This book provides a wide-ranging review of the European rules relating to distribution: exclusive purchase and exclusive supply, exclusive and selective distribution, motor vehicle distribution, franchises, commercial agents.

French Distribution Law

Article L. 330-3 of the Commercial Code imposes on any person who provides to another person a corporate name, trademark or trade name, by requiring therefrom an exclusivity or quasi-exclusivity a commitment to provide the other party with truthful information allowing the latter to commit itself with full knowledge of the facts. It is mandatory rule of public policy  and applies to an exclusive distribution agreement concluded in the parties' interest, where the distributor bears an exclusivity or quasi-exclusivity obligation in terms of supply or representation , and where the contract provides the distributor with distinctive signs , these conditions being cumulative.

The generality of the words “all contracts” has given rise to controversy: does the information obligation only concern the conclusion of the initial contract, or also its renewal or extension? The majority of the courts rule in favor of the reiteration of the pre-contract information when renewing , extending  or transferring the contract . By contrast, the pre-contract information is not due in the absence of signature of a contract , where a third party purchases shares in the distributing company  or where the new supplier, having absorbed the former one, does not significantly modify the characteristics of the contract and the distributor is aware of the elements necessary for it to be informed . 

However, it must be noted that the Court of Cassation has ruled that when a distributor sells his business and the commercial relationship with it, the supplier is required to provide the new contracting party with the requisite information allowing him to commit himself in full knowledge of the facts and to properly perform the distribution agreement, insofar as the transferree of the business becomes the new authorized dealer . This case law seems to be both unnecessary (in the case of the acquisition of a business, the purchaser will inform itself about the company in question and any contracts governing its operation) and excessive.

Article L. 330-3 of the Commercial Code states that the information given must be "truthful": the supplier in only bound by a best-effort obligation and not a firm commitment. The future distributor must be able to enter into the contract in full knowledge of the facts. It would appear that the legislature was less concerned by the truthfulness aspect of the information than its seriousness, particularly with regard to estimated data. The provision does not lay down that an estimated income statement must be established . The truthful character of the given information cannot be assessed in view of the success of the business, i.e. the profitability of the project .

Articles R. 330-1 and R. 330-2 of the Commercial Code precisely details which information the supplier must make available to its future contracting party in respect of:

- the supplier: identity of the company director, address, registered office, legal form of the undertaking, registration number with the registry of trade and companies, date of its creation, main steps of its development, state of the market, banking domiciliation, annual accounts for the last two fiscal years;

- the network: list and number of undertakings forming it, undertakings having ceased being part thereof in the preceding year, presence in the planned area of establishments offering identical products or services with the express consent of the supplier ;

- proposed transaction: duration of the contract, conditions of renewal, termination or evidence of transaction.

In practice, the supplier who merely appends to the contract a geographic map, a list of brands, and the text of Articles L. 330-3 and R. 330-1 of the Commercial Code, does not establish that all mandatory documents have been communicated . A supplier cannot be held liable for failure to comply with the public policy obligations laid down in Articles L. 330-3 and R. 330-1 of the Commercial Code requiring the provision of pre-contractual information on the grounds that it failed to provide the financial statements of its predecessor, where it provided the information document to the franchisee within the time-limit and it contained all the information required by law, which enabled the franchisee to make an informed decision to contract or not .

Article L. 330-3 of the Commercial Code provides that the pre-contractual information must be notified at least twenty days before the signing of the agreement.

According to the Court of Cassation, in order to determine whether the pre-contract information was provided before the formation of the contract, account must be taken of the signing date, and not its effective date . In this case, the Court was careful to specify that no act took place between the effective date of the contract and its signature, which alone establishes the parties' effective consent. By contrast, if an act formalizes the parties' consent before the signature of the contract, compliance of the pre-contract information obligation will be assessed as of the date of that act . 

However, the distribution contract is not null and void where the supplier has performed its pre-contract information obligation more than twenty days before its effective signature .

Non-compliance with the pre-contractual information obligation is punishable by a fine of EUR 1,500 and by penalties applicable to 5th category offenses (Article R. 330-2 of the Commercial Code).

Moreover, since the breach of a legal provision constitutes misconduct that is harmful for the victim, the supplier is likely to incur liability if it provides erroneous information  or it provides estimates for which it is established that they are totally unrealistic . It is not sufficient that the information be inaccurate; the distributor must also have been unable to assess the value thereof . As long as the candidate - distributor, trader or a well-informed professional  , already has a very good knowledge of the network  and has had the time to assess the value of the information provided, the supplier's liability is not incurred . This is also true where the results forecasts have almost been reached by the dealer and that factors other than an overestimation of the commercial potential can explain the mediocrity of its results, such as his incompetence in commercial matters .

Although it is not set forth in the legal provision, the nullity of the contract entered into in violation of the pre-contract information obligation may be sought. The action is not rendered ineffective by the termination of the concession agreement at the initiative of the supplier . Having retained the automatic nullity of the agreement entered into in breach of the public policy provisions of Article L. 330-3 of the Commercial Code , the courts reversed their position by basing themselves on the principle “no nullity without grievance”. The nullity can be held only if the consent of the creditor of the pre-contract information obligation has been vitiated . The distributor is required to identify the data not provided by the supplier that would have prevented his informed consent being given .The lack of information about the fact that the supplier runs another company which markets competing products is not, according to the court, of such a nature as to vitiate the consent of the candidate . Also, an exclusive distributor cannot claim that his consent has been vitiated due to the incomplete nature of the pre-contract information document provided by the supplier where, prior to the signing of the contract, he received two year's training and worked with the sales leads provided by that supplier . This is also the case for candidates who have already been operating a store of the brand for five years at a short distance from the new establishment , who have been sales managers working for large groups for ten years, or who are specialists in distribution networks and direct sales  or have aggressively negotiated the terms of the contract . Moreover, the franchisee’s poor results must be attributable to the poor quality of the information provided and not to their own management errors . Lastly, an error concerning profitability cannot be invoked when the achievement of the communicated turnover figures did not fall within the contractual scope, as this data was provided after the decision to contract had already been made . However, a supplier who fails to provide information on the identity of the pilot center and its closure less than a year before the conclusion of the contract and who does not inform the applicant of the financial difficulties of the operators of another concept whose turnover figures he has disclosed commits fraud which justifies the cancellation of the contract .

However, the starting point of the action for annulment on the basis of the misleading nature of the information in the pre-contractual information document is the date of the event giving rise to doubts as to the supplier's sincerity .

Regarding that classification, see CA Douai, 13 January 2022, LawLex202200000373JBJ.

CA Paris, 23 May 1997, LawLex200200005673JBJ: the pre-contract information obligation is not mandatory where the exclusive distributor is a multi-brand distributor; CA Poitiers, 13 September 2005, LawLex200600000360JBJ: the pre-contract information obligation provided for by Article L. 330-3 of the Commercial Code does not apply to a concession contract entered into without purchase exclusivity. See also CA Agen, 12 March 2008, LawLex200800002245JBJ, indicating that exclusivity, which conditions the applicability of Article L. 330-3, only concerns relationships between grantor and dealer, and not all the activities exercised by the dealer; CA Aix-en-Provence, 5 September 2012, LawLex201200002025JBJ; CA Lyon, 3 March 2016, LawLex201600000537JBJ, holding that the lack of trademark protection granted cannot be challenged on the basis of Article L. 330-3 of the Commercial Code when the distributor is not bound by any exclusive supply obligation;
CA Montpellier, 7 June 2016, LawLex201600001186JBJ, concerning a quasi-exclusive supply arrangement; CA Papeete, 22 September 2022, LawLex202200008022JBJ, excluding the application of Article L. 330-3 when the reseller is not required to limit itself to distributing the supplier’s products; CA Toulouse, 8 November 2023, LawLex202300013525JBJ.

T. com., Paris, 30 September 1997, LawLex200200005048JBJ; On the concept of projected accounts, see CA Toulouse, 8 November 2023, LawLex202300013525JBJ, clarifying that providing the the potential distributor with turnover figures achieved by their predecessor over three financial years, along with an estimate of annual expenses, does not amount to the communication of projected accounts.

TGI Paris, 2 April 2001, LawLex200300000831JBJ: the dealer cannot claim liability of the manufacturer in case of failure of the business where, as an informed professional, it is able to assess, at the time of the signing of the contract, the profitability of the project according to its financial base. 

CA Paris, 11 May 2022, LawLex202200002508JBJ, holding that the supplier is not legally required to provide information on the profitability of retail outlets located in comparable areas.

CA Toulouse, 12 April 2023, LawLex202300005747JBJ.

CA Paris, 8 January 2025, LawLex202500000416JBJ.

Cass. com., 17 July 2001, LawLex200200004365JBJ. See also CA Rennes, 13 September 2005, LawLex200900003105JBJ.

Cf. CA Orléans, 22 November 2012, LawLex201200002394JBJ: failure to comply with Article L. 330-3 of the Commercial Code does not lead to the voiding of an exclusive distribution agreement not having been formalized in writing insofar as the 28 day period required for the provision of the pre-contract documents is calculated according to the date of the signing of the agreement.

CA Paris, 3 April 1998, LawLex200200005119JBJ.

See Cass. com., 25 September 2007, LawLex200900002679JBJ; and, a contrario, CA Paris, 4 April 1997, LawLex200200005658JBJ. 

TGI Metz, 26 October 2004, LawLex200400002599JBJ; Cf., where there is a discrepancy of less than 20% between the promised results and actual performance, CA Paris, 22 May 2024, LawLex202400003990JBJ.

CA Reims, 29 April 1998, LawLex200200004967JBJ: where there is no availability of distinctive signs, the pre-contract information obligation does not apply to the exclusive distribution contract; CA Aix-en-Provence, 31 March 2016, LawLex201600000749JBJ, holding that Article L. 330-3 of the Commercial Code, which is not limited to franchise or trade mark license agreements, applies to an exclusive distribution contract including  the provision of a trade name. Cf., when the products are supplied under the distributor’s own brand, CA Paris, 9 June 2022, LawLex202200003137JBJ.

CA Paris, 18 March 1988, LawLex200200005718JBJ. For such an assessment, the court refers to the concrete capacity of the distributor to assess the information and to replace it in the context; CA Paris, 15 March 2007, LawLex200700001418JBJ: the non-compliance with the pre-contract information obligation cannot be attributed to the grantor if when signing the contract, the dealer alleged having a better knowledge of the market than its supplier. 

See CA Chambéry, 15 October 2002, LawLex200400002108JBJ: candidate to the concession having occupied a position within the marketing department of the grantor's company; 17 February 2004, LawLex200400000488JBJ. 

For a former employee, see CA Paris, 22 May 2024, LawLex202400003990JBJ.

Cass. com., 10 May 2000, LawLex200200005304JBJ. 

CA Chambéry, 22 March 2016, LawLex201600000673JBJ.

CA Paris, 3 April 2019, LawLex201900000488JBJ.

CA Paris, 15 January 1998, LawLex200200004772JBJ; CA Montpellier, 12 November 1998, LawLex200200005152JBJ. 

CA Rennes, 1 April 1998, LawLex200200005115JBJ and CA Agen, 12 March 2008, LawLex200800002245JBJ: the lack of information, in particular on the development and content of the network, results in the nullity of the contract where it has vitiated the dealer's consent, preventing it from being aware of the low profitability of the activity in question; Cf. Cass. com., 14 January 2003, LawLex200300000687JBJ: the non-performance of the pre-contract information obligation results in the nullity of the contract only if it is established that it has vitiated the dealer's consent; CA Toulouse, 27 May 2003, LawLex200300004116JBJ; CA Paris, 5 November 2003, LawLex200400000840JBJ; TGI Paris, 13 May 2004, LawLex200400001275JBJ; CA Toulouse, 26 January 2006, LawLex200600002468JBJ.

CA Paris, 3 April 2019, LawLex201900000488JBJ, cited above.

CA Aix-en-Provence, 31 March 2016, LawLex201600000749JBJ.

But see CA Angers, 7 February 2017, LawLex201700000308JBJ, holding that retains that the failure to provide a precontractual information document at the time of the renewal of the contract does not invalidate the latter insofar as the dealer, who had operated in the same sector from the outset and had already been affiliated to the network for a year, had been able to test the qualities and potential problems arising from the contract.

CA Grenoble, 6 October 2011, LawLex201100001776JBJ.

CA Paris, 3 April 2019, LawLex201900000488JBJ, cited above; also see CA Toulouse, 8 November 2023, LawLex202300013525JBJ.

CA Aix-en-Provence, 5 September 2012, LawLex201200002025JBJ.

Cass. com., 18 September 2012, LawLex201200002080JBJ.

But see CA Paris, 11 May 2022, LawLex202200002508JBJ.

CA Toulouse, 8 November 2023, LawLex202300013525JBJ.

CA Angers, 7 February 2017, LawLex201700000308JBJ; CA Paris, 3 April 2019, LawLex201900000488JBJ, cited above.

CA Angers, 7 February 2017, LawLex201700000308JBJ.

See CA Montpellier, 12 November 1998, LawLex200200005152JBJ; CA Versailles, 27 January 2000, LawLex200200005275JBJ; Cass. com., 14 January 2003, LawLex200300000687JBJ; CA Toulouse, 6 December 2007: the pre-contract information obligation is applicable in case of renewal of a contract, even by tacit renewal. See however T. com. Créteil, 2 April 2002, LawLex200200004655JBJ: the pre-contractual information, supplied within the legal time-periods at the time of the conclusion of the contract, has not to be repeated at the time of the renewal of the contract.

Cass. com., 21 February 2012, LawLex201200000299JBJ, and on referral from the Court of Cassation, CA Bordeaux, 23 September 2013, LawLex201300001413JBJ, highlighting that an amendment of the initial contract which results in the authorization of a new dealer obliges the supplier to provide the new dealer with all the information allowing him to contract in full knowledge of all the facts.

CA Paris, 13 September 2002, LawLex200300001106JBJ. 

CA Paris, 14 November 1997, LawLex200200005065JBJ. 

Cass. com., 23 May 2000, LawLex200200005307JBJ; CA Paris, 18 October 1996, LawLex200200005606JBJ; 23 October 2002, LawLex200500003782JBJ; 23 October 2002, LawLex200500003782JBJ;
Cass. com., 6 October 2015, LawLex201500001238JBJ, holding that the failure to provide a pre-contractual disclosure document during the renegotiation of the contract does not preclude the distributor from having contracted with full knowledge, insofar as he already possessed the necessary information about the conditions of an activity he had previously carried out, which the supplier supplemented by notifying him of the future establishment of a third party in his area.

Cass. com., 21 February 2012, No 11-13.653, LawLex201200000299JBJ: appeal judgment quashed for having ruled that the pre-contractual information obligation “ requiress the licensor, prior to the conclusion of a contract for the concession and not during the transfer of an ongoing a current contract between predecessor and successor” wheareas the supplier had approved the buyer of the business “as a new dealer and that such a modification of the original contract required the licensor to provide its new contracting party with information allowing him to engage in full knowledge of the facts and to properly perform the distribution agreement”.

68. Pre-contractual information.