FRANCE: Franchises: assessing the scope of a territorial exclusivity clause in light of the parties’ behavior.

Didier FERRIER | FRANCE | 2014-07-15


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A franchisor that had already entered into contracts for the distribution of its products entered into a franchise agreement prohibiting it “from authorizing any other points of sale to be opened under [its] brand name without the franchisee’s prior consent.” The franchisee then accused it of breaching the territorial exclusivity clause by continuing to supply the points of sale that were already distributing its products. The franchisor argued that this clause did not cover the points of sale that had been distributing its products before the conclusion of the franchise agreement.

The court of appeals has rejected the franchisor’s argument because “the franchisee was well founded in asserting that competition from the store had to cease as soon as this agreement was signed”, given that:

–       the franchisor itself had acknowledged this commitment by informing the former distributor “that it would cease supplying [its brand] products to [said distributor]”;

–       in addition, the franchisor should have inserted a clause allowing it to continue supplying its former distributors.



An affiliation contract reclassified as an employment contract.


Bordeaux Court of Appeals, 30 April 2014, Case no. 12/06406


A distributor who had an affiliation agreement (contrat de commission-affiliation) with his supplier sought to have the agreement reclassified as an employment contract.

Noting that “by selling goods that had been supplied to him exclusively by a single company (…), at a site approved by [said company] and on terms and at prices imposed by it, [the distributor] (…) was not engaged in an independent merchant’s activity and had the status of branch manager”, the court of appeals has held that, while these criteria of Article L. 7321-2 of the French Labor Code are necessary to the application of certain provisions of labor law, they are not such as to preclude a reclassification of an agreement into an employment contract in cases where they reveal a “a true legal (…) bond of obedience”. The appellate court thus upheld the lower court’s decision reclassifying the agreement into an employment contract, entailing full application of labor law.  


Didier Ferrier, agency, distribution and franchising Country Expert for France.

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