Minimum sales prices charged

The practice of imposing minimum selling prices, incompatible with the principle of franchisee independence,  is strictly prohibited, both by European law and French competition law.

Thus, Article 4 of EU Regulation 330/2010 of 20 April 2010 provides that the exemption provided for in Article 2 of the said Regulation (relating to the non-application of Article 101 (1) of the Treaty on the Functioning of the European Union, relating to anti-competitive practices, to agreements which produce sufficient benefits to offset their anti-competitive effects) “does not apply to vertical agreements which, directly or indirectly, alone or in combination with other factors on which the parties may influence, have the purpose of restricting the buyer’s ability to determine its selling price (…)“.

Article L.442-5 of the Commercial Code sanctions the fact of “imposing, directly or indirectly, a minimal character to the resale price of a product or good, to the price of a service or to a commercial margin“.

It is therefore strictly forbidden for the franchisor to set resale prices or minimum margin amounts to the franchisee, either expressly in the terms of the contract, or in a disguised manner, for example by means of the communication of recommended selling prices or the setting of maximum prices imposed, which would result, given the franchisor’s contractual practice, in restricting the franchisee’s freedom in the setting of its resale prices.

The imposition of a minimum selling price is likely to ground the nullity of the contract in which such a clause would be contained.

It also constitutes a criterion for reclassifying the franchise contract as an employment contract.