The French franchise market constitutes a robust and dynamic sector of the national economy. As of 2025, approximately 2,035 franchise networks were operating throughout France, generating aggregate turnover of EUR93.71 billion and accounting for 1,018,038 direct and indirect employment positions. The French franchise market is widely regarded as one of the most mature and well developed in Europe.

A significant number of French brands have established prominent franchise networks across a diverse range of sectors, notably including:

• Paul, a bakery chain that has achieved substantial international expansion;
• La Mie Câline, a bakery franchise with an extensive presence throughout France;
• Yves Rocher, a cosmetics and beauty products brand that has developed a portion of its distribution network through franchise arrangements;
• Century 21, a real estate agency franchise currently operating across 82 jurisdictions worldwide;
• Fitness Parc, a fitness franchise operating approximately 400 facilities throughout France;
• On Air, a fitness franchise operating approximately 200 facilities throughout France and expanding its network internationally; and
• Accor, a global leader in the hospitality sector, which has developed an extensive international franchise network encompassing a wide portfolio of hotel brands.

France also represents an attractive market for international franchise systems seeking to establish operations within its territory, as evidenced by the following examples:

• Burger King, which has established itself as a leading operator in the French fast-food sector;
• Starbucks, which has developed its French operations through a master franchise arrangement;
• McDonald’s, which operates approximately 1,600 restaurants in France through its franchise model, rendering France its second-largest market globally after the United States;
• The Body Shop, a British brand that has successfully established a commercial presence in France; and
• Engel & Völkers, a prominent international franchise in the real estate sector, which has developed a significant presence in the French market.

Under French law, there is no single, dedicated statute governing franchising as such. Rather, the franchise relationship is regulated by a combination of legislative and regulatory instruments drawn from several distinct bodies of law.

The General Law of Contract, as Set Forth in the Civil Code (Articles 1101 Et Seq, As Reformed by the Ordinance of 10 February 2016)

This constitutes the primary legal framework applicable to franchise arrangements. In particular, the principles of good faith in contractual dealings (Article 1104) and the general pre-contractual duty of disclosure (Article 1112-1) are of direct relevance. In the absence of franchise-specific provisions, the terms of the franchise agreement itself govern the majority of the rights and obligations arising between the parties.

Mandatory Pre-Contractual Disclosure Requirements Pursuant to the Doubin Act (Law No 89-1008 of 31 December 1989)

These requirements are codified at Article L. 330-1 of the Commercial Code, which imposes an obligation to provide pre-contractual information upon any person making available a trade mark, trade name or sign subject to an exclusivity or quasi-exclusivity arrangement.

The detailed content of the pre-contractual information document is prescribed by Implementing Decree No 91-337 of 4 April 1991, codified at Article R. 330-1 of the Commercial Code.

Additional Legislative Provisions Applicable to Franchising

Further provisions of the Commercial Code address related matters, including exclusive supply arrangements (Article L. 330-4), post-contractual restrictions applicable to retail distribution networks introduced by the Macron Act of 2015 (Articles L. 341-1 and L. 341-2).

The legal framework governing franchise arrangements is further shaped by the application of the following bodies of law:

• competition law, including the prohibitions on anti-competitive agreements and abuse of dominant position or economic dependence set forth in Articles L. 420-1 and L. 420-2 of the Commercial Code, as well as EU Regulation 2022/720 on vertical agreements (the VBER);
• intellectual property law, as codified in the Intellectual Property Code; and
• the law on restrictive trade practices, in particular the provisions of Article L. 442-1 of the Commercial Code, which prohibit the creation of a significant imbalance in the rights and obligations of the parties and the abrupt termination of established commercial relationships, both of which are of particular relevance to franchise arrangements.

Applicable Non-Binding Provisions

The European Code of Ethics for Franchising sets out the fundamental principles governing franchise relationships and establishes standards of good practice applicable to franchisors and franchisees alike.

In France, there is no statutory definition of a franchise. However, the concept has been defined through both European and French case law.

Under European case law, a franchise arrangement is one whereby an undertaking that has established itself in a given market as a distributor and has thereby developed a body of commercial methods grants, in return for remuneration, independent traders the right to establish themselves in other markets using its business name and the commercial methods that have proved successful.

French case law has further refined this definition by identifying three essential criteria for the characterisation of a franchise agreement:

• the existence of know-how that is identified, secret and substantial, capable of being transmitted and enabling the franchisee to replicate the franchisor’s success by conferring a substantial competitive advantage;
• the provision of assistance by the franchisor both at the launch of the franchisee’s business and throughout the performance of the agreement; and
• a business name or sign capable of attracting a pre-existing customer base, together with the grant of a trade mark licence.

In consideration thereof, the franchisee undertakes to comply with the standards imposed by the franchisor and is required to pay royalties. These three constituent elements have also been incorporated into the European Code of Ethics for Franchising.

Pre-Contractual Disclosure Obligation Under the Commercial Code

To safeguard the franchisee’s informed consent, Article L. 330-3 of the Commercial Code – derived from the Doubin Act (Law No 89-1008 of 31 December 1989) – imposes upon the franchisor an obligation to furnish pre-contractual information to the prospective franchisee. The prescribed content of such information is exhaustively set out in Article R. 330-1 of the Commercial Code.

The pre-contractual information document must contain the following particulars.

• The address of the registered office, the nature of the business activities carried on, the legal form of the entity, the identity of the owner or of the corporate officers and the amount of the share capital.
• The company’s registration number and the trade and companies register (registre du commerce et des sociétés) with which it is registered, together with the date and number of the trade mark registration or filing. Where the trade mark has been the subject of an assignment or licence, the date and number of the corresponding entry in the National Trade Mark Register and the duration of the licence are required.
• The company’s bank account details, which may be limited to the five principal bank accounts.
• The date of incorporation of the company, together with a summary of the principal milestones in its development – including, where applicable, those of the network – as well as all information enabling an assessment of the professional experience acquired by the operator or by its officers.
• A general and local overview of the market for the products or services that are the subject of the agreement, together with the development prospects of that market.

It should be noted that such general and local market overviews do not constitute market studies within the meaning of the term; the obligation to carry out a comprehensive market study rests with the prospective franchisee. Particular attention should be paid to this distinction, as the franchisor’s obligation is limited to providing a general and local presentation of the market, whereas the responsibility for conducting a thorough market study, including an assessment of the viability of the proposed location, lies exclusively with the candidate franchisee. Further requirements follow:

• a presentation of the network of operators, including the businesses forming part thereof and their methods of operation, the addresses of the establishments located in France with which the party proposing the agreement is bound by agreements of the same nature as the one contemplated and the date of execution or renewal of such agreements (where the network comprises more than 50 operators, the information referred to in the preceding paragraph need only be provided in respect of the 50 establishments nearest to the location of the proposed operation);
• the number of undertakings bound to the network by a franchise agreement;
• the number of undertakings that have ceased to form part of the network during the year preceding the year in which the document was issued, specifying whether the agreement expired, was terminated by notice or was rescinded;
• where applicable, evidence of the existence, within the area of activity of the location specified in the proposed agreement, of any establishment in which the products or services covered by the agreement are offered with the express consent of the party proposing the agreement;
• a statement setting out the duration of the proposed agreement, the conditions of renewal, termination and assignment, and the scope of any exclusivity;
• a draft of the franchise agreement; and
• the nature and amount of the expenditure and investments specific to the brand or trade mark that the recipient of the draft agreement is required to incur prior to the commencement of operations.

The document containing the foregoing information, together with the draft agreement, must be provided to the prospective franchisee no later than 20 days prior to the execution of the agreement or the payment of any sum whatsoever.

Pre-Contractual Disclosure Obligation Under the Civil Code

In addition to the foregoing, the franchisor is subject to a general duty of transparency pursuant to Article 1112-1 of the Civil Code. This provision establishes a general pre-contractual obligation to disclose any information the significance of which is determinative of the other party’s consent.

This obligation applies in parallel with, and in addition to, the specific disclosure requirements imposed by the Doubin Act. Accordingly, the franchisor is required to inform the prospective franchisee of any information that would be determinative of the latter’s consent, beyond the items expressly prescribed by Articles L. 330-3 and R. 330-1 of the Commercial Code. It is recommended that such additional information also be included within the pre-contractual information document.

Specific Provisions Relating to Financial Forecasts

It should further be noted that the provision of financial forecasts to the prospective franchisee is not a legal requirement under French law. However, where the franchisor elects to communicate such forecasts, it may incur liability if they prove to be excessively optimistic or unrealistic. In such circumstances, the franchisee may seek the annulment of the franchise agreement on the grounds of fraud or material mistake vitiating consent, and may additionally claim damages in respect of the loss suffered.

In the event of a breach of the franchisor’s pre-contractual disclosure obligations, the franchisee may institute proceedings seeking the annulment of the franchise agreement. Such annulment operates retroactively, entailing the mutual restitution of all sums paid under the agreement, including, inter alia, the initial franchise fee and all royalties remitted during the term of the contract.

To succeed in such proceedings, the franchisee must establish that its consent to the franchise agreement was vitiated by a defect within the meaning of Article 1130 of the Civil Code, thereby depriving the agreement of one of its essential conditions of validity. Among the three categories of defects in consent recognised under French law, the franchisee will most commonly invoke the ground of fraud pursuant to Article 1137 of the Civil Code.

The characterisation of fraud requires the demonstration of both a material element – namely, deliberate manoeuvres, misrepresentations or concealment of information, including the provision of an incomplete or misleading pre-contractual information document, and an intentional element, being the franchisor’s intention to deceive the franchisee in order to induce its consent.

In either case, in addition to the annulment of the agreement, the franchisee may claim damages in respect of the loss suffered as a consequence of the franchisor’s breach.

Furthermore, pursuant to Article 1112-1 of the Civil Code, the franchisee may seek compensation for the loss of opportunity to have contracted on more favourable terms or to have refrained from contracting altogether.

In addition to the civil remedies set out in the foregoing, a breach of the pre-contractual disclosure obligation constitutes a criminal offence punishable by a fine of EUR1,500, in accordance with the applicable provisions of the Commercial Code.

French law does not provide for any exemption from the obligation to deliver the pre-contractual information document. The experience or sophistication of the prospective franchisee is wholly irrelevant in this regard; the franchisor is required to furnish the document in all cases, irrespective of the franchisee’s prior knowledge of the sector or of franchise operations generally.

Neither Article L. 330-3 nor Article R. 330-1 of the Commercial Code prescribes any requirement as to the applicable language of the pre-contractual information document.

Notwithstanding the foregoing, Article L. 330-3 of the Commercial Code provides that the document must be such as to enable the prospective franchisee to commit to the agreement in full knowledge. In this regard, the General Directorate for Competition, Consumer Affairs and Fraud Control (Direction générale de la concurrence, de la consommation et de la répression des fraudes – DGCCRF) indicated that a contractual provision stipulating that only the English-language version of the document shall be authoritative may be characterised as creating a significant imbalance within the meaning of the applicable provisions of the Commercial Code.

Accordingly, it is strongly recommended that the franchisor furnish both the pre-contractual information document and the draft franchise agreement in a language that the prospective franchisee is able to understand and, principally, in French, so as to ensure compliance with the aforementioned disclosure requirements and to mitigate the risk of a subsequent challenge to the validity of the franchisee’s consent.

Under French law, there is no registration requirement applicable to franchising. Neither the franchisor nor the franchise agreement is subject to any obligation of registration prior to or in connection with the development of a franchise network within French territory.

Notwithstanding the foregoing, it should be noted that the trade mark licence component of a franchise agreement, whilst not subject to any registration requirement as a condition of validity between the parties, must be recorded with the French National Institute of Industrial Property (Institut national de la propriété industrielle – INPI) in order to be enforceable against third parties, in accordance with Article L. 714-7 of the Intellectual Property Code. This flexibility encourages the establishment of new franchise networks.

There are no registration formalities for a franchise agreement in France.

As no specific registration requirement exists in respect of franchise agreements under French law, the question of consequences arising from a failure to register does not arise.

French law does not impose any requirement upon the franchisor to demonstrate past profitability across a minimum number of outlets prior to developing a franchise network. However, the franchisor is required to evidence know-how that is both proven and substantial, and must be in a position to demonstrate the commercial success of its concept.

In practice, this entails the prior operation by the franchisor of one or more pilot establishments over a period of sufficient duration to establish the viability of the concept.

There is no legally prescribed duration for the operation of such pilot establishments, nor is there a mandatory minimum number of pilot locations; these matters are assessed on a case-by-case basis by the courts, having regard to the nature of the business and the circumstances of each case.

French law does not prescribe any minimum or maximum duration for franchise agreements. The determination of the term of the agreement is a matter falling within the contractual freedom of the parties, who may elect to conclude either a fixed-term or an indefinite-term agreement, subject to compliance with the prohibition on perpetual commitments set forth in Article 1210 of the Civil Code.

It should be noted, however, that the European Code of Ethics for Franchising recommends, at Article 5.5, that the duration of the franchise agreement be set so as to enable the franchisee to amortise the investments specific to the franchise.

Notwithstanding the foregoing, where the franchise agreement contains an exclusivity clause, the duration thereof shall be subject to the limitations imposed by applicable competition law (see 6.2 Exclusive Territories and Competing Businesses).

The franchisee has no vested right to the renewal of the franchise agreement (Article 1212 of the French Civil Code). The parties may contractually provide for the tacit renewal of the franchise agreement or for a renegotiation of its terms upon expiry; however, no such provision is required as a matter of law. Neither the franchisee nor the franchisor is under any statutory obligation to renew the agreement upon the expiration of its term.

Compensation Upon Non-Renewal

In the event that the franchise agreement is not renewed upon expiry, no compensation is payable to the franchisee as of right, unless the agreement expressly provides otherwise.

Goodwill Compensation Under Commercial Agency Laws

Under French law, pursuant to Article L. 134-12 of the Commercial Code, a commercial agent is entitled, upon termination of the agency contract, to an indemnity in compensation for the loss of the clientele that the agent has brought in or developed on behalf of the principal.

For a contractual arrangement to be characterised as a commercial agency agreement, the agent must, in particular, have the power to negotiate and, where applicable, to conclude contracts for the sale of goods or the provision of services in the name and on behalf of the principal.

The risk of a franchise agreement being reclassified as a commercial agency contract is extremely limited under French law, given that the franchisee operates as an independent undertaking that purchases goods and subsequently resells them or sells services in its own name and on its own account.

Under French law, the parties enjoy full contractual freedom to determine the notice period applicable to the termination of the franchise agreement. Notwithstanding the foregoing, Article L. 442-1 II of the Commercial Code prohibits the abrupt termination of established commercial relationships. A party that terminates such a relationship without prior written notice, or with a notice period that is manifestly insufficient having regard to the duration and nature of the commercial relationship, shall be liable in damages to the aggrieved party. This provision applies irrespective of whether the agreement is concluded for a fixed or indefinite term.

The adequacy of the notice period is assessed by the courts on a case-by-case basis, having regard to the totality of the circumstances, including, inter alia:

• the duration of the commercial relationship;
• the degree of economic dependence of the party to whom notice is given;
• the volume of business generated thereunder;
• the existence of exclusivity obligations; and
• the investments specifically undertaken in connection with the franchise.

It should be noted, however, that Article L. 442-1 II of the Commercial Code provides that a notice period of 18 months constitutes a maximum, the observance of which precludes the terminating party from incurring any liability on this ground. Nevertheless, in respect of fixed-term franchise agreements, early termination by the franchisor in the absence of a demonstrated contractual breach by the franchisee may give rise to an obligation to pay damages for anticipatory termination, in accordance with Article 1212 of the Civil Code.

Exclusivity Clauses

The franchisor is under no obligation to grant territorial or contractual exclusivity to its franchisees. The grant of exclusivity, where applicable, is a matter falling within the contractual freedom of the parties.

Where the franchise agreement contains an exclusivity clause, the duration thereof is subject to the following limitations:

• under French law, pursuant to Article L. 330-1 of the Commercial Code, any exclusive or quasi-exclusive supply commitment must be limited to a maximum duration of ten years; and
• under European law, pursuant to EU Regulation 2022/720 on vertical agreements (VBER), the duration of such exclusivity obligations may not exceed five years.

An exclusive sourcing clause requiring the franchisee to procure goods or services exclusively from the franchisor or from suppliers approved by the latter is valid under French and European law, provided that it is necessary for the replication of the franchise system and the preservation of the network’s identity, and that the franchise confers a genuine competitive advantage upon the franchisee.

Non-Competition Clauses

During the term of the franchise agreement, a non-competition obligation imposed upon the franchisee is characterised as an exclusivity obligation within the meaning of EU Regulation 2022/720 on vertical agreements (VBER) and is accordingly subject to the limitations applicable thereto.

Post-contractual non-competition clauses are strictly regulated by Article L. 341-2 of the Commercial Code. To be valid and enforceable, such a clause must satisfy the following cumulative conditions:

• it must relate exclusively to goods and services that are in competition with those that are the subject of the franchise agreement;
• it must be limited in its geographical scope to the premises and land from which the franchisee has conducted its business during the term of the agreement;
• it must be indispensable for the protection of know-how that is substantial, specific and confidential; and
• its duration must not exceed one year from the expiry or termination of the franchise agreement.

Resale Price Maintenance

Any clause restricting, whether directly or indirectly, the franchisee’s ability to freely determine its resale price constitutes a restriction. Only maximum resale prices and recommended resale prices are permissible, provided that they do not amount, in practice, to fixed or minimum resale prices (Article 4(a) of EU Regulation 2022/720 VBER).

Online Sales

Any clause preventing the effective use of the internet by the franchisee for the purpose of selling the contract goods or services, or prohibiting the use of an entire online advertising channel, constitutes a restriction. However, a prohibition imposed by the franchisor on the use of third-party online marketplaces by the franchisee remains permissible, provided that the franchisee retains the freedom to operate its own online sales channel (Article 4(e) of EU Regulation 2022/720 VBER).

Exclusive Territories

The franchisor may grant exclusive territories to its franchisees, it being noted that territorial exclusivity is not inherent to the franchise relationship under French law.

Competing Business

During the term of the franchise agreement, a non-competition obligation imposed upon the franchisee is in principle lawful, as it is inherent to the protection of the franchisor’s know-how.

Upon expiry or termination of the franchise agreement, post-contractual non-competition clauses falling within the scope of Article L. 341-2 I of the Commercial Code are deemed unwritten unless they satisfy the following cumulative conditions:

• the clause relates exclusively to goods and services in competition with those that are the subject of the franchise agreement;
• it is limited in its geographical scope to the premises and land from which the franchisee conducted its business during the term of the agreement;
• it is indispensable for the protection of know-how that is substantial, specific and secret; and
• its duration does not exceed one year from the date of expiry or termination of the agreement.

An exclusive sourcing clause requiring the franchisee to procure goods or services exclusively from the franchisor or from suppliers approved by the latter is valid under French and European law (VBER), provided that it is necessary for the replication of the franchise system and the preservation of the network’s identity, and that the franchise confers a genuine competitive advantage upon the franchisee.

Without prejudice to the foregoing, any exclusivity obligation not falling within the cases referred to previously shall be limited to a maximum duration of ten years pursuant to Article L. 330-1 of the Commercial Code and, in accordance with EU Regulation 2022/720 on vertical agreements, to a maximum duration of five years.

Under both EU and French competition law, a franchisor is prohibited from imposing an outright ban on passive sales by members of its network. Accordingly, a franchisor may not prohibit its franchisees from utilising the internet as a channel for the resale of the contract goods and services (see 6.1 Treatment of Competition Restrictions in Franchise Agreements). The franchisor may, however, impose certain restrictions on online sales by its franchisees, provided that such restrictions do not amount to a prohibition on the use of the internet as a sales channel.

As a member state of the European Union, France is directly subject to EU Regulation 2022/720 of 10 May 2022 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices (the VBER). The VBER is directly applicable in the French legal order and does not require transposition into national law.

Accordingly, vertical agreements entered into in the context of franchise arrangements benefit from the block exemption provided for by the VBER, provided that the conditions set out therein are satisfied, in particular the market share thresholds and the absence of hardcore restrictions. The practical implications of the VBER for franchise agreements, including with respect to exclusivity obligations, non-competition clauses, exclusive sourcing obligations, resale price maintenance and online sales restrictions, are addressed in detail in 6. Restrictions on Competition in Franchise Agreements.

Under French law, a franchisee is an independent business owner and is therefore solely liable for his or her actions, particularly with respect to employees. In a franchise arrangement, these employees are, in fact, employed within the franchisee’s organisation. Notwithstanding the foregoing, where the franchisor is found to have interfered in the management of the franchisee’s business, such conduct may give rise to the franchisor’s liability.

In more serious cases, such interference may result in the reclassification of the franchise agreement as an employment contract, in particular under the provisions governing the status of branch managers pursuant to Article L. 7321-2 of the French Labour Code.

As noted in 5.2 Franchise Renewal, the franchisee operates as an independent undertaking and is not a subordinate of the franchisor. Accordingly, the franchisor does not bear vicarious liability for the acts or omissions of the franchisee.

Notwithstanding the foregoing, the franchisor may incur liability towards third parties where a risk of confusion exists between the activities of the franchisor and those of the franchisee, in particular where the franchisor has created a misleading appearance or has interfered in the management of the franchisee’s business.

The franchisor may further be held liable on the ground of its own fault (faute propre) where it has directly contributed to the damage suffered, for instance by disseminating erroneous information to consumers through the franchise network.

Pursuant to Article 3 of Regulation (EC) No 593/2008 on the law applicable to contractual obligations (the “Rome I Regulation”), the parties enjoy full freedom to designate the law governing their contractual relationship. Accordingly, the franchisor is at liberty to stipulate the application of the law of its own jurisdiction within the franchise agreement.

Nevertheless, irrespective of the law designated by the parties to govern the franchise agreement, the overriding mandatory provisions of French law shall apply to any franchise agreement performed within French territory, in accordance with Article 9 of the Rome I Regulation.

Accordingly, regardless of the governing law chosen by the parties, the franchisor is required to comply with all other applicable overriding mandatory provisions of French law whenever the franchise agreement is to be performed in France.

There is no requirement under French law that the franchise agreement be governed by French law. However, as set out in 8.1 Possibility of a Franchisor Stipulating Non-Local Law, the overriding mandatory provisions of French law, within the meaning of Article 9 of the Rome I Regulation, shall apply to any franchise agreement performed within French territory, irrespective of the law designated by the parties to govern the agreement, the application of which is deemed necessary for the safeguarding of the political, social or economic organisation of France.

These include, in particular, the pre-contractual disclosure requirements derived from the Doubin Act (Articles L. 330-3 and R. 330-1 of the Commercial Code), the mandatory rules of contract law, including the obligation of good faith (Article 1104 of the Civil Code), the provisions relating to restrictive trade practices set forth in the Commercial Code and the obligations arising under competition law.

With respect to intellectual property rights, there is similarly no requirement that such rights be governed by French law. However, where the franchisor’s trade mark is not registered in France, it does not benefit from legal protection within French territory.

Given that the franchisor’s trade mark and distinctive signs form an integral part of the franchise agreement, and that the franchisee pays royalties in consideration for the right to use such signs and for the protection afforded by their exclusive character, the absence of trade mark registration in France may deprive the franchise agreement of its essential consideration. In such circumstances, the franchisee may seek the annulment of the agreement on the ground of derisory or illusory consideration, pursuant to Article 1169 of the Civil Code.

French law does not prescribe any specific mandatory content to be included in a franchise agreement, provided that the agreement contains the essential obligations inherent to the franchise relationship, namely the transmission of know-how, the provision of assistance and the grant of a trade mark licence.

Furthermore, the general provisions of the Civil Code are implied in the franchise agreement as a matter of mandatory law. In particular, the obligation of good faith in the performance of contracts (Article 1104 of the Civil Code), the pre-contractual duty of disclosure (Article 1112-1 of the Civil Code) and the requirement of contractual balance apply to franchise arrangements.

The franchise agreement must not give rise to a significant imbalance between the rights and obligations of the parties within the meaning of Article L. 442-1 I of the Commercial Code. By way of illustration, a contractual provision depriving the franchisee of the right to terminate the franchise agreement or to bring proceedings before the competent court has been held to constitute such a significant imbalance.

French law does not contain any blacklist of prohibited provisions specific to franchise agreements. However, the following categories of clauses shall be deemed unwritten or unenforceable as a matter of mandatory law:

• post-contractual non-competition clauses which do not satisfy the cumulative conditions set forth in Article L. 341-2 of the Commercial Code;
• exclusive supply clauses exceeding a duration of ten years, in accordance with Article L. 330-1 of the Commercial Code;
• clauses constituting hardcore restrictions within the meaning of EU Regulation 2022/720 on vertical agreements (VBER), including, in particular, resale price maintenance and absolute allocation of markets or customers;
• any clause relating to an anti-competitive practice prohibited by Articles L. 420-1 et seq of the Commercial Code; and
• clauses giving rise to a significant imbalance in the rights and obligations of the parties within the meaning of Articles L. 442-1 et seq of the Commercial Code.

Judgments rendered by courts of EU member states are recognised and enforced in France pursuant to Regulation (EU) No 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the “Brussels I bis Regulation”), which provides for the automatic recognition and enforceability of such judgments without the need for any special procedure.

For judgments emanating from states party to the 2007 Lugano Convention (Iceland, Norway and Switzerland), recognition and enforcement are governed by the provisions of that Convention. In respect of judgments rendered by courts of third states not covered by any of the foregoing instruments, enforcement in France requires the obtaining of an exequatur through judicial proceedings before the competent Tribunal judiciaire.

In the absence of any applicable convention or regulation, French case law has established three cumulative conditions for the grant of exequatur:

• the indirect jurisdiction of the foreign court that rendered the decision;
• compliance of the decision with French international public policy; and
• the absence of fraud.

With respect to international arbitration, France is a party to the New York Convention of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. Foreign arbitral awards are accordingly recognised and enforced in France, subject to a limited review of their conformity with international public policy. France is traditionally regarded as a jurisdiction favourable to international arbitration, as reflected in the liberal case law of the Cour de cassation and the Paris Court of Appeal.

It should further be noted that arbitration clauses contained in franchise agreements concluded between professionals are valid and enforceable under French law.

French law does not impose any statutory cap on franchise fees, royalties or service fees. The principle of contractual freedom prevails in respect of the determination of the amounts payable by the franchisee to the franchisor, and the parties are at liberty to agree upon the quantum, structure and payment terms of such fees, whether by way of a lump-sum amount, a percentage of turnover or any other method of calculation.

Notwithstanding the foregoing, where the fees or royalties stipulated in the franchise agreement are manifestly excessive, the franchisee may invoke the prohibition on significant imbalance in the rights and obligations of the parties, within the meaning of Article L. 442-1 I of the Commercial Code. Furthermore, the franchisee may seek the annulment of the agreement on the ground of derisory or illusory consideration pursuant to Article 1169 of the Civil Code.

The imposition of resale prices by the franchisor upon the franchisee is strictly prohibited under both French and European Union law. In any event, as set out in 2.1 Mandatory Disclosure, no sum whatsoever may be received by the franchisor prior to the expiration of the 20-day period following the delivery of the pre-contractual information document, in accordance with Article L. 330-3 of the Commercial Code.

Regarding currency, as a general rule, payments are made in euros. However, payments may be made in another currency if the obligation arises from an international transaction. In the case of a master franchise agreement where the franchisor is based abroad, it should therefore be possible to use a foreign currency.

Franchise royalties paid by a debtor carrying on business in France to a non-resident beneficiary that does not have a permanent establishment in France are subject to withholding tax pursuant to Article 182 B of the French General Tax Code. The applicable rate of withholding tax may be reduced or eliminated by virtue of a bilateral tax treaty concluded between France and the state of residence of the beneficiary.

For these purposes, the term “royalties” encompasses payments made for the use of, or the right to use, trade marks, patents, secret formulae or processes, and information relating to industrial, commercial or scientific experience (know-how); payments for the use of equipment are also covered.

In addition, franchise fees and royalties are generally stipulated exclusive of value added tax (taxe sur la valeur ajoutée – TVA) and are subject to VAT at the standard rate in accordance with the applicable provisions of the French General Tax Code.

France does not maintain any foreign exchange control regime. As a member of the eurozone and of the European single financial area, France permits the free movement of capital and payments, in accordance with Articles 63 et seq of the Treaty on the Functioning of the European Union. Accordingly, the payment of franchise fees, royalties and service fees in foreign currencies is entirely unrestricted, and no prior authorisation from the Banque de France or from any other regulatory authority is required in order to effect such payments.

Notwithstanding the foregoing, transfers of funds to or from foreign jurisdictions exceeding certain thresholds may be subject to reporting obligations imposed for the purposes of monetary flow surveillance and compliance with anti-money laundering legislation, in particular pursuant to the provisions of the French Monetary and Financial Code.

There is no requirement under French law for the franchise agreement to be notarised or authenticated. No witnesses are required for the valid execution of the agreement. The franchise agreement is validly concluded by private deed.

Where the agreement is entered into by private signature between the parties, Article 1375 of the Civil Code requires only evidentiary formalities; accordingly, the agreement must be executed in as many originals as there are parties, and the number of originals must be specified in the agreement. Furthermore, there is no obligation to register the franchise agreement with any public authority. However, the parties may elect to register the agreement on a voluntary basis in order to obtain a date certain (date certa) or to ensure the enforceability of certain transactions against third parties.

Pursuant to Article 1366 of the Civil Code, an electronic document has the same evidentiary value as a document on paper, provided that the person from whom it emanates can be duly identified and that the integrity of the document is guaranteed.

Article 1367 of the Civil Code further provides that an electronic signature shall be valid where it consists in the use of a reliable identification process guaranteeing the link between the signature and the document to which it relates; such reliability is presumed where the conditions laid down by decree are satisfied.

Electronic signature solutions (such as DocuSign and equivalent platforms) are valid in France, provided that they comply with Regulation (EU) No 910/2014 of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market (the “eIDAS Regulation”) and the standards defined therein.

The eIDAS Regulation distinguishes three levels of electronic signature: simple, advanced and qualified. A qualified electronic signature within the meaning of the eIDAS Regulation benefits from a legal presumption of reliability and validity.

For ordinary commercial transactions, including franchise agreements, an advanced electronic signature – or even a simple electronic signature where its validity is not contested – is generally considered sufficient.

French law does not impose any stamp duty (droit de timbre) or documentary tax on the execution of a franchise agreement, given that such agreements are not subject to any mandatory registration requirement.

Notwithstanding the foregoing, in the context of real estate transactions – for instance, where the franchisor or the franchisee acquires commercial premises – notarial fees and transfer taxes, including land registration tax, shall be payable in accordance with the applicable provisions of the General Tax Code.