Franchising, Aramis Law Firm updates

France

Contributed by Aramis Law Firm
Post-term non-compete clauses in franchise agreements becoming more challenging to enforce
  • France
  • 10 November 2020

In practice, non-compete clauses are often enforced in France if they meet the general conditions required for the validity of non-compete clauses under French law. However, this traditionally favourable approach to post-term non-compete clauses in franchise agreements was overturned by the Macron Act 2015 in relation to retail businesses. A recent Paris Court of Appeal decision provides an interesting illustration of this new provision in the retail sector.

Franchisees cannot be classified as employees
  • France
  • 24 March 2020

Some jurisdictions have recently held that certain independent workers (eg, Uber drivers) are actually classified as employees. This raises the question of whether franchisees should also be classified as employees. However, as opposed to a Court of Cassation decision which classified an Uber driver as an employee, a recent decision from the Limoges Court of Appeal seems to clarify that a franchisee cannot be classified as an employee due to the specific features of any franchise contract.

Intercompany financing: alternative financing method for franchisees?
  • France
  • 21 January 2020

The overriding principle which governs credit transactions in France has been relaxed over time in order to allow for, among other things, intragroup financing. Among the more recent derogations to the rules are those of 2015 and 2019, which made it possible for micro and small and medium-sized enterprises to obtain financing from companies with which they have economic links. The relevant implementing decrees make it clear that 'economic links' includes franchise agreements.

Franchisor's change of control and its impact on renewing existing franchise contracts
  • France
  • 17 September 2019

The Paris Court of Appeal recently held that a franchisor had not breached its duty of loyalty towards its franchisee in reorganising its business following its change of control. In the context of an internal business reorganisation, franchisors should therefore be careful in statements that they may make to franchisees, including in the pre-contractual disclosure documentation.

Freedom of association and franchising: duty of loyalty in question
  • France
  • 30 April 2019

The concept of loyalty is frequently used as a general (and often fallback) principle by franchisees and franchisors in the litigation context. As a franchise agreement cannot identify every illegal behaviour of the parties, loyalty and good faith are often used as key principles to determine what is allowed. The Court of Cassation recently considered the loyalty principle in a case opposing a franchisor and a franchisee in the computing school sector.


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