Pursuant to competition law, it is not permitted to include so-called resale price maintenance in franchise agreements, which means that the franchisor may prescribe to the franchisee the selling prices at which the products and/or services must be purchased by consumers from the franchisee. Going against this rule is considered a cardinal and mortal sin in competition law. If such a clause is nevertheless included in a franchise agreement, does this mean that the franchise agreement in question is actually null and void? And what about if the franchisor has issued a margin guarantee to the franchisee and the franchisee cannot or may not deviate from the selling prices? In court proceedings, a franchisee recently argued that there was no possibility whatsoever to deviate from the sales price indicated by the franchisor. It has been ruled in court that it must be verified whether there is actually price maintenance in practice; this is very decisive. This can arise in practice, for example, when the franchisee is not even formally given the opportunity to deviate from these prices and therefore has no leeway whatsoever to charge a different price for a certain product. This resale price maintenance can also arise from the pre-pricing of articles, which the franchisee cannot or may not deviate from when selling. If this is actually the case, then real resale price maintenance only arises, with all the consequences that entails.
Franchisor and franchisee would of course be wise not to include absolute resale price maintenance in their franchise agreement. This in itself can render the franchise agreement null and void. In addition, it is very important to concretely and practically avoid price maintenance in practice and to actually act accordingly. This can be achieved, for example, by the fact that the franchisee continues a certain (price) promotion longer than planned, independently conducts (price) promotions, gives discounts, uses different sales prices for larger (volume) purchases, et cetera. The practice offers countless possibilities for this. In this way, the actual resale price maintenance can be avoided, with all the associated legal and economic risks.
Ludwig & Van Dam franchise attorneys, franchise legal advice