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

When entering the network the franchisee must usually pay an entry fee or an initial fixed fee. The entry fee is the consideration for the services provided by the franchisor before the opening of the outlet, such as disclosure of know-how  or the provision of technical and commercial assistance, territorial exclusivity, brand and a joint buying services . It does not necessarily have to be the sa …

Entry fee.

When entering the network the franchisee must usually pay an entry fee or an initial fixed fee. The entry fee is the consideration for the services provided by the franchisor before the opening of the outlet, such as disclosure of know-how  or the provision of technical and commercial assistance, territorial exclusivity, brand and a joint buying services . It does not necessarily have to be the same amount for all members of the network . Where the franchisee fails to pay the balance of the entry fee whereas the franchisor has correctly fulfilled its contractual duties, he/she runs the risk of the termination of the contract . Conversely, the franchisor's claim for termination of the contract must be dismissed where the contract has never taken effect, in the absence of payment of the entry fee by the franchisee and any exploitation of the concept in the territory in question .

In the absence of any condition precedent relating to the provision of financing, the franchisee may be required to pay the entry fee even if he does not go ahead with the project . The same applies in the event of failure to form the planned franchised business, where a stipulation in the contract provides that the franchisor is to retain the right of entry fee “whatever the outcome of the contract” . On the other hand, in the absence of such clauses, the franchisor must refund the entry fee received when the franchisee does not proceed with the project, but only to the extent of the services that it has not provided . In addition, the entry fee must be repaid to the franchisee where the franchisor has made excessive promises of profitability and has shown excessive optimism in the provisional accounts , where the franchise agreement is re-classified as an employment contract and the payment of the entry fee has deprived the employee of his/her right to wages at least equal to the minimum wages (SMIC) , or when the franchisor has not respected the territorial exclusivity granted to the franchisee as consideration . 

Cass. com., 26 June 2007, LawLex200700001168JBJ: the entry fee received by a franchisor has no cause where the transmitted know-how is not different from the rules of the bakery business.

CA Bordeaux, 30 April 2002, LawLex200300003356JBJ; CA Nîmes, 14 February 2006, LawLex200700000375JBJ.

CA Paris, 31 January 2024, LawLex202400000848JBJ.

CA Metz, 27 April 2021, LawLex202100002026JBJ.

Cass. com., 14 January 2003, LawLex200300000702JBJ, upholding CA Paris, 26 January 2001, LawLex200300001185JBJ.

CA Paris, 15 November 2023, LawLex202300013707JBJ.

CA Grenoble, 28 May 2019, LawLex201900000729JBJ; Also see CA Montpellier, 27 September 2022, LawLex202200007916JBJ, emphasizing that the fact that the beauty salon was not opened does not entitle the franchisee to a refund of the sums paid for the entry fee, since these were in return for the franchisor making its brand and logo available, and the transmission of know-how.

CA Paris, 11 September 2024, LawLex202400006378JBJ.

CA Rennes, 1 October 2024, LawLex202400007329JBJ, also specifying that the starting point of the limitation period for the action for restitution of the entry fee, when the franchise project has not been successful, does not run from the expiry of the period granted to the franchisee to find approved premises, in the absence of termination of the contract or the granting of a new period of time by the franchisor, but from the date on which the candidate became certain that the project would not materialize.

CA Toulouse, 27 October 1992, LawLex200200006359JBJ; CA Paris, 26 October 2006, LawLex200700000759JBJ.

Cass. soc., 25 February 1998, LawLex200200005106JBJ; CA Lyon, 13 March 2009, LawLex200900001626JBJ; Cass. soc., 10 February 2010, LawLex201000000225JBJ.

French Distribution Law

418. Entry fee.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

418. Entry fee.

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

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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