Author of “Ask the Experts”, Canada Business Franchise Magazine, May 2008

While the franchise distribution system is growing exponentially in France, there is no legal definition of the franchise agreement in French law.

Only Community law, in the Guidelines of the Exemption Regulation No.330/2010 of 20 April 2010, defines this concept:

“Franchise agreements include licenses of intellectual property rights relating in particular to trademarks or distinctive signs and know-how for the use and distribution of goods or services. In addition to an intellectual property rights license, the Franchisor shall normally provide the Franchisee, during the period of application of the Agreement, with commercial or technical assistance. The license and this support are an integral part of the franchised business method. The franchisor generally receives a royalty from the franchisee for the use of this method for limited investments, a uniform network for the distribution of its products. In addition to the concession of the business method, franchise agreements generally contain a combination of vertical restrictions on the products distributed, in particular selective distribution and/or a non-compete obligation and/or exclusive distribution or softened forms of these restrictions. ”

In view of this definition, as well as the doctrinal and jurisprudential definitions that have been developed in French law, the franchise contract, which consists of the reiteration of the franchisor’s success by the franchisees, is characterized by the combination of three essential components:

• the provision of know-how: an indispensable element of the franchise agreement, know-how is defined in Community law as a “secret, substantial and identified set of non-patented practical information, resulting from the experience of the supplier and tested by the latter”. It is important for each franchisor to rigorously define in its franchise agreement each quality of its know-how;
• support : the franchisor’s assistance to franchisees in the network is characterized by both initial assistance (assistance with the launch of the point of sale, referencing of banking organizations, assistance with the communication of the launch of the point of sale, etc.) and permanent assistance (referencing of a software provider, commercial assistance, etc.). Each franchisor defines, according to its network, the elements of assistance it wishes to provide to its franchisees. The terms of the assistance provided are detailed in the franchise agreement;
• – SIGNS OF of customers: they constitute all the signs that allow customers to identify the franchisee as belonging to the network (Mark, trade name, brand, graphic charter, architectural concept, olfactory marketing, audiovisual marketing, etc.). Trademark law and copyrights allow the franchisor to ensure the protection of all these elements specific to its network.