, restrictions on discounts, or monitoring mechanisms backed by penalties require specific legal assessment.

Nor is it enough to call a price ‘recommended’ if departing from it leads to retaliation in practice. Ask your lawyer to review not only the contract wording but also commercial communications, sales system settings and the instructions your support team will receive.

3. Design a policy that can be implemented clearly

The policy should explain whether the prices communicated are for guidance and how the final price offered to the public is determined, always within the applicable legal framework. Avoid ambiguous wording such as ‘follow the brand’s prices’ without specifying what it means.

Keep three documents separate: your business’s internal cost analysis, commercial communications to franchisees and the terms customers will see. They serve different purposes and should not be confused.

If you share a reference price, include the assumptions behind it: portion size, product presentation, costs taken into account and the date it was prepared. This reduces the risk of an outdated reference being interpreted as a guaranteed margin.

Your IT system must also reflect the approved policy. Check who can edit prices, how changes are logged and what happens when a central update does not apply to a particular outlet. Do not use technical restrictions to impose indirectly any constraints that have not undergone legal review.

4. Agree promotions before advertising them

A joint promotion requires more than an advert. Before publishing it, document the participating outlets, dates, products included, exclusions and who will fund the discount. Also define how orders placed before the campaign ends will be handled.

For example, a two-product offer may work in your company-owned outlet but generate losses at another location with different costs. Examine that difference before publicly committing the whole network. Do not present a campaign as available everywhere if it is limited to certain outlets.

Keep a record of each approved promotion and the communications sent out. Review implementation to identify outdated adverts or discrepancies between channels, not to turn information-sharing into improper coordination between businesses.

Practical tip: before franchising, prepare a short pricing and promotions policy, identify the seller in each channel and submit the policy for legal review. Brand consistency starts with clear rules, not with the assumption that everyone must charge the same price.