Recommended Prices

In order to ensure price homogeneity within the franchise network, and thus preserve the consistency of the network and the image of the brand, the franchisor may send the franchisees of the network a list of recommended prices for the sale of products and/or services.

This practice of recommended prices, like that of maximum prices imposed, is expressly authorised by European competition law, since Article 4 of EU Regulation 330/2010 of 20 April 2010 provides that the supplier may “impose a maximum selling price or recommend a selling price, provided that the latter do not amount to a fixed or minimum selling price as a result of pressure or incentives by one of the parties “.

It is also not prohibited by French competition law, since Article L.442-5 of the Commercial Code only prohibits the practice of minimum prices imposed.

However, it is the responsibility of the franchisor who communicates a recommended price list to ensure that these prices do not in practice constitute prohibited minimum imposed prices, and to ensure that franchisees remain free, as independent traders, in the setting of their resale price and their margin.

It will therefore be necessary, in the franchise agreement, to justify that these recommended prices are communicated with the objective of homogeneity of the pricing policy within the network, in order to preserve the image of the brand, and to expressly indicate that the recommended prices communicated to the franchisee are not mandatory and that the franchisee retains all freedom to set its resale prices.

In addition, in the franchisor’s contractual practice, care should be taken not to adopt any practice likely to call into question the franchisee’s freedom to set its resale prices, as organized by the franchise agreement.