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Dictating or Encouraging Franchisee Pricing

By Eugene F. Zelek, Jr.
February 28, 2014

A price charged by a franchisee that is too low can adversely affect other franchisees and the franchisor by discouraging the provision of pre- and post-sale services, eroding brand image and jeopardizing the ability to introduce new products by depressing price points. Although relatively rare, a franchisee also may cause marketplace problems by charging too high a price for an attractive, new product in great demand. In addition, wide variations in resale prices among franchisees may make it difficult to implement effective national or regional price advertising.

In the United States, there are two primary methods to address concerns over prices that are outside a desired range ' resale price setting and resale price encouragement.

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