Franchise, where the limit of canvassing is located
The Court of Cassation delivered an interesting judgment on the scope of a territorial exclusivity clause stipulated in a franchise agreement, in the event of canvassing actions carried out by a franchisee on the exclusive territory of another franchisee in the same network.
The Court of Cassation delivered an interesting judgment on the scope of a territorial exclusivity clause stipulated in a franchise agreement, in the event of canvassing actions carried out by a franchisee on the exclusive territory of another franchisee in the same network.
In a franchise network of gyms, a franchisee who himself benefited from an exclusive territory, had set up communication actions through the affixing of advertising panels, and by distribution of flyers in the mailboxes of the inhabitants, on the exclusive territory of another franchisee.
The latter, considering himself to be competing unfairly, had obtained an interim order from the President of the Commercial Court on the basis of tort, condemning his opponent under penalty for “manifestly unlawful disorder”.
The Court of Appeal, however, overturned this order.
In order to justify their decision, the appeal judges noted that the prospectuses were limited to indicating the address of the point of sale and its prices, “without any element of comparison” with the proposals of the franchisee thus competing, that canvassing was not “for the specific use of customers” (acquired) of the neighbouring franchisee, and that no denigrating remarks had been made in the communication.
This case thus raised the question of a share of active sales in an exclusive territory and the characterization of acts of unfair competition.
The definition of passive sales and active sales was introduced almost 20 years ago, with the exemption regulation coming into force in 1999:
Passive sales are those that are not solicited, i.e. that are concluded spontaneously, following customer approaches. On the contrary, active sales are those that are triggered as a result of an action by the seller; they therefore positively assume that the distributor initiates an action, in particular advertising or communication, intended to reach the public and provoke
For the highest French court, this is indeed “targeted prospecting for customers located in the territory” exclusive to the neighbouring franchisee. And “it does not matter that it does not target its specific clientele” (but only its potential clientele).
With regard to unfairness, the Court of Cassation points out that the judges of Aix-en-Provence noted that the contract “defines the territory of the franchisee“ and also provides for “an internal ethics of the network that each franchisee undertakes to respect”, which implies that “each franchisee is required, vis-à-vis the other franchisees, to respect the marketing territory assigned to him”, which could not lead them to rule out the manifestly illegal disturbance of the practice of depositing advertising leaflets.
For the Court of Cassation, the Court of Appeal “which did not draw the legal consequences of its findings”, reversed the judgment in all its provisions and referred the parties to the Nîmes Court of Appeal.
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Gouache Avocats draws up your tailor-made franchise agreement, for a sustainable and secure development of your network.
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