Q: Is there a limit up to which a franchisor can set its prices for products that I'm obliged to buy? Our written agreement is silent on the issue but the most recent price list is wholly uncompetitive and sure to lead to ruin.
Aug 14 2007
Email a friend
Answered by: Élise Billy Ask a question
It depends on what is written in your contract and you should check carefully what is said about purchase of products, and whether there is any comfort given on the prices or any increases.
You should also check exactly which products you have to buy from the franchisor. If the contract does say that you have to buy from the franchisor and that it is at any price that the franchisor sets (which is not uncommon), then your legal options include trying action based on unfair contract terms or misrepresentation (or possibly even an argument based on competition law depending on the circumstances). The outcome of any such claims would be uncertain.
If you are close to expiry of contract, then you could choose not to renew, or you could try to sell your business if you want to exit. If your franchisor is a member of the British Franchise Association, you could try a complaint to the BFA.
The first action however is probably to discuss the situation with your franchisor, possibly together with the other franchisees, and attempt to resolve the situation directly, because it can not be in the franchisor’s interests for the franchisees to be unable to continue trading profitably.
Comments