Goodwill

Goodwill can be defined as a set of tangible and intangible elements assigned to the operation of a commercial or industrial activity.If there is no legal definition of goodwill, Articles L.141-5 and L.142-2 of the Commercial Code list some of the elements that may constitute it.

Thus, Article L.141-5 of the Commercial Code relating to the seller’s privilege provides that “(the seller’s privilege) relates only to the elements of the land listed in the sale and in the registration, and in the absence of a precise designation, only to the sign and the trade name, the right to the lease, the clientele and the goodwill”.

Article L.142-2 of the Commercial Code relating to the pledge of goodwill provides that “only the following are likely to be included in the pledge subject to the provisions of this chapter as part of a goodwill: the sign and the trade name, the right to lease, the clientele and goodwill, the commercial furniture, the equipment or tools used for the exploitation of the goodwill, patents for invention, licences, trademarks, industrial designs, and generally the intellectual property rights attached thereto”.

The goodwill thus includes tangible elements such as furniture, equipment and tools used for the operation of the goodwill, as well as fixtures and installations, and intangible elements, namely: customers and goodwill, the right to lease, the sign and the trade name, trademarks, patents for inventions, licenses and administrative authorizations when they are transferable.

Among the elements making up the goodwill, the clientele is an essential element without which the fund does not exist. It can be defined as all people willing to maintain contractual relations with a merchant.
The question of who owns the customers within a distribution network has long been debated. Certain decisions of jurisprudence have indeed been able to consider that the franchisee did not own a business, and have consequently denied him the benefit of the status of commercial leases based on the absence of independent management and an own clientele independent of the appeal exerted by the brand of the franchisor. An important judgment of the Court of Cassation of 27 March 2002 enshrined the principle of a clientele specific to the franchisee, considering that “if a clientele is at the national level attached to the reputation of the franchisor’s brand, the local clientele exists only because of the means implemented by the franchisee, including the tangible elements of its business, equipment and stock, and the intangible element constituted by the lease, that this clientele is itself part of the franchisee’s business since, even if the latter is not the owner of the brand and the sign made available to it during the execution of the franchise agreement, it is created by its activity, with means that, contracting in a personal capacity with its suppliers or lenders of money, it implements at its own risk”.
Real estate is excluded from the goodwill, as are the claims and debts of the operator.