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

The stringent nature of commercial urban planning rules which, before the adoption of the LME Law of 4 August 2008, strictly limited the possibilities of opening stores in city centers, resulted in a struggle between retail distributors or control of existing outlets. Therefore, there has been a huge increase in the number of cases based on unfair competition between the large franchise networks a …

Complicity in breach of contractual obligations.

The stringent nature of commercial urban planning rules which, before the adoption of the LME Law of 4 August 2008, strictly limited the possibilities of opening stores in city centers, resulted in a struggle between retail distributors or control of existing outlets. Therefore, there has been a huge increase in the number of cases based on unfair competition between the large franchise networks accusing each other of a new form of poaching consisting in contacting distributors of competing networks to encourage them to terminate their contracts and join their own network.

Like resale outside the network in exclusive or selective distribution systems, the fact that the franchisor is merely aware that a franchisee is a member of a competing network is not sufficient to make it an accomplice in the franchisee's termination of its contract before term. In effect, membership of a particular network is not necessarily synonymous with submission to a non-reaffiliation clause, especially in areas where such clauses are not extensively used . Further, the termination of the franchise agreement may be explained by other causes than the franchisee's intention of joining another network, e.g. the franchisor failing to perform its obligations . Where the franchisee has already expressed grievances with respect to its franchisor, the mere fact that a competitor has canvassed a franchisee and provided the contact details of a lawyer specialized in the defense of the franchisee's rights is not sufficient to make it the accomplice of the subsequent termination of the franchise contract where such a decision is a matter for the franchisee's free will . Furthermore, the competing franchisor's liability cannot be sought where it is not clearly established that it made contact with the franchisee before the termination , where it has contacted it only after the termination , even if such termination is in breach of the contract  or where the circumstances led it to legitimately believe that the contract had already been terminated . An action for disruption cannot be lawfully brought against a franchisor where a franchisee from a competing network joins its own network insofar as this takes place in the context of competition between distributors with a view to maintaining a local trade network . On the other hand, its complicity in the violation of the franchisee's duties will be found if it is established that it knew or could not have been unaware  of the existence of the contract, even if that knowledge did not relate to details of the terms of the contract . A fortiori, the competing network head informed by registered letter of the existence of a non-compete clause for which a reseller is liable, becomes an accomplice to the breach of its contractual obligations by not severing the links established with the latter .

Where the franchise agreement contains a priority  or preemption right  that the official franchisor has not exercised  or where it is not established that the competing franchisor knew the official franchisor's intention to exercise such option , third party complicity is excluded . Therefore, the purchase of a franchised business from a competing network before the termination of the franchise and purchase agreements does not constitute an act of unfair competition where no unfair actions have taken place . Likewise, the franchisor cannot succeed in an interim application for the pursuit of the contract when, invited to exercise his approval or preemption right, he has responded negatively to both options proposed and the parties have provided for the automatic termination of the agreement in such circumstances . The finding that the franchisee wishes to get around the franchisor's priority and preemption rights may result from the choice to limit to 49% the share of the franchised company sold to a third party, which is then immediately contradicted by the granting to the latter of very extensive management rights .  Furthermore, the priority right in the franchisor's favor must be executed in good faith by the franchisee, i.e. without including a condition in the transfer deed which is clearly impracticable . More recently, the Court of Cassation has taken a more protective stance on pre-emption rights: it held that the head of a competing network who acquires the shares of a franchisee in violation of the franchisor’s pre-emption right incurs liability for third-party complicity, insofar as it necessarily has knowledge of such a clause, which it itself imposes on its own franchisees .

In the event of termination of a franchise agreement authorized by the banruptcy judge following the placement of the franchisee in receivership (safeguard proceedings), the franchisor cannot obtain the disclosure of documents not filed in the proceedings that contain essential elements of the franchisee’s affiliation with a competing group, including its know-how or potential margins—especially where the request targets “any annex,” thereby indicating that the aim is not to seek access to a specific document that has been withheld but rather to gain possession of the terms and condition offered by a competing group to its members or franchisees .

Lastly, the dispossessed franchisor should be prudent when considering legal action since the courts will not hesitate to hold an action abusive if they find that the sole object of the action is the protection of the franchisor's territory .

CA Dijon, 8 March 2018, LawLex201800000497JBJ, real estate sector; see also CA Paris, 27 January 2021, LawLex202100000283JBJ, considering that the mere acquisition, by the head of a competing network, of shares in franchised companies belonging to another network does not make it an accomplice to the latter's breach of their non-compete obligation, since it was not established that it was aware of this stipulation.

Cass. com., 23 January 2007, LawLex200700000145JBJ.

CA  Paris, 20 March 2019, LawLex201900000434JBJ and LawLex201900000437JBJ.

Cass. com., 23 January 2007, LawLex200700000144JBJ, upholding CA Besançon, 30 November 2004, LawLex200700000206JBJ.

Cass. com., 15 May 2007, LawLex200900002656JBJ, approving CA Rennes, 10 January 2006, LawLex200900003106JBJ.

Cass. com., 6 September 2011, LawLex201100001453JBJ:  a franchisor who allowed the period for exercising his preferential right to expire, while the takeover bid submitted by his competitor excluded the takeover of the franchise and supply agreements, cannot accuse the latter of any act of unfair competition arising from the breach of these agreements by the franchisee.

Cass. com., 9 June 2009, LawLex200900002928JBJ.

Cf. CA Paris, 6 March 2019, LawLex201900000315JBJ, holding that  the head of a competing network is complicit in the breach by a franchisee of the preference clause entered into for the benefit of its franchisor when, clearly aware of the existence of that stipulation, it repurchases the latter's shares.

CA Agen, 11 June 2014, LawLex201400002131JBJ.

CA Paris, 6 June 2013, LawLex201300000964JBJ.

Cass. com., 26 February 2013, LawLex201300000265JBJ.

CA Paris, 13 June 2012, LawLex201200001329JBJ.

CA Paris, 24 September 2009, LawLex201000000211JBJ. See also CA Paris, 25 February 2010, LawLex201000000684JBJ. Cf. CA Nîmes, 8 September 2005, LawLex200600000540JBJ.

Cass. com., 13 January 2021, LawLex202100000117JBJ.

CA Lyon, 19 September 2024, LawLex202400006802JBJ.

Cass. com., 24 November 2009, LawLex200900003554JBJ, upholding CA Paris, 2 October 2008, LawLex200900003628JBJ.

Cass. com., 24 November 2009, LawLex200900003554JBJ and LawLex200900003555JBJ; CA Paris, 25 February 2010, LawLex201000000684JBJ;Cass. com., 7 June 2011, LawLex201100001031JBJ.

Cass. com., 9 June 2009, LawLex200900002927JBJ.

Cass. com., 15 May 2007, LawLex200900002656JBJ.

Cass. com., 3 April 2007, LawLex200700000429JBJ; CA Toulouse, 20 March 2013, LawLex201300000492JBJ, regarding a franchisee who was no longer part of the network at the time when the franchisor's competitor bought its business.

Cass. com., 16 December 2010, LawLex201000001473JBJ.

Cass. com., 19 December 2000, LawLex200200000693JBJ.

Cass. com., 23 January 2007, LawLex200700000142JBJ and LawLex200700000149JBJ; 2 December 2008, LawLex200800002173JBJ.

French Distribution Law

434. Complicity in breach of contractual obligations.

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434. Complicity in breach of contractual obligations.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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