Many franchisees will have similar pricing to other restaurant locations. Consistency is one of the things that draws people to franchise restaurants in the first place. They know what they’re going to get, and they know roughly how much it’s going to cost.
But for the franchise owner at a specific location, is there actually an obligation to go along with pricing used at other stores? Say that the franchisor runs a national sale or discount program. The ads are all over television and on the internet, so it’s what consumers are expecting. Does that mean that every location has to honor that pricing structure?
It depends on the franchise agreement
Unfortunately, there is no one-size-fits-all answer. It often depends on the specific franchise agreement and the rules put in place by the franchisor.
For example, some restaurant chains give individual franchisees a lot of leeway to charge as much as they want. They know that pricing can be flexible, depending on a variety of factors. One of these is the minimum wage in the state where that franchise is being run. Since states have much different wage rates, different restaurants may be able to pay more or less based on necessity.
But in other cases, a franchisor will mandate that all locations honor certain deals, discounts, rewards or loyalty programs. The owner of that specific location may not want to offer the deal, but they don’t have a choice as long as they want to continue operating that franchise.
As you can imagine, this often leads to disputes between the two parties. Franchisees need to know exactly what steps to take as they navigate the legal process. Our law firm offers free initial consultations, so call today.
