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 1(1)(j) of Regulation No 2022/720  defines know-how as “a package of non-patented practical information, resulting from experience and testing by the supplier, which is secret, substantial and identified”. According to the Guidelines on Vertical Restraints , franchise agreements are an example of know-how being communicated to the buyer for marketing purposes. Know-how must be secret - not …

Concept of know-how

Article 1(1)(j) of Regulation No 2022/720  defines know-how as “a package of non-patented practical information, resulting from experience and testing by the supplier, which is secret, substantial and identified”. According to the Guidelines on Vertical Restraints , franchise agreements are an example of know-how being communicated to the buyer for marketing purposes. Know-how must be secret - not known or easily accessible -, substantial - indispensable to the franchisee - and identified - its description must be sufficient to certify its secret and substantial character.

The identification of transferred know-how plays an essential part regarding evidence. Where the know-how is identified by the disclosure of documents to the franchisee, the latter bears the burden of proof of the absence or non-transfer of know-how. Without such disclosure, the franchisor must establish that it has properly fulfilled its obligations .

Know-how is widely understood and, according to the European Commission, includes every aspect of the franchisor's business “and in particular technical, commercial, promotional, publicity, administrative and financial matters, staff training and general administration” .

The transmission of know-how operates not only during the conclusion of the contract but also during its performance by the updating of the transferred know-how. The franchisor's dual obligation makes it possible to distinguish franchising from the mere licensing of know-how. The lack of immediate transfer of information indispensable to the proper performance of the contract justifies its termination . The maintenance of know-how is essential as part of a franchise contract, which maintains contractual obligations with payment of a fee by the franchisee in return for that know-how. The court therefore assesses the reality of such updates in view of the specific elements of each case .

In fact, no breach can be attributed to the franchisor with regard to its obligation to transfer up-to-date know-how when it amended its marketing visuals every year, developed a new product and was ranked first and then second in the “nutritional advice” category of the “best brand” ranking carried out by a major magazine for three consecutive years . Some courts have also held that know-how may be updated through the obligation to provide assistance and ongoing training .

Commission Regulation (EU) 2022/720 of 10 May 2022 on the application of  Article 101(3) of the Treaty on the Functioning of the European Union  to categories of vertical agreements and concerted practices.

Guidelines on Vertical Restraints, No2022/C 248/01, para 85.

Cass. com., 1 July 2003, LawLex200300003208JBJ: “but the decision finds that Secta delivered to CTM, as soon as the membership contract was signed, various documents that contained a complete description of the Autosur methodology, both regarding the area of technical control and the commercial aspects of the network organization, and made IT software available; by a sovereign assessment the Court of Appeal has deduced from these findings that Secta had transferred substantial know-how to CTM that the latter could have discovered only further to long and expensive personal researches”.

Commission Decision No 87/14 of 17 December 1986, Yves Rocher, LawLex200500004449JBJ, pt 22.

See inter alia CA Paris, 10 March 1989, LawLex200200005737JBJ: “Although, in view of the facts, the will of La Croissanterie to transmit to the franchisee a new and original distribution technique seems certain, it remains that the conditions of performance of that major obligation of the franchisor have not been without defects if one considers especially the extended time frame between the signature of the contracts (1981) and the dissemination of precise technical documents indispensable to the proper exploitation of the transmitted know-how, so that, at the time of the conclusion of the contracts, the technical training of franchisees remained at the empirical stage and was insufficient to guarantee the setting-up and animation of a true network of franchisees, capable of developing and enhancing the techniques transferred by the franchisor”.

CA Paris, 21 June 2006, LawLex200600001846JBJ: the provision of training for a concept of long-term rental, updated during the performance of the contract, expresses the performance by the franchisor of its obligation to transmit the know-how to the franchisee.

CA Toulouse, 5 April 2023, LawLex202300005441JBJ.

CA Paris, 17 March 2021, LawLex202100000847JBJ and LawLex202100000898JBJ.

French Distribution Law

384. Concept of know-how

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384. Concept of know-how

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Les décisions de justice citées dans ce paragraphe :

Sous parties

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise