Indirect price maintenance
As is well known in franchising practice, resale price maintenance is out of the question. The franchisor who obliges a franchisee to prescribe a sales price is therefore crossing the line. What about indirect price maintenance, where price maintenance can also arise through indirect measures and/or sanctions?
Forms in which indirect price maintenance can be expressed include the following: a franchisor can price certain products in advance by means of a bar code, with the product being settled at the cash register at the predetermined price by means of scanning the product. Furthermore, in general, a binding recommendation can be made to use a certain selling price. The franchisee is expected to determine the sales price independently, but must focus on the pricing policy of the franchise organization in question. Another form of indirect resale price maintenance can arise through communicating directly with consumers over the heads of the franchisees about the sales prices in question, for example through advertising. If practice means that the franchisee then has no choice and must charge the sales price communicated by the franchisor, resale price maintenance has also arisen in this way.
All these and similar forms of indirect price fixing are inadmissible and prohibited. The sanctions for absolute price maintenance can be far-reaching, both on the part of the Netherlands Competition Authority (NMa) and on the cooperation between franchisor and franchisee itself. Under certain circumstances, the contested provision and even the entire franchise agreement may become null and void. Franchisor and franchisee would therefore be wise to adjust their contracts on this point in good time if necessary and to hold good consultations in general.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Supermarket letter – 26
Supermarket Newsletter No. 26
Link franchise agreement and rental agreement uncertain? – dated October 14, 2019 – mr K. Bastiaans
It is no exception within a franchise relationship that the parties agree that the franchise agreement and the rental agreement are inextricably linked.
Termination of franchise agreement in case of changes in leased retail space – September 27, 2019 – mr. AW Dolphin
Termination of a franchise agreement in light of a substantial change in the leased retail space.
Article De Nationale Franchisegids: “Distribution of (potential) customers prohibited?” – September 17, 2019 – mr. AW Dolphin
Within many franchise organizations, agreements are made about the recruitment of (potential) customers in a certain area.
District protection no protection against termination due to urgent own use – dated September 17, 2019 – mr. AW Dolphin
As a landlord, can the franchisor terminate the lease for urgent own use, in the sense of district protection, while this would be excluded on the basis of the franchise agreement.
Unreasonable compensation at the end of the franchise agreement – dated September 17, 2019 – mr. AW Dolphin
Some franchise agreements stipulate that the franchisee always owes the franchisor a minimum of a certain amount of costs upon termination of the franchise agreement.