French Supreme Court, Commercial Chamber, 10 September 2013, Case no. 12- 11.701
A franchisor had granted its franchisee territorial exclusivity ‘in order to guarantee [it], in terms of customers, a sufficient zone of attraction in view of the concept.’ As the franchisor had opened a website to sell its products and distributed catalogues mentioning the website address with lower prices and product deliveries to the franchisee’s premises without any remuneration for the franchisee, the franchisee sued the franchisor seeking the termination of the franchise agreement based on a fault in the performance thereof.
The Supreme Court criticized the Court of Appeals for having admitted the claims on the grounds that‘the modest level of the sales made by the franchisor online [was] not a sufficient argument to rule out its breach of the exclusivity clause it had granted to the franchisee itself,’ whereas ‘the agreement merely guaranteed [the franchisee] territorial exclusivity in a given sector and creating a website is not the same as creating a point of sale in a protected sector.’
Agen Court of Appeals, 9 September 2013, Case no. 12/01175
A commercial agent sought the termination of its agreement and various indemnities because the principal was selling its products to companies which operated discount websites selling the products at much lower prices to wholesalers who were the majority of the clients he was supposed to prospect.
The Court of Appeals rejected its claims because the principal was ‘authorized to use the Internet’ and,‘the specific terms and conditions [of sales online] generate less costs for [the principal] (no end-of-year rebate or after-sales service, payment in advance). It could thus ‘validly apply lower prices to those applied off the websites.’ Incidentally, as the principal did not ‘systematically apply a policy of lower prices’ and the wholesalers had not shown any intent to ‘obtain their supplies directly [via] the Internet from then on (…), the sale of the products to businesses operating websites, at prices taking into account the lower costs of such operations, did not reflect any intent on the part of [the principal] to prevent [the agent] from performing the agency agreement, especially as the amount of commissions [he] received [had] not significantly decreased.’
Didier Ferrier, agency, distribution and franchising Country Expert for France.