What Franchise Owners Can Do When an AI Pricing Tool Recommends Unprofitable Prices

Check the recommendation against your own unit’s costs and sales, preserve the inputs and explanation, and ask the franchisor or vendor how the price was generated. Before changing or refusing a price or promotion, check whether your franchise documents make it mandatory and get advice from a franchise attorney if the answer is unclear. An unprofitable recommendation alone does not establish price fixing or give you a legal right to ignore it.

How to check a price recommendation

Treat the tool’s output as a proposal to evaluate, not proof that a price will make your location money. A menu price by itself does not show the contribution each sale makes or whether the unit is profitable overall.

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1. Save the recommendation. Record the item, suggested price, date, location or unit, displayed rationale, and relevant settings or inputs. Keep the related sales and cost records so you can explain how you reached your concern.
2. Recalculate using your unit’s figures. Check item-level costs and applicable fees, discounts, and taxes. Consider the actual sales mix as well as the price of an individual item. Separate the amount left after costs that vary with the sale from broader unit expenses; a price that covers some costs may still not make the business profitable overall.
3. Ask how the tool reached the result. Ask the franchisor or vendor what inputs, assumptions, and objectives drove the recommendation, whether it is advisory or changes prices automatically, and how inaccurate data or unsuitable outputs can be reported or corrected. Keep the response with your records.
4. Pause before acting if you have discretion. While checking the figures, consider holding or limiting a proposed change if the system permits it. Do not assume you can decline a price or promotion that franchise rules require.
5. Escalate a documented concern. Send the evidence through the franchisor’s or vendor’s appropriate channel. If the issue involves competitors’ nonpublic pricing information or shared recommendations, raise it with counsel or an appropriate internal channel rather than discussing pricing with other franchisees.

Can you ignore the recommended price?

That depends on what the tool does and what your franchise documents require. A recommendation that is genuinely optional is different from an automated price change or a price or promotion required by the franchise relationship. Check your franchise agreement, operations manual, promotional rules, and written pricing policies before refusing or changing it. The owner’s authority depends on the specific terms and applicable state law; general guidance cannot resolve an individual contract. Consult a franchise attorney about your rights and the consequences of noncompliance.

Does an unprofitable recommendation mean price fixing?

No. A price that appears to lose money at one unit does not by itself prove unlawful coordination. The FTC explains that below-cost pricing is not automatically illegal; the predatory-pricing theory is narrower and concerns pricing intended to exclude competitors when the seller can later recoup its losses. An independent decision to price below cost does not necessarily harm competition. See the FTC’s guidance on predatory or below-cost pricing.

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There is a separate antitrust question if a pricing system involves competitors sharing or following recommendations. The FTC and DOJ say competitors cannot use an algorithm to do what would be unlawful directly, and shared pricing recommendations may raise concerns even when users retain discretion. Whether that applies depends on the facts and law; an algorithm is not an exemption. The agencies’ March 2024 statement about algorithmic pricing discusses that principle. Do not coordinate prices with other franchisees; take concerns to counsel or an appropriate internal channel.

What the recent McDonald’s lawsuit does—and does not—show

On October 6, 2026, the Associated Press reported that a consumer had filed a federal lawsuit in Illinois alleging that McDonald’s AI-assisted pricing tool shares nonpublic information and contributes to price coordination. McDonald’s disputed the allegations and said franchisees set restaurant prices, while available tools are optional and do not automate, coordinate, or fix prices. Those are the complaint’s allegations and the company’s response, not a court finding. The report does not establish the case’s later status. Read the Associated Press report for the account and the parties’ positions.

Where to raise a franchise concern

If the franchisor does not address the issue, the FTC’s Franchise Guidance page links to materials about franchisee complaints and undisclosed fees. Those resources do not determine whether a particular franchisor can require a price or promotion, or settle a dispute about a specific tool.

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