France is one of the best countries in Europe in which to start a business considering its economic background and the uniform development of most industries. During the last few years, a new type of venture has emerged in France: the franchise.
Franchise businesses have appeared as a response to the high demand of the French population for international brands. However, local brands also started developing at the same time and local franchises are also quite popular now.
Foreign enterprisers can set up both local and international franchise businesses in France.
At this current time, those business types operating as franchise businesses in France are typically in the following industries: automotive; business services; clothing; construction; food and drink and retail, though not limited to these areas.
Those foreign investors setting up business in France can choose specific types of companies which can help them reduce business taxes by creating a holding company.
In order to register a franchise in France, it is necessary to comply with The French Company Act – which clearly defines the various different types of business structures.
The main business structures recognised by the French Company Act are:
- The Limited Liability Company or SARL – this is the most common business type in France.
- The Joint Stock Corporation or SA – this is suitable for larger operations.
- The Partnership or SNC – a structure that is not formed so offers less advantages than other structures’
- The Simple Joint Corporation or SAS – this is one of the newest types of companies in France.
In order to set up a franchise business in France, you need to register the company with the Trade Register, followed by the negotiation and preparation of a Franchise Agreement. There are three main types of franchise businesses which can be opened in France:
- The direct franchise which a more limited type of venture offering a high degree of control to the franchisor and which implies a thorough selection of the franchisees;
- The joint-venture franchise which is more of a partnership between the franchisor and the franchisee;
- The master franchise which offers a high degree of control to the franchisee who can also sublet the franchise to other distributors.
Under French law, when a contract provides for exclusivity or quasi-exclusivity and when one party grants the other with the right to use a commercial name, trademark or trade name, the granting party must inform the candidate, prior to the contract, of several details in a specific document, referred to as a “pre-contractual disclosure document”.
These details must be communicated to the candidate no less than 20 days before entering into the contract and must include the name of the undertaking, its date of creation, its affiliates and subsidiaries, the term of the contemplated contract, the financial conditions, and numerous other information on the franchisor, its trade marks, its network, the local market, as well as commercial and legal terms. The form and the content of the contract is freely determined by the parties, although the contract must comply with the:
- General principles of French commercial contract and competition law (including the French Civil Code and the Loi Doubin).
- EU regulation, including the EU Code of Ethics for Franchising.
For more information on setting up a franchise business in France, please contact our legal specialists at Delcade on +33 (0)1 75 43 18 56 or e: firstname.lastname@example.org