Commercial Leases/Business Goodwill

For premises, to be classified as ancillary and benefit from the protection of the status of commercial leases, must be necessary and indispensable to the operation of the business , to the extent that “their deprivation is likely to compromise the operation of the business” (Art. L. 145-1, I, 1° Commercial Code). It is up to the lessee to demonstrate the indispensable nature of the ancillary prem …

Premises necessary for the operation of the business

For premises, to be classified as ancillary and benefit from the protection of the status of commercial leases, must be necessary and indispensable to the operation of the business , to the extent that “their deprivation is likely to compromise the operation of the business” (Art. L. 145-1, I, 1° Commercial Code). It is up to the lessee to demonstrate the indispensable nature of the ancillary premises and that their deprivation would be likely to compromise the proper operation of their business . The trial courts assess the indispensable nature of the ancillary premises , with regard to the operation of the business, and not considering the replacement possibilities that the lessee might have . The necessary and indispensable nature thus presupposes the existence of an indivisible economic entity  or even a true operational unit . Thus, model homes built on vacant land constitute ancillary premises as long as their disappearance would compromise the main operation of the builders whose purpose is turnkey sales .

The classification of ancillary premises raises difficulties in certain cases:

- parking areas: according to the Court of Cassation, to assess the ancillary nature of parking spaces in relation to the operation of the business and subject their rental to the status of commercial leases, the courts must determine if these spaces can be classified as premises . This is the case for a space located on the ground floor of a building and constituting part of that building, which, given its nature, function, and location, is essential to the operation of a restaurant business , or even for two parking spaces, notwithstanding the absence of separation from other parking areas, as long as the landlord has issued monthly due notices and provided receipts for their occupation and the tenant's use of these spaces is consistent with the lease's purpose . Conversely, spaces that are not enclosed and covered parking or constructions but are non-defined parking areas located outside the building and solely intended for vehicle parking do not fall under the status of commercial leases .

- Garages: the premises used for storing vehicles, equipment, and goods, the loss of which compromises the operation of a garage involving maintenance and repair activities, as well as the purchase and sale of used vehicles, benefit from the status of commercial leases . Conversely, premises used for parking, repairing, maintaining, and washing the lessee's vehicles, located near the latter's offices, does not constitute ancillary premises necessary for the operation of a driving school business .

- Warehouses: a lessee is entitled to invoke the provisions relating to the status of commercial leases when the lessor was aware, on the day of signing the lease, of the ancillary nature of the premises used as a warehouse, essential to the exercise of their main activity . This is not the case when the lessee does not provide proof that the loss of the premises used as a warehouse is likely to compromise the operation of their main business , or when the removal of the possibility to store goods does not constitute an impediment to commercial operation .

- Workshops: the benefit of the status of commercial leases was granted to a premises used as a repair workshop, which was considered essential to the routing service and necessary for the operation of a local newspaper .

- Housing: in this case, the premises may be intended for the use of the tenant or their staff. It has thus been judged in the case of a bakery activity involving night work that the lease benefits from the status of commercial leases, covering a residential premises located in the same building, considered indispensable for the tenant baker to reside on the premises or nearby, unless it would severely compromise their business, with the residential and commercial premises forming an inseparable whole . Premises located in the basement and partially interlocked “by the commercial premises' footprint,” which, due to the absence of windows and the presence of a common electric meter with the commercial premises, could only be reserved for staff housing and the storage of customers' skis, also constitute premises indispensable to the operation of the business subject to the status of commercial leases . Conversely, the fact that the designation of the operated premises includes an apartment is not sufficient to apply the status to it, as long as it is not demonstrated that the deprivation of such an apartment compromises the operation of the business . Similarly, the fact that the apartment, when adjoining the business, makes its operation more convenient by facilitating the opening and closing of the premises, does not confer upon it an indispensable character for this operation, as the loss of such premises is not likely to compromise the operation of the business . When housing is intended for staff, the application of the status of commercial leases has been excluded concerning two rooms that constituted a mere convenience without being indispensable to the operation of a “bar-snack” business . Similarly, the use of premises located on the upper floors of a building, rented to the parent company of a group in the interest of the representative institutions of the group's entire staff, do not constitute accessories to those of the bookstore business operated on the lower floors by the sole subsidiary of the same group, even if these premises are also used by the specific staff of the bookstore .

CA Paris, 4 April 2024, LawLex202400002962JBJ.

Cass. 3e civ., 21 March 1990, LawLex202100004753JBJ; Cass. 3e civ., 27 February 1991, LawLex202100001351JBJ,S; CA Paris, 28 June 2006, LawLex202100004762JBJ, where it was held that the lessee cannot claim the benefit of commercial property rights if they do not provide any evidence that the deprivation of a parking area, the subject-matter of the lease, would compromise the operation of the main business; Cass. 3e civ., 9 December 2008, LawLex202100001366JBJ: the lessee cannot claim the benefit of the status of commercial leases if they do not prove that the deprivation of the leased premises compromises the operation of their business.

Cass. 3e civ., 1 July 2014, LawLex202100001367JBJ.

CA Paris, 3 October 2007, LawLex202100003474JBJ.

Cass. com., 4 December 1967, LawLex202100004701JBJ.

CA Paris, 27 September 2006, LawLex202100003463JBJ.

CA Amiens, 8 March 1999, LawLex202100003627JBJ3.

Cass. 3e civ., 19 September 2006, LawLex202100001280JBJ.

Cass. com., 19 July 1966, LawLex202100004700JBJ, regarding a local newspaper ensuring transport and distribution through its own routing service, which constitutes a crucial branch of the operation and requires about forty automobiles, a repair workshop, and personnel.

CA Versailles, 15 October 1998, LawLex202100003546JBJ, where it was noted that the residential lease contains onerous clauses, such as the reimbursement to the owner of all property taxes, that it is expressly intended for the operator of the business, a right of priority on the housing in favor of the successor in case of transfer of the business being stipulated, and that the supply of utilities to the apartment is carried out from the installations located in the commercial premises.

Cass. 3e civ., 15 February 2018, LawLex202100001370JBJ.

Cass. 3e civ., 18 November 1998, LawLex202100001358JBJ.

For a rejection of the classification of ancillary premises, see Cass. 3e civ., 12 February 1992, LawLex202100004759JBJ According to the Court, the deprivation of a garage allowing one or more taxis to be parked near the lessees' residence is not likely to compromise the operation of a taxi-ambulance and school transport business. For a classification as ancillary premises, see Cass. 3e civ., 14 September 2017, LawLex202100001369JBJ, according to which premises located opposite the main premises of a driving school, used for lessons given to students, as well as the adjacent parking lot intended for vehicles used for driving lessons, constitute premises essential to the operation of the business covered by the status.

CA Versailles, 4 June 2024, LawLex202400004184JBJ.

Cass. 3e civ., 27 September 2005, LawLex202100001361JBJ.

CA Paris, 19 November 2008, LawLex202100003505JBJ: in this case, the lessee had also not established that the successive lessors had in any way consented to a voluntary submission to the status of commercial leases.

Cass. 3e civ., 7 February 1990, LawLex202100001333JBJ.

CA Paris, 31 October 2001, LawLex202100003596JBJ: constitute ancillary premises, the deprivation of which compromises the operation of the business, the premises where gilding printing, cardboard cutting, embossing work is carried out, representing a true operating unit, and the premises where gluing operations are performed, all constituting an indivisible economic entity, with employees able to work interchangeably in either location.

CA Paris, 20 March 2013, LawLex202100003517JBJ. According to this ruling, premises adjacent to the main premises cannot be considered as accessories if the lessee does not establish that they form an operational unit with the main premises and that their deprivation would compromise the operation of their business.

Cass. 3e civ., 29 September 1999, LawLex202100004761JBJ.

Cass. 3e civ., 4 January 1995, LawLex202100001354JBJ, according to which, to assess the ancillary nature of parking spaces in relation to the operation of the business and subject their rental to the status of commercial leases, judges must determine whether these spaces can be classified as premises.

Cass. 3e civ., 22 March 2006, LawLex202100001362JBJ.

CA Versailles, 12 January 2016, LawLex202100003524JBJ.

Commercial Leases/Business Goodwill

13. Premises necessary for the operation of the business

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13. Premises necessary for the operation of the business

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Les décisions de justice citées dans ce paragraphe :

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