What is Franchising a Business?
LexInter | September 17, 2019 | 0 Comments

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.

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

concession

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.
This document, the content of which is fixed by decree, specifies in particular, the seniority and experience of the company, the state and development prospects of the market concerned, the size of the network of operators, the duration, the conditions for renewal, termination and transfer of the contract as well as the scope of exclusivity.
When the payment of a sum is required prior to the signing of the above-mentioned contract, in particular to obtain the reservation of an area, the services provided in return for this sum are specified in writing, as well as the reciprocal obligations of the parties. in case of withdrawal.
The document provided for in the first paragraph as well as the draft contract are communicated at least twenty days before the signature of the contract, or, where applicable, before the payment of the sum mentioned in the previous paragraph.

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

DISTRIBUTION FRANCHISING

FRANCHISING OF SERVICES

INDUSTRIAL FRANCHISING

RECENT JURISPRUDENCE  FRANCHISING

F ranchise_and_precontractual_information

F ranchiser_and_market_study

 

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

franchising_and_ententes

prices in franchising networks and competition law

fixing_of_prix_by_the_franchiser

franchising_and_pricing_variability

 

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]

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