Merger-acquisition affecting the company of the commercial agent allows the termination of the agreement by the principal (Appeals Court of Bordeaux, September 21, 2022).
Under French law, the commercial agent agreement is deemed by ARTicle L134-2 of French commercial code “of common interest” and thus traditionally considered to have been concluded intuitu personae, in consideration of the person of the agent. The Cour de cassation ruled that the unauthorized transfer of the contract constitutes serious fault justifying termination without notice or termination indemnity (Com., Jan. 14, 1997 or May 28, 2002. The change of control of the agent’s company must be subject to information to the principal (Appeals Court of Paris, Oct. 24, 2018). In addition, any transfer of the agreement to a new agent is subject to previous information to the principal and its consent.
In the commented matter, the agent probably tried to work around these rules and the transferee created a company which absorbed the agent’s company. The principal terminated the commercial agent agreement and the agent filed a claim for a termination indemnity.
The Appeals Court of Bordeaux indicated that merger and acquisition operations entail the universal transmission of the assets of the absorbed company to the beneficiary of the merger, unless for intuitu personae contracts. One should note that the commercial agent agreement contains a specific clause providing that it had been made in consideration of the agent.
Non-renewal of a franchising agreement is not abusive, subject to certain circumstances.
A franchisor can decide not to renew his franchise agreement with a franchisee, without having to give any justification.
A franchisor did not renew a large part of the contracts with its franchisees while reorganizing its network (more than 55% of them). A franchisee and the partners of the franchised company questioned the franchisor’s responsibility for abusive non-renewal.
On September 7, 2022, the Court of Cassation (n°21-17.914) dismissed the claims of the franchisee on the grounds that “it is up to the franchisee to establish the contractual unfairness of the franchisor in exercising its right of non-renewal, based on the circumstances specific to the non-renewal”, as the franchisor had not led the franchisee to believe that the contract would be renewed on its expiry date, nor had it exposed the franchisee or its associates to excessive investments, costs or debts. The circumstance of a massive non-renewal of the agreement has no effect.
Frédéric Fournier, IDI Country Expert for agency in France