Doubin Law
The term “Doubin Law” refers to the law of 31 December 1989 and its implementing decree of 4 April 1991, codified in Articles L 330-1 and R 330-1 et seq. of the Commercial Code.
Article L330-1 of the Commercial Code provides:
“Any person who makes available to another person a trade name, a brand or a sign, requiring from it a commitment of exclusivity or quasi-exclusivity for the exercise of its activity, is required prior to the signing of any contract concluded in the common interest of both parties to provide the other party with a document giving sincere information, which allows it to make an informed commitment.
This document, the content of which is set by decree, specifies in particular the seniority and experience of the company, the state and development prospects of the market concerned, the importance of the network of operators, the duration, the conditions for renewal, termination and assignment of the contract as well as the scope of exclusives.
When the payment of a sum is required prior to the signing of the contract mentioned above, in particular to obtain the reservation of an area, the services provided in return for this sum are specified in writing, as well as the reciprocal obligations of the parties in case of default.
The document provided for in the first paragraph as well as the draft contract shall be communicated at least twenty days before the signing of the contract or, where applicable, before the payment of the sum mentioned in the preceding paragraph “.
Article R. 330-1 provides:
The document provided for in the first paragraph of Article L. 330-3 contains the following information:
1. The address of the registered office of the company and the nature of its activities with the indication of its legal form and the identity of the head of the company if it is a natural person or the managers if it is a legal person; if applicable, the amount of capital;
2° The particulars referred to in 1° and 2° of Article R. 123-237 or the number of registration in the trade register as well as the date and number of registration or filing of the Trademark and, in the case where the Trademark which is to be the subject of the contract has been acquired following an assignment or a licence, the date and number of the corresponding registration in the national register of Trademarks with, for licence contracts, the indication of the duration for which the licence has been granted;
3. The company’s bank account (s). This information may be limited to the five main bank domiciliations;
4° The date of the creation of the company with a reminder of the main stages of its evolution, including that of the network of operators, if applicable, as well as any indications allowing to appreciate the professional experience acquired by the operator or by the managers.
The information mentioned in the previous paragraph may relate only to the last five years preceding that of the delivery of the document. They must be supplemented by a presentation of the general and local state of the market for the products or services to be the subject of the contract and the prospects for the development of this market.
Attached to this part of the document are the annual accounts for the last two financial years or, for companies whose financial securities are admitted to trading on a regulated market, the reports drawn up for the last two financial years pursuant to III of Article L. 451-1-2 of the Monetary and Financial Code;
5° A presentation of the network of operators that includes:
a) The list of the companies that are part of it with the indication for each of them of the agreed mode of operation;
b) The address of the companies established in France with which the person proposing the contract is bound by contracts of the same nature as the one whose conclusion is envisaged; the date of conclusion or renewal of these contracts is specified;
When the network has more than fifty operators, the information mentioned in the previous paragraph is only required for the fifty companies closest to the place of the proposed operation;
c) The number of companies that, being linked to the network by contracts of the same nature as the one whose conclusion is envisaged, have ceased to be part of the network during the year preceding that of the issuance of the document. The document specifies whether the contract has expired or whether it has been terminated or cancelled;
d) If applicable, the presence, in the area of activity of the location provided for in the proposed contract, of any establishment in which the products or services covered by the contract are offered, with the express agreement of the person proposing the contract;
6. Indication of the duration of the proposed contract, the conditions of renewal, termination and assignment, as well as the scope of exclusives.
The document also specifies the nature and amount of expenses and investments specific to the brand or the Brand that the recipient of the draft contract undertakes before starting operation “.
It should be noted that the franchise agreement is not the only one covered by the obligation to issue a pre-contractual information document to its Franchisee candidate. The concession contract is also covered by this pre-contractual information obligation.
