Franchise Independence, Network Leadership Absolute Rule, Articles

The concession contract is based on cooperation between two legally and financially independent companies. If the franchisor is free to determine the terms under which it waives the right to use its trademark and concept, it cannot deny the franchisor’s independence. By venturing down this dangerous path, he risks seeing Contractual relationship that has been judicially rehabilitated And pay the price.

Franchise contract, lease management contract, commission affiliation contract or delegation contract, the rule applies to all forms of cooperation between two independent companies, each of which has made an investment and assumed entrepreneurial risks. The franchisor generally invests all his savings and commits his assets by acting as collateral not only for the bank loan, but also for the lessor, or even the head of the network, who wants to ensure the correct repayment of their debts: monthly loan payments, rent bills, royalties, merchandise.

In light of these issues, the franchisor must fully respect the autonomy associated with the status of the franchisor throughout the contractual relationship. One cannot claim to impose company risks on someone without being the latter management control.

Operational independence

What exactly does franchisor independence cover? The franchisor is The sole authority to sign contracts Which his company will require: lease contract, loan and lease contract, service contracts and purchases of various materials, labor contract, etc. Choose her chartered accountant and insurance company that will cover the activity. but that is not all. The franchisor must also be able to set up a file Personal pricing policy and commercial policy in an independent way. He must make all management decisions without interference from the network head. No profit without risk but no risk without independence. Thus, it is up to the franchisor to create the equation between the risks he decides to take on and the profits he seeks.

Independence in contract execution

The franchisor has the right to require the franchisor to make a real investment in order to enhance the success of their point of sale. This results in a contribution of funds sufficient to meet all obligations arising from the concession contract and in terms of technical know-how. But it is up to the franchisor to decide whether he wants to be an investor or run the outlet himself. In the latter case, the franchisor can choose to work there full-time or part-time using a trusted assistant. In the name of the principle of independence, concessionaire It cannot prevent the franchisor from carrying out another activity in parallel than that specified in the franchise agreement.

coexistence and balance

Excellence is defined as the repetition of success. So it is clear that the franchise contract is based on the franchisor’s commitment to respect the keys to this success. Thus, it does not question the independence of the franchisor on the one hand, the fact that he is obliged to respect the specifications, the book of knowledge, the condition of exclusive supply from the indicated suppliers whose quality is guaranteed by the franchisors on the other hand, visits the exclusive offer to control the implementation of the concept. In the same spirit, the franchisor can request the connection of the turnover and annual accounts. Thus, acquiring a franchise requires ensuring a balance between the obligation to transmit and the prohibition of infringement.



Charlotte Pele and Nicholas Dessault are the authors of The Franchise Guide, published in November 2020 by Editions Dalloz.

Authors:

Charlotte Billet, a Paris Bar Association lawyer associated with the BMGB, has been an expert in defending franchisees for twenty-five years. Nicolas Desseau is a member of the private law schools, a university professor and a lawyer in Lille. Specialist in Distribution Law. This text is from their book “Le guide de la franchise” published by Editions Dalloz in November 2020, 512 pages, €48.

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