According to The INternational Trade Administration (USA)“The EU market is quite robust and friendly to franchise systems in general. There are several laws that govern the operation of franchises within theEU, butthese laws do not constrain the competitive position of foreign franchisors.”In their contracts franchisors should avoid provisions which have a strong effect on the organization of work in general and working conditions of employees such as fixed working day and week schedules for all franchisees’ employees. Itis necessary to get advices from a lawyer.
Legal Issues in Franchising
France regulates franchising since the adoption ofthe so-called “Loi Doubin”(31December 1989). Loi Doubin, now included in the code of commerce under article L330, aims at helping franchisees to take good decisions. It is a good general disclosure law that applies to franchising and similar systems, stipulating that a disclosure needs to be provided at least 20days before signing an agreement or paying any money.
Although the law is nottoo hard,the general obligations also include a requirement to provide a franchisee with a description ofthe general and local market conditions for all franchised products and services as well as the outlook for development ofthe market. It can be complicated to comply with this requirementfor a newcoming franchisors but good solutions are provided by local experts. The Loi Doubin requires also he disclosure of all information necessary to assess the business experience ofthe franchisor and its management.
The franchise agreement mustinclude information aboutthe franchise system, such as the use oftrademarks and products,territory, rights and obligations ofthe parties: standards, procedures,term (duration) ofthe franchise, payments made by the franchisee to the franchisor,termination and/or the rightto transfer the franchise,training, assistance, and advertising.
Opportunities for foreign franchisors
A wide variety of foreign franchises are enjoying success in France. The French marketis open to foreign franchises but requires to be highly professional as the competition is strong.
The French franchise sector ranks firstin Europe in terms of sales and has doubled over the lastten years. Although very competitivewith over 2000 franchisors and more than 75000franchisees,the French market offers many opportunities. In 2018the French franchise market employed over 700,000 people (direct and indirectjobs). 7% offranchises operating in France are foreign, of which 22% areAmerican. In 2018,total franchising sales were estimated at $70.68billion (€62billion).
For the past 30years, direct investment have proven more successful in France than the traditional Master Franchise model because mostforeign franchisors requestto high master fees, do not select good masters and do not give appropriate support and assistance.
Trade event The most important franchise trade show takes place each year in March in Paris
It gathers 580exhibitors and 36000visitors. 72% of the visitors state they are there to learn how to establish a business and become a franchisee.
However to many foreign franchisors are disappointed because their lack of preparation to the market.
Efficient Franchise portals
- ACFranchise
- L’observatoire de la franchise
- Toute la Franchise
Assistance to foreign franchisors
- FranchiseBusiness Club
Jean Samper Founder of FranchiseBusiness Club – js@frankey.fr
