Resale pricing in franchised stores: A franchisor perspective

How resale prices in franchising are determined is of particular interest to franchisors and franchisees, as well as researchers, due to their links with customer attraction, chain uniformity, franchisor know-how, franchisee autonomy and legal dimensions. We combine legal and managerial considerations to assess the way franchisors perceive price-setting policies within their chains by looking at which specific practices are involved in franchise chains, which rules are approved by franchisors, which ones franchisors comply with or skirt, etc. This empirical study is based on an analysis of 19 semi-structured interviews with franchisors from different brands and industries running their businesses in the French market. Findings show that franchisors have different understandings of their franchisees' freedom in terms of resale pricing. Even though the ban on directly imposed resale prices on franchisees seems to be accepted in practice by interviewed franchisors, some franchisors impose prices without openly admitting to it. This paper can be considered by franchise experts, franchisors, franchisees and franchisee candidates as an overview of resale price-related legal aspects, adopted practices and potential conflicts in franchise chains. It also highlights price-related practices to be avoided in order to prevent potential conflicts in franchise chains.