What is Franchising a Business?
|Definition of Franchising
Franchising is a way of managing a business in a network . The development of the network is based on the exploitation of a sufficiently original know-how, image and concept, which were created by the person who becomes the head of the network. Franchising requires a franchisable concept, which must be identifiable and identified and which must be communicable and transferable. Check out how to form an llc in simpler steps from MoneyBrighter.
To do this, the concept must be associated with signs to attract customers. Know-how and image are associated with a brand . Through a contract known as a franchise contract, the franchisor makes the brand, image, know-how and often management assistance available to franchisees who are legally independent companies and who will pay the franchisors royalties in return. The franchise agreement often includes a supply obligation.
The transmission of know-how is an essential aspect of the Cass franchising contract . com. May 10, 1994 . Failure to provide the technical assistance promised to the franchisee allows him to obtain the termination of the franchise contract at the fault of the franchisor Cass. com. February 1, 1994
Own clientele of the Civ franchisee. 3rd March 27, 2002, cf. Cass. com. June 12, 2007
|The development of franchising
Franchising is a concept that was first developed in the United States, under the name of ” franchising ” It was imported into France where the term was francized as ” franchising “, finding the French origin of the American term which comes the term “franchise”, associated with franchise charters which were privileges granted to cities or trades.
Franchising is not the subject of a legal statute and is developed within the framework of contractual freedom . The franchise contract is one of the contracts developed by practice.
The main sectors are the franchise distribution franchise , the franchise services and industrial franchise
The distinction between the franchise contract and the concession is thus described by the Court of Cassation
the contract provides for the provision of a trade name, acronyms and symbols, as well as commercial assistance from the grantor during the creation of the activity and the organization by the latter of promotional campaigns, it does not, however, refer to the existence of know-how and does not create any obligation to transmit knowledge specific to a franchise, the obligation of assistance placed at the expense of the grantor such as the determination of supply quotas with the sole grantor subject, on the contrary, to an exclusive concession contract
Cass. com. June 4, 2002
|Information obligation of the franchisor
The franchisor has the obligation to provide fair and precise information on the expectations of the contract.
article 330-3 of the commercial code
Anyone who makes a trade name, a brand or a sign available to another person, by requiring from him an exclusive or quasi-exclusive commitment for the exercise of his activity, is required, prior to the signing of any contract concluded in the common interest of both parties, to provide the other party with a document giving sincere information, which allows it to make an informed commitment.
The violation of this information obligation and the provision of false information constitutes a fraud vitiating the consent and entailing the nullity of the contract. eg. Cass. com. October 20, 1998 Breaches of the obligation to provide information documents provided for in article 1 of the law of December 31, 1989 only void the agreement in the event of a violation of Cass.com consent . December 5, 2000
Cass. com. January 14, 2003
RECENT JURISPRUDENCE FRANCHISING
|Franchising and competition law
The establishment of a luxury franchising network does not constitute an abuse of a dominant position Cass. com May 4, 1999
prices in franchising networks and competition law
|The franchisor must not concede another brand in the area of exclusivity of its franchisee, creating a risk of confusion for the Cass.com consumer . December 19, 2006|
|Termination of the franchise agreement
the agreements stipulated for a fixed term must be carried out until their term and that the disputed contract provided for a period of notice of six months in the event of non-renewal, it is without having to search, this search being inoperative, whether contracts infringing exclusivity had been concluded during this period, that the court of appeal was able to decide that the distribution by the franchisor two months before the expiration of the contract of a circular announcing in the territory protected by the exclusivity conferred on the franchisee the name and address of a new franchisee and inviting customers to contact “now” for more information with this reseller, constituted a culpable infringement of the exclusivity still in force granted | to the franchisee]