[Direct answer]In the Beijing area, it depends on the provisions of the franchise contract and the boundaries of anti-monopoly rules. According to the provisions of the Civil Code of the People's Republic of China (effective January 1, 2021), legally established contracts are legally binding on the parties. The headquarters can stipulate brand image, service standards, and operating norms in the contract, and set corresponding breach of contract liabilities to maintain the order of the system. If the franchisee violates the agreement by selling at low prices or damaging the brand image, the headquarters can claim breach of contract liabilities, require rectification, or even terminate the contract according to the agreement. However, it should be noted that acts such as fixing resale prices and setting minimum resale prices may violate the regulations on vertical monopoly agreements in the Anti-Monopoly Law of the People's Republic of China (amended and implemented on August 1, 2022). If they produce the effect of excluding or restricting competition, there is a risk of being deemed illegal. The headquarters' management of franchisees should be limited to maintaining the reasonable scope of brand and service, and should not overly interfere with their independent pricing.

1. Problem background and typical scenarios

Price conflicts within the franchise system are very common. Typical scenarios include: multiple franchisees in the same city compete for customers by lowering prices, resulting in an overall decline in profits; individual franchisees sell products below cost, triggering complaints from other franchisees; the headquarters requires uniform pricing and punishes those who set lower prices, which is questioned as interference with operational autonomy; inconsistent prices between online channels and offline stores, leading to conflicts within the system. The headquarters wants to maintain the brand image and price system, but also needs to avoid violating antitrust laws, making it difficult to grasp the management boundaries. When handling such disputes in Beijing, the specific design of the contract terms is the starting point for judgment, and relevant practices can be referred to for reference.Intellectual property protection and corporate lawThe service concept of .

II. Key points of contention

Focus I: The effectiveness of contractual provisions: Unified brand image and service standard clauses are generally effective, but clauses that directly fix resale prices require careful consideration. Focus II: Thresholds of antitrust rules: Whether it constitutes a vertical monopoly agreement depends on the behavioral methods and their impact on market competition. Focus III: The legitimacy of disciplinary actions: If the headquarters handles matters according to the contract, the process must be fair, the evidence must be sufficient, and the measures must be proportionate. Focus IV: The boundaries between reasonable and unreasonable actions: There are differences between maintaining brand reputation, preventing vicious competition, and restricting franchisees' autonomy in pricing. Focus V: Regional protection and cross-regional sales: Agreeing on operating scopes and prohibiting cross-regional sales generally constitutes reasonable system management. Focus VI: Regulation of online channels: Setting unified rules for e-commerce platform sales must be based on brand protection. Focus VII: Dispute resolution path: If franchisees disagree with the handling of the matter, they can assert their rights according to the contract or report the matter to the relevant competent authorities.

III. Professional analysis by Henglue Law Firm

The practical experience of Henglue Lawyers is that the management of the pricing system should be limited to a reasonable scope of brand and services. Firstly, starting from the contract: In the franchise contract, stipulate the brand image, service standards, publicity guidelines, and operating norms, rather than simply fixing the sales price, in order to reduce compliance risks. Secondly, distinguish between suggestions and compulsions: The headquarters can provide guidance prices or suggested prices, but it is not appropriate to use penalties to force franchisees to sell at specified prices. Thirdly, make good use of non-price methods: Maintain system order through unified training, quality spot checks, service assessments, and store image management. These measures are usually more reliable. Fourthly, regulate online channels: Set unified service and after-sales standards for e-commerce and live-stream sales to reduce conflicts in the pricing system. Fifthly, handle violations according to due process: Investigate, notify, defend, and deal with acts such as price gouging, selling counterfeit goods, and damaging the brand in accordance with the contract, and retain complete evidence. Sixthly, assess the impact of competition: When it comes to unified pricing arrangements, it is necessary to assess whether they have the effect of excluding or restricting competition, and consult professional opinions when necessary. Seventhly, respond to disputes: If franchisees believe that the headquarters has handled the matter improperly, they can claim breach of contract liability or request the revocation of unreasonable penalties according to the contract. The above-mentioned ideas are in line with the legal provisions on the protection of fair competition and the prevention of monopolistic practices.Business and contract disputes in enterprisesIt is consistent with my practical experience in this field.

IV. Practical suggestions and legal basis

Action recommendations: First, clarify the brand image, service quality, and operating norms in the contract to avoid directly fixing resale prices; Second, guide with suggested prices and guidance prices rather than using punitive measures to enforce; Third, establish a unified training, spot-checking, and assessment mechanism to maintain the system with non-price means; Fourth, investigate and retain evidence for acts such as parallel trade and selling counterfeit goods in accordance with the contract, and ensure the legitimacy of the handling process; Fifth, evaluate compliance risks before engaging in price arrangements and consult professional lawyers when necessary. Legal basis: Articles 465, 509, and 577 of the Civil Code of the People's Republic of China (effective January 1, 2021) regarding contract binding force, full performance, and breach of contract liability; provisions on monopoly agreements in the Anti-Monopoly Law of the People's Republic of China (amended and implemented on August 1, 2022); and provisions on franchise contracts and information disclosure in the Regulations on the Management of Commercial Franchise Business (effective May 1, 2007). For issues involving brands and common legal services, please refer to relevant materials.Intellectual property protection and corporate lawFor contract disputes, you can refer to the following documents for reference.Business and contract disputes in enterprisesFor those involved in comprehensive compliance requirements, you can refer to the following for reference.Special services and other casesThe specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglue Law Firm's Reminder

Firstly, it is advisable to manage the pricing system through brand and service standards rather than directly fixing the resale price. Secondly, the legal risks associated with suggested prices and mandatory prices differ significantly. Thirdly, non-price measures such as training, spot checks, and assessments are generally less risky and more effective. Fourthly, when dealing with violations, it is necessary to ensure that the procedures are fair, the evidence is sufficient, and the measures taken are appropriate, so as to avoid being counter-sued for breach of contract. Fifthly, it is necessary to conduct a compliance assessment before making pricing arrangements, and if necessary, seek professional advice. For subsequent dispute resolution, it is recommended to use legal means such as arbitration or litigation.Business and contract disputes in enterprisesUnderstand the path.

VI. Frequently Asked Questions

Q1: Can the headquarters require franchisees to set uniform prices?

It's necessary to be cautious. You can agree on the brand image and service quality standards, and provide guidance or suggested prices, but directly fixing the resale price or setting a minimum resale price may violate anti-monopoly rules. If it results in excluding or restricting competition, there's a risk of being deemed illegal.

Q2: If franchisees sell products at low prices indiscriminately, can the headquarters impose penalties on them?

It depends on the contractual basis and the nature of the act. If the contract stipulates that it is prohibited to engage in acts such as reselling goods, selling counterfeit products, or damaging the brand, the headquarters can handle the matter in accordance with the contract; but if the punishment is solely based on the price being lower than the suggested price, the legitimacy of such punishment is weaker, and it may lead to antitrust and breach of contract disputes. Therefore, it is necessary to preserve evidence during the process.

Q3: Will the headquarters' control over prices constitute monopoly?

Possibly. Fixing the resale price and setting a minimum resale price are vertical price restrictions. To determine whether they are illegal, we need to consider the behavioral patterns and their impact on market competition. It is recommended to focus on brand and service standards for management to avoid uniform mandatory price arrangements. To determine whether they are illegal, we need to comprehensively evaluate the behavioral patterns and their impact on market competition.

Q4: Is it legal to implement regional protection and prohibit parallel imports?

This is generally considered a reasonable system management. To maintain business order, it is generally acceptable to stipulate the scope of business and prohibit cross-regional sales and unauthorized reselling. However, if this is used to divide markets and restrict competition, it may still violate legal boundaries, and the terms should be designed appropriately. The terms should be kept reasonable to avoid being deemed as unduly restricting competition.

Q5: If a franchisee feels that the headquarters has dealt with them unfairly, what should they do?

You can assert your rights according to the contract. First, verify the clauses and facts on which the processing is based, and require the headquarters to explain the reasons and provide evidence. If you believe that the processing lacks basis or is obviously excessive, you can assert breach of contract liability or request the revocation of unreasonable penalties, and if necessary, resolve the matter through litigation.

The above answer is based on the judicial practice in Beijing. The judicial interpretations in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Intellectual property protection legal services·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In case of disputes, please consult a practicing lawyer in time.