{"id":9095,"date":"2019-02-26T07:00:05","date_gmt":"2019-02-26T06:00:05","guid":{"rendered":"https:\/\/www.legalmondo.com\/?p=9095"},"modified":"2020-01-05T20:48:29","modified_gmt":"2020-01-05T19:48:29","slug":"franchise-systems-ad-campaigns-low-prices-can-come-costly","status":"publish","type":"post","link":"https:\/\/www.legalmondo.com\/ru\/2019\/02\/franchise-systems-ad-campaigns-low-prices-can-come-costly\/","title":{"rendered":"Franchise systems: ad campaigns with low prices can come costly!"},"content":{"rendered":"

Franchisors may run ad campaigns with low prices<\/strong>. Such campaigns, however, can<\/strong> come costly if they have an anticompetitive effect<\/strong>, especially if they factually force the franchisees to offer the products for the low prices.<\/p>\n

Best example: pricing campaigns for the \u201cburger of the week<\/em>\u201d, as decided by the Munich Regional Court<\/strong> in its decision of 26\u00a0October\u00a02018<\/strong> (Case No.\u00a037 O 10335\/15<\/a>).<\/p>\n

The situation<\/strong><\/h2>\n

The plaintiffs are franchisees of the defendant’s franchise network, a restaurant chain. In addition to the obligation to pay «royalties» in return for the use of the franchise systems and its trade marks (5%), the franchise agreements also obliged the franchisees to pay a sales-related advertising fee. The defendant and franchisor used the advertising fees of the franchisees, among others, to advertise products from the plaintiffs’ menu at low prices, e.g. under the slogan «King of the Month<\/em>«. By participating in the advertising campaigns and its low prices, the sales of the franchisees increased and thus the franchise fee they had to pay. After some time, the franchisees decided that this advertising campaign caused them financial damage \u2013 because the products offered for a low price affected the sale of products offered at a normal price (\u201ccannibalism effect<\/em>\u201d). They no longer participated in the campaign and demanded an appropriate reduction of their advertising fee. Among other things, they brought an action for an injunction against the use of the advertising fee for the campaign complained of and for a declaratory judgment of the liability to pay damages. The Regional Court granted both motions.<\/p>\n

The main reason<\/strong>. The advertising campaigns <\/strong>had the effect of restricting competition<\/strong>, namely the franchisees\u2019 ability to determine their sale prices (contrary to sec.\u00a01 and 2 (2) German Act against Restraints of Competition<\/a> and Art.\u00a02 (1), Art.\u00a04 a) Vertical Block Exemption Regulation<\/a>). After all, the franchisor set \u2013 so the court \u2013 the resale price through the de facto binding effect of the ad campaign.<\/p>\n

The decision <\/strong>stands in line with the previous case law<\/strong>, especially of the German Federal Court\u2019s decisions on low-price campaigns by franchisors of<\/p>\n