Can a French Franchisor Impose Resale Prices? (No — and the Requalification Risk)

Can a French franchisor impose resale prices in a franchise?

No. A franchisor cannot impose minimum or fixed resale prices in a French franchise. Resale prices in a French franchise are set by the franchisee, who trades for its own account as an independent business owner and not as an employee, an agent, or a manager of the franchisor. This is one of the structural limits of the model: the franchise is built on a network of independent traders, and that structure deprives the head of the network of the power to fix resale prices. A franchisor that wants to dictate the price at every till has chosen the wrong instrument.

The rule is easy to state and easy to breach. A franchisor is entitled to a coherent, recognisable network. It transmits know-how, lends its signs, and expects discipline. From there it is a short step to the idea that the network would be tidier if every outlet charged the same price. That step is unlawful. The franchisor may go as far as communicating recommended prices, and no further towards a floor. Crossing the line exposes the franchisor to two distinct sanctions that do not depend on each other: a competition-law challenge to the price restriction, and, more dangerously, a reclassification of the operator as a branch manager (gérant de succursale) under Articles L 7321-1 and following of the Labour Code, with the labour-law bill that follows.

This article sets out what a franchisor may and may not do about resale prices in a French franchise, why the prohibition exists, how a "recommended" price quietly becomes an imposed one in practice, and how the imposition of prices feeds the requalification risk that every network operating in France should treat as real.

Why the franchisee sets its own resale prices in a French franchise

The franchisee's freedom to set resale prices in a French franchise is a direct consequence of its legal status. A franchisee is not a salaried worker, not an agent, and not a manager acting for someone else. It operates a business for its own account, owns the stock it sells, and owns the goodwill it builds. The customer base it works is an asset of a business that belongs to it. Because the franchisee buys goods and resells them on its own behalf, it — and only it — decides the price at which those goods leave the shelf.

Operational independence is not a slogan. It means the franchisee alone signs the contracts that bind its business — the lease, the loan, the equipment and service contracts, the employment contracts — and chooses its own accountant and insurer. It also means the franchisee must be able to put in place its own pricing policy and its own commercial policy, autonomously and without interference from the head of the network. There is no profit without risk, and no risk without independence: the franchisee carries the entrepreneurial risk, so it must keep the levers of its own management, and price is the first of them.

This is precisely what separates the franchisee from neighbouring figures who look similar from the street. A commission-affiliate, for example, does not resell goods; it sells them for the account of the network head, which is why that head keeps full control of the network's pricing policy. The trade-off is telling — a trader that does not even set its own prices enjoys only a semblance of independence, and the technique carries its own reclassification risk. The franchisee sits on the other side of that line. It acts for its own account and owns its stock, and the counterpart of that autonomy is that the price it charges is its decision to make.

The obligation of loyalty a franchisee owes to the network does not erode this. A franchisee must follow the commercial methods and the know-how, apply the promotional and supply standards, respect the network's graphic charter, and use its distinctive signs. That fidelity is owed because the franchisee belongs to a network. But fidelity is not dependence. The franchisee keeps a natural margin of manoeuvre, and the franchisor may not, among other things, fix minimum resale prices. Everything here is a question of degree, and price is where the degree is measured most sharply.

Recommended prices in a French franchise: what a franchisor may lawfully do

What a franchisor may lawfully do about resale prices in a French franchise is communicate recommended prices — and only recommended. A recommended price (prix conseillé) is a genuine suggestion. It informs the franchisee, helps a newcomer position its offer, and supports a consistent commercial image across the network. It leaves the franchisee entirely free to charge more, to charge less, or to run its own promotions. The moment the recommendation stops being optional in fact, it stops being a recommendation in law.

The distinction between what is permitted and what is prohibited tracks the competition framework for vertical agreements. A maximum resale price and a recommended resale price are, in principle, compatible with that framework; a minimum resale price and a fixed resale price are not. The comparison below sets out the three categories a franchisor is tempted to use and how each is treated.

The line is not drawn by the label the franchisor puts on the price, but by what happens when a franchisee departs from it. A "recommended" price that a franchisee is not, in practice, free to ignore is an imposed price. That is the whole difficulty, and it is the subject of the two sections that follow.

Resale price maintenance in a French franchise and EU competition law

The prohibition on imposing resale prices in a French franchise has a competition-law footing as well as a contractual one. Where a franchise agreement affects trade between EU Member States, the vertical dimension of the relationship is assessed under Article 101 of the Treaty on the Functioning of the European Union and the block exemption that implements Article 101(3): Regulation (EU) 2022/720 of 10 May 2022 on categories of vertical agreements and concerted practices, which since 1 June 2022 has replaced the earlier regime. That regulation is the reference point for how price restrictions between a supplier and its resellers are treated.

Within that framework, a restriction that fixes the buyer's minimum or fixed resale price is treated as a serious restriction of competition — the kind of clause that removes the benefit of the block exemption rather than fitting within it. Setting a maximum price or issuing a recommended price does not carry the same treatment, which is why the franchisor's permitted zone stops at recommendation and ceiling and does not reach a floor. The economic logic is straightforward: resale-price maintenance suppresses price competition between the outlets of the same brand, and the franchise, unlike an integrated chain of branches, is a network of independent traders who are supposed to compete, including on price.

French domestic competition law reinforces the point. Article L 420-1 of the Commercial Code prohibits agreements that restrict competition, and French courts have struck down clauses whose object is to guarantee the network head full control of supply "at the prices it determines" while preventing the franchisee from obtaining better terms, holding such arrangements disproportionate to any legitimate interest of the franchisor and an illegitimate interference with the franchisee's freedom to carry on its business under normal conditions. The same reasoning bites on a clause that would lock the franchisee's downstream price.

The competition-law exposure is real, but for most franchisors operating in France it is the second-order risk. The first-order risk is the labour-law reclassification that the imposition of prices helps trigger, and it is worth understanding why the two run on separate tracks.

When recommended prices become imposed resale prices

A recommended price becomes an imposed resale price in a French franchise not through the wording of the contract but through the conduct that surrounds it. Courts look at the real conditions in which the relationship operates, not at the label the parties chose. A price presented as merely advisory is treated as imposed once the franchisee is, in fact, unable to depart from it — because it is pressured to comply, monitored for compliance, or sanctioned for non-compliance.

The practical mechanisms are familiar. A point-of-sale or till system locked so that the franchisee cannot enter its own prices removes pricing autonomy as effectively as a contractual floor. Network-wide promotions that the franchisee is required to mirror, or that customers can obtain elsewhere in the network at a price the franchisee cannot match, achieve the same result by another route. Field managers who arrive unannounced, inspect the outlet as if they owned it, issue instructions, and do not hesitate to threaten sanctions turn a "recommendation" into a command. Each of these is a way of imposing prices without ever writing "minimum price" into the agreement.

Keeping recommended prices genuinely recommended is a matter of discipline in how the network is run. The following measures keep a price on the lawful side of the line.

The distinction matters because pricing is the fourth and most contested condition of branch-manager status. It is on "conditions and prices imposed" that networks fight hardest to avoid reclassification, and it is there that they most often lose.

Imposed resale prices and the requalification risk (branch-manager status)

Imposing resale prices in a French franchise is one of the cumulative conditions that can reclassify a franchisee as a branch manager (gérant de succursale) under Articles L 7321-1 and L 7321-2 of the Labour Code. This is the exposure that turns a pricing habit into a payroll liability. It operates independently of the competition-law analysis, and it does not require proof of an employment relationship.

Article L 7321-2 defines a branch manager as, in substance, a person whose profession consists essentially of selling goods of any kind that are supplied exclusively or almost exclusively by a single undertaking, where that person carries on the activity in premises supplied or approved by that undertaking and on the conditions and at the prices imposed by that undertaking. These conditions are cumulative. A person claiming the status must prove that all four are personally met; if a single one is missing, the reclassification is defeated.

The consequence is not a technicality. Branch-manager status is a matter of public policy, and it triggers the application of the Labour Code without any need to establish a bond of legal subordination. A person recognised as a branch manager can claim from the network head a notice-period indemnity, paid holiday, a dismissal indemnity, back-pay of remuneration, and damages for dismissal without real and serious cause where the head of network ended the relationship. The point has been described by the courts as an application of labour law rather than a reclassification of the contract into an employment contract — but the financial result is the same, and it is retrospective.

The label the parties used offers no shelter. The judge must give the disputed acts their exact qualification without stopping at the name the parties proposed (Article 12 of the Code of Civil Procedure), and it has long been held that calling an agreement a franchise does not defeat the application of employment legislation, which is of public policy. Nor does interposing a company: where the individual operator personally and effectively runs the activity, the existence of a company between the franchisor and the operator does not deprive that individual of the rights held under Article L 7321-2. What counts is the real, personal exploitation of the business, not the corporate form wrapped around it.

Imposing prices is, therefore, doubly costly. It is not only a competition-law restriction; it is the condition most likely to convert an independent franchisee into a branch manager entitled to the protections of the Labour Code. The safest posture is the one the case law rewards: recommended prices only, no locked till, no price-based sanction — everything that leaves the franchisee the master of its own commercial policy.

Supply prices versus resale prices in a French franchise

There is one price a franchisor may control, and it is not the resale price. A distribution franchisor supplies the contract goods to the franchisee under its general terms of sale, and it may reserve the power to fix, unilaterally, the price of those goods — the upstream supply price the franchisee pays. The two prices must not be confused: the franchisor may set what the franchisee pays for the goods; it may not set what the franchisee's customers pay for them.

The franchisor's power over the supply price is itself bounded. Since the case law settled in 1995 and its codification in Article 1164 of the Civil Code, a clause referring to the supplier's tariff in force at the date of the franchisee's supply orders does not affect the validity of the contract; abuse in the fixing of that price gives rise only to termination or to compensation, not to nullity. In practice, abuse in the setting of the supply price is rarely established, but the remedy exists where the franchisor uses its pricing power to strangle the franchisee — for instance, by depriving an approved distributor of the means to charge competitive prices, which the courts have treated as a failure to perform the contract in good faith.

This upstream power is precisely why the downstream freedom matters. A franchisor already influences the franchisee's economics through the supply price, the entry fee, and the ongoing royalties. If it could also fix the resale price, the franchisee would be reduced to a shopfront operating parameters set entirely by the head of the network — the very situation the prohibition on imposed resale prices, and the branch-manager case law, exist to prevent. The franchisor sets the wholesale figure; the franchisee sets the retail figure. That division is the practical expression of the franchisee's independence.

Network homogeneity and the limits on resale prices in a French franchise

Franchisors defend price control by invoking network homogeneity, and the interest is genuine — but it does not reach resale prices in a French franchise. A franchise belongs to a network, and that network calls for a degree of homogeneity: it is the uniformity and common identity of the network that characterise the franchise. Franchisees are, in principle, to be treated alike, and any difference in treatment must be justified by objective reasons. The franchisor is entitled to police outliers who damage the brand and to require standards that preserve the network's image.

The limit is that homogeneity is an interest, not an authority to negate the franchisee's independence. A franchisor may not, for any reason whatever, deprive an independent trader of the mastery of its own economic activity. The line the case law draws is instructive: yes to manuals, know-how bibles, specifications, and information letters that let the franchisee grasp and apply the concept; yes to advice aimed at optimal management; yes to recommended prices, and only recommended; yes to a national commercial policy that leaves room for local initiative; yes to the field manager who checks that the concept is being applied. No to daily directives that are commands to obey to the letter; no to imposed orders and imposed objectives; no to a locked till that prevents the franchisee from running its own pricing policy; no to the hierarchical pressure of managers who give orders and threaten sanctions. Homogeneity is served by the first list and destroyed by the second.

Supply discipline illustrates the same boundary. A franchisor may require exclusive or quasi-exclusive supply where that is indispensable to preserve the identity and reputation of the network, and it may control the assortment so that customers find a homogeneous branded offer across outlets. But French courts have annulled supply clauses whose real aim is to guarantee full supply at prices set by the franchisor and to prevent the franchisee from obtaining better terms, precisely because those aims are foreign to the protection of the franchisor's legitimate interests. Homogeneity justifies coherence of concept and offer; it does not justify capturing the franchisee's price.

Frequently asked questions about resale prices in a French franchise

Can a French franchisor impose prices on its franchisees?

No. A franchisor cannot impose minimum or fixed resale prices on its franchisees. The franchisee trades for its own account as an independent business and sets its own resale prices. The franchisor may communicate recommended prices and, in principle, set a maximum price, but it may not impose a floor or a fixed figure.

What is the difference between recommended prices and imposed prices in a franchise?

A recommended price is a genuine suggestion the franchisee is free to follow or ignore. It becomes an imposed price the moment the franchisee cannot, in practice, depart from it — because it is pressured, monitored, or sanctioned for non-compliance, or because the till software is locked. The label on the price does not matter; the conduct around it does.

Are recommended prices (prix conseillés) legal in a French franchise?

Yes. Recommended prices are lawful provided they remain genuinely advisory. The franchisor may publish them and give national commercial guidance, but it must leave the franchisee free to charge more or less and to run its own promotions. Recommended, and only recommended.

Why is resale price maintenance treated as a serious restriction?

Because it suppresses price competition between the independent outlets of the same brand. Under Article 101 of the Treaty on the Functioning of the EU and the block exemption in Regulation (EU) 2022/720, a minimum or fixed resale price is a serious restriction that falls outside the exemption, whereas a maximum or recommended price does not. Article L 420-1 of the Commercial Code prohibits such restrictions in domestic law.

Can imposing resale prices turn a franchisee into a branch manager?

Yes. "Conditions and prices imposed" is one of the four cumulative conditions of branch-manager status under Article L 7321-2 of the Labour Code. If the franchisee also sells goods supplied almost exclusively by one undertaking in premises the franchisor supplied or approved, imposing prices supplies the final condition, and the operator can claim the protections of the Labour Code.

Can the franchisor at least set the price of the goods it supplies?

Yes. The franchisor may reserve the power to fix, unilaterally, the supply price the franchisee pays for the contract goods, subject to abuse, which gives rise only to termination or compensation (Article 1164 of the Civil Code). That upstream power is distinct from the resale price, which the franchisee sets.

Does the franchisor's interest in a coherent network allow price control?

No. Network homogeneity is a legitimate interest and supports standards, assortment control, and a common identity, but it does not authorise the franchisor to negate the franchisee's independence or to fix its resale prices. Homogeneity justifies coherence of concept and offer, not capture of price.

What happens if a franchise contract contains an imposed-price clause?

A clause fixing minimum or fixed resale prices is exposed to nullity as an anticompetitive restriction and can serve as evidence of imposed prices for a branch-manager claim. Because the judge assesses the real conditions of the relationship, redrafting the clause as "recommended" while continuing to enforce it in fact offers no protection.

Key takeaways on resale prices in a French franchise

How our French lawyers can help with resale prices in a French franchise

Whether you are a foreign brand structuring a French network or a franchisee questioning how much control your franchisor exercises over your prices, the boundary between lawful recommendation and unlawful imposition is where the risk concentrates. Our French lawyers audit franchise agreements and, more importantly, the way they are operated in practice — the till systems, the field-visit routines, the promotional obligations, and the sanction mechanisms that turn suggested prices into imposed ones.

For franchisors, we design pricing communication that keeps recommended prices genuinely recommended, aligns supply-price clauses with Article 1164 of the Civil Code, and removes the features that feed a branch-manager claim under Articles L 7321-1 and following of the Labour Code. For franchisees, we assess whether the conditions of reclassification are met and quantify the sums recoverable where they are.

This article is for general information only. It does not constitute legal advice on resale prices, recommended prices, or requalification risk in French franchising. The lawfulness of a pricing arrangement depends on the specific terms of the agreement and, above all, on how the network is operated in practice. Contact our French lawyers for qualified advice before setting or challenging resale-price arrangements in a French franchise.