Can you legally control store design, prices and promotions in Czech franchise?

|Attorney|Czech Bar Association Reg. No. 14692

Published:3/7/2026Updated:6/30/2026

As a franchisor in the Czech Republic, you need clear answers about what you can and cannot require from your franchisees. While EU competition law and Czech regulations give you significant control over store design and brand standards, price-fixing remains strictly prohibited. Understanding these boundaries is essential, as many franchisors unknowingly violate competition law, exposing themselves to substantial fines and damage claims.

Key takeaways

Price Control is Radioactive: You cannot fix prices or minimum margins. Recommended prices are legal only if they are genuinely non-binding. Violations attract fines up to 10% of turnover.

Design Control is Strong: You can and should enforce strict visual standards. Use the Operations Manual and reference it in the main contract to ensure enforceability.

VBER 2022 Compliance: Ensure your agreements comply with the current EU Vertical Block Exemption Regulation (2022/720), especially regarding online sales and non-compete durations (max 5 years for exclusivity).

"Weaker Party" Protection: Czech courts increasingly protect franchisees as the weaker party. Avoid grossly disproportionate penalties to prevent them from being voided.

Audit Your Paperwork: Having a "standard" US or UK agreement is dangerous. It must be adapted to the Czech Civil Code and Act on Protection of Competition to be valid.

ARROWS law firm

245 007 740 consultation@arws.cz

Conclusion

The Czech Republic offers a flexible environment for franchising due to the absence of a rigid Franchise Act, but the Civil Code and Competition Law impose strict boundaries. Your ability to control brand standards is broad, but your ability to control the commercial behavior of franchisees is limited by EU-harmonized regulations.

ARROWS Law Firm specializes in structuring franchise systems that are commercially robust and legally compliant in the Czech environment.

If you are establishing or expanding a franchise system in the Czech Republic, contact consultation@arws.cz to discuss your situation with experienced franchise lawyers.

FAQ – Frequently asked legal questions about franchise system control in Czech Republic

1. Can I require franchisees to use only my approved suppliers?

Yes, but with limits. Under the VBER (Regulation 2022/720), you can require a franchisee to purchase more than 80% of their goods from you or designated suppliers (single branding), but this obligation generally cannot exceed 5 years. If the franchisee operates from premises owned or leased by you, the obligation can match the duration of the occupancy.

2. What happens if I discover a franchisee is charging prices below my recommended levels?

You cannot penalize them for the price itself. However, you should check if they are complying with quality and service standards. If the low price is a result of cutting corners on mandatory standards, you can enforce those standards.

3. Can I prevent franchisees from advertising online or using social media?

No, you cannot impose a blanket ban on the use of the internet. You can, however, impose quality standards on their online presence and, under current rules, restrict sales via third-party marketplaces (marketplaces ban) if justified by the nature of the product.

4. Is a contractual penalty ("smluvní pokuta") enforceable?

Yes, providing it is agreed in writing and the amount is proportionate. If the penalty is manifestly excessive, a Czech court has the power to moderate (reduce) it to a reasonable amount under Section 2051 of the Civil Code.

5. How does the "Weaker Party" status affect me?

Under Section 433 of the Civil Code, if you abuse your stronger position to create a gross imbalance in rights and obligations, those clauses may be void. We recommend avoiding "suicide clauses" that give the franchisee no rights and the franchisor all rights, as these are vulnerable in court.

ARROWS law firm

245 007 740 consultation@arws.cz

About the author

Mgr. Vojtěch Sucharda

Associate, partner

LinkedIn|Czech Bar Association Reg. No. 14692

Managing Partner ARROWS International | Head of Legal Practice Group ETL Global

sucharda@arws.cz 245 007 740

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Disclaimer:

The information contained in this article is for general informational purposes only and serves as a basic guide to the issue as of 2026. Although we strive for maximum accuracy, laws and their interpretation evolve over time. We are ARROWS Law Firm, a member of the Czech Bar Association (our supervisory authority), and for the maximum security of our clients, we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of the regulations and their application to your specific situation, it is necessary to contact ARROWS Law Firm directly (consultation@arws.cz). We are not liable for any damages arising from the independent use of the information in this article without prior individual legal consultation.