Exclusive or near-exclusive

procurement

Exclusive sourcing is the contractual stipulation by which the franchisee has the obligation to source from the entity, the head of the network, or from suppliers referenced by the latter. This system often allows the franchisee to benefit from price advantages (through quantitative discounts for example) and resale assistance.

• The supply is considered quasi-exclusive as long as it exceeds 75% to 80% of the total purchases made by the franchisee.
• Exclusive sourcing has long posed two sets of challenges:

Pricing of exclusive supplies. After numerous fluctuations in case law, the Court of Cassation has held, since a series of judgments dated 1 December 1995, that, although the determination of the price was in principle freely defined between the parties, the franchisor had to respect a duty of contractual good faith. Failure by the franchisor to comply with this requirement of good faith, all sales contracts between the franchisor and the franchisee could be null and void (with the exception of the franchise contract).
Justification of exclusivity /quasi-exclusivity clauses. The franchisor must justify the absolute need to impose an exclusive supply on its franchisees, in particular by asserting the protection of the identity and homogeneity of the network.

 Otherwise, the validity of the exclusive supply clause is questionable under competition law (internal and Community). The drafting of this type of clause therefore requires the intervention of a qualified professional.