Resale Pricing as Part of Franchisor Know-How

Abstract

As franchisees are independent entrepreneurs, one important part of the business format that franchisors are not allowed to impose on their franchisees is resale prices. They are only allowed to indicate a recommended or a maximum price. This study looks further into the capabilities underlying the calculation of resale prices and suggests that price-setting is part of both: the “business know-how” transferred to franchisees and the “organizational know-how”, that is, capabilities developed and kept at the franchisor level.