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Thread: Recommended Retail Pricing and The CPA

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    Recommended Retail Pricing and The CPA

    I understand that a franchise can force their franchisees (eg Wimpy/Spur etc)through a contractual obligation NOT to sell their meals for less than a specific/recommended retail price.

    How does CPA view this?

    Then if this is fine, if a distributor of a certain brand has dealers, in terms of the CPA (or any other law/act) can they "force" (through contractual obligation) a retail price to consumers through their dealer network.

    In this particular example the dealer network is not a franchised dealer network, nor do they trade under the distributors/manufacturer's name! Perhaps the product is just one of many that the dealer sells!

    The reason i ask, is that i sell a "widget" which i get from a manufacturer. The widget is sold by a few other dealers in my area. I can afford to sell this widget slightly cheaper that these other dealers, but have been told to stop! I have to sell it at the recommended retail.

    I have looked at ways to make it cheaper through other means(ie hide it, vouchers etc)...no go!

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    Nigel, from what I understand the current legislation does not allow even a franchisor to enforce a franchisee to sell products at a certain price. Of course franchisees are "encouraged" to do that and I cannot imagine that they will ever have a reason not to comply. I investigated the whole franchise set-up quite a lot early last year.

    You are by law entitled to sell the product at the price you want. The only problem would be if the supplier then find reasons not to supply you anymore. They are definitely contravening the CPA by telling you to stop. We sell wholesale and have a suggested selling price. Some fo my shops sell the products cheaper than the RSP and some more expensive. As far as I am concerned once they have paid me, it becomes their property to do with as they will.
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    Diamond Member adrianh's Avatar
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    Difficult one. I agree with the distributor, you are creating a problem for everybody in the market. Because you feel you want to make a 2% profit you force companies that are currently making a 20% to do the same. I think that your supplier will simply not have stock for you any longer!
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    Diamond Member Blurock's Avatar
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    Difficult one indeed. One retailer/franchisee may sell a product at cost; a loss leader to attract customers buying other, more profitable items, while the other desperately needs the mark-up to survive.

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    Silver Member Petrichor's Avatar
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    If you do sell at the prescribed retail price, does this "cost" you elsewhere? Specifically referring to lost opportunities in other revenue streams? This could be a way to weigh up the options you may have here.

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    Quote Originally Posted by Petrichor View Post
    If you do sell at the prescribed retail price, does this "cost" you elsewhere? Specifically referring to lost opportunities in other revenue streams? This could be a way to weigh up the options you may have here.
    Actually, we buy in "bulk" and therefore get preferential pricing, so we make more than the average dealer..hence can afford to offer it slightly cheaper

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