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

Pursuant to Article L. 7322-1, the non-salaried manager must benefit from all advantages granted to employees under labor law , and in particular collective bargaining conventions and agreements where they contain provisions that are more favorable to employees than the applicable laws and regulations . He may claim a notice period , compliance with the traditional dismissal procedure , with the p …

Rights of the non-salaried manager.

Pursuant to Article L. 7322-1, the non-salaried manager must benefit from all advantages granted to employees under labor law , and in particular collective bargaining conventions and agreements where they contain provisions that are more favorable to employees than the applicable laws and regulations . He may claim a notice period , compliance with the traditional dismissal procedure , with the provisions of the Labor Code relating to protected employees , protection reserved to employees against the risk of non-payment in the event of reorganization or judicial liquidation proceedings  or right to financial consideration in case of a contractual non-compete undertaking .

The manager is entitled to a minimum remuneration which is determined by the collective agreements according to the size of the branch and its forms of operation (Labor Code, Article L. 7322-3(2)). The remuneration must be at least equal to the minimum wage (SMIC) . The national collective agreement of 18 July 1963 provides for a minimum monthly commission greater than the minimum wages (SMIC) which varies according to the type of management . The minimum remuneration is guaranteed subject to the burden of an inventory shortfall which may result in reducing that remuneration , even where the manager has committed no gross misconduct , unlike the salaried manager who may claim his right to payment of minimum wages to restrict his obligation to repay the inventory shortfall . The difference in the rules explains why non-salaried managers' are often tempted to have their contracts re-classified as salaried management contracts.

Pursuant to Article 15 of the national collective agreement, the non-salaried manager, whose seniority exceeds two years, benefits, save gross misconduct, from a termination indemnity where the termination is at the initiative of the undertaking. The compensation is adjusted depending on the manager's seniority and cannot exceed a total of seven months. The right of legal severance pay is not part of the advantages listed in Article L. 7322-1 . Likewise, the prohibition on fines and financial sanctions against the employee does not apply to the non-salaried manager of branches of retail food businesses .

Non-salaried managers of cooperatives and managers of warehouses of companies having multiple branches or other commercial or industrial establishments do not fall within the rules of self-employed persons, but rather within the general rules relative to employees (Code of Social Security, Article L. 311-3, 6º), which enable them to be covered for the risks of loss of earnings and the risk of industrial accident and work-related illnesses. The 1963 agreement also provides for a contingency system which guarantees managers a social security protection where they are prevented from operating by reason of sickness or industrial accident (Article 10), and a supplementary retirement scheme (Article 11). They are also entitled to unemployment insurance under the same conditions as employees (Article 12).

Cass. soc., 4 February 1993, LawLex200200004508JBJ; 11 March 2009, LawLex200900001598JBJ.

Cass. soc., 4 February 1993, LawLex200200004508JBJ, which quashes and annuls CA Versailles, 18 October 1988, LawLex200300000561JBJ.

Cass. soc., 4 April 1990, LawLex200200004505JBJ. See also as regards the inventory procedure: CA Besançon, 18 November 1987, LawLex200200004407JBJ: the non-salaried manager of a branch of retail food business must bear the inventory shortfall found following an adversarial inventory which he attended; CA Paris, 12 December 1994, LawLex200200004426JBJ: the inventory at the end of the management in presence of the co-managers and signed by one of them is sufficiently adversarial where no reserve has been expressed regarding the absence of inspector of the principal company.

Cass. soc., 20 January 1993, LawLex200200004536JBJ.

CA Orléans, 2 April 1998, LawLex200200004429JBJ.

CA Rennes, 15 January 1992, LawLex200200004420JBJ.

Cass. soc., 2 March 1994, LawLex200200004534JBJ: the clause of a non-salaried management contract for branches of retail food businesses which provides for a termination without notice period or compensation in case of inventory shortfall not reimbursed within eight days cannot prevent the application of the social security provisions that protect the employee as regards the notice period. Article L. 7322-1 of the Labor Code provides that as an exemption to Article L. 3141-1, the payment of compensation equal to one-twelfth of the remunerations received during the reference period may be substituted to the granting of the prior notice by mutual consent of the parties.

Cass. soc., 10 January 2001, LawLex200200004501JBJ, upholding CA Montpellier, 17 September 1998, LawLex200200004431JBJ: the procedure of dismissal of non-salaried managers of branches of retail food businesses is complied with where they have been convened to a meeting prior to the termination of the contract and that a termination letter stating reasons has been notified to them.

Cass. soc., 8 December 2009, LawLex201000000026JBJ, as regards the dismissal of a non-salaried managing agent empowered with a representative agency pursuant to Article 37 of the national collective agreement of food businesses with branches of 18 July 1963.

CA Orléans, 15 June 2000, LawLex200200004430JBJ.

Cass. soc., 8 December 2009, LawLex201000000027JBJ and LawLex201000000026JBJ.

Cass. soc., 2 March 1994, LawLex200200004534JBJ; 8 November 1994, LawLex200200004506JBJ, which quashes and annuls CA Reims, 26 February 1990, LawLex200300000768JBJ and specifies that the overall commission fixed by the contract of non-salaried management of branch of food business for two co-managing spouses must be at least equal to the minimum wages (SMIC).

1st class management: EUR 1,500 per month; 2nd class management: EUR 2,170 per month; the minimum amounts may be reviewed once a year, save exceptional circumstances (1963 Agreement, Article 5). For a maximum of one year, the minimum amount for the 2nd class is guaranteed where the turnover of a 2nd class branch undergoes a significant and long-lasting decrease justified, in particular, by change in its environment (1963 Agreement, Article 13, B).

The burden of the inventory shortfall, which represents the difference between the value of the initial stock plus that of goods supplied and the value of deposited goods at the time of the inventory plus that of the sold products , must be on the manager where it is found further to an inventory in the presence of both the parties . The right of the non-salaried manager to a monthly remuneration at least equal to the legal minimum wages (SMIC) does not exempt him from the duty to cover any inventory shortfall . However, a clause in the agency-management contract cannot purport to deprive the manager in advance from the guarantees offered by labor law at the time of the termination of the contractual relationships by describing the inventory shortfall as a gross misconduct ("faute lourde") . Furthermore, contrary to the solutions found in matters concerning operating losses, when a dispute concerns inventory shortfalls, it is not necessary to establish the existence of a derogation from the provisions of Article 2000 of the Civil Code .

According to Article 22 of the national collective agreement ("accord collectif national"), the inventory is defined as the detailed statement of the listing of goods (products, ancillary services and packaging) in a branch, with a view to assess real existing goods as follows: “Value of initial stock + value of received goods = revenues paid + value of final stock”. It is drawn upon consultation with both parties . The adversarial principle is not complied with where the non-salaried managers of a branch of a retail food business are ordered to pay a sum aimed at compensating for a shortfall in goods without having received the documents used as calculation basis to determine the amount of the shortfall ; the non-salaried manager must attend each expertise meeting . The resigning manager who challenges an inventory shortfall where he is no longer in the premises must also be able to make verifications before accepting accounts .

Where the total reveneues paid and the stock found on the day of the inventory are less than the initial stock and the value of the received goods, there is missing stock or missing revenue from their sale. Otherwise, there is surplus (Article 22). The non-salaried manager who is under an obligation to restitute stock even where there has been gross misconduct , must repay in kind or in cash any missing goods the disappearance of which remains unexplained . Losses resulting from negligence for carelessness are borne by him . The last commissions, paid vacation and notice owed by the principal may be subject to an offset for the shortfall . The finding of an inventory shortfall may constitute a real and serious cause of dismissal subject to the provisions relating to the termination of the open-ended contract of employment (Labor Code, Article L. 1231-1 et seq.) and those relating to the statute of limitations for sanctions (Labor Code, Article L. 1332-4) .

The collective agreement provides for at least three inventories of payments for the first year, and subsequently at least one annual inventory. The manager is informed of the date of the inventory at least eight days before and receives the inventory report within a period not exceeding one month. From the receipt of these documents, he has fifteen days to review them and submit any comments he may have. The personal management account is settled no later than two months after the date of the inventory (Article 22(c) of the national collective agreement).

The non-salaried manager also assumes the operational risks. However, a finding of mismanagement is not in itself sufficient to characterize serious misconduct that might result in the immediate termination of the contract without notice or compensation . Selling goods at prices higher than those fixed by the principal , taking sick leave and closing the business without finding a replacement , being in a position of incapacity to manage, coarsely insulting a representative of the company in the presence of customers  all constitute misconduct on the part of the manager. Misconduct committed by a manager is also attributable to his co-manager if the contract stipulates joint liability between them for the whole scope and performance of their agency . Lastly, save gross misconduct, the non-salaried manager retains his right to a monthly remuneration at least equal to the minimum wage (SMIC), irrespective of the volume of shortfall attributable to his management .

The non-salaried manager's contract can contain a non-compete clause. For such a clause to be valid it must be indispensable to the protection of the legitimate interests of the undertaking and must provide for financial consideration. The non-compete clause is null and void if there is no provision for financial consideration  and its presence in the contract causes the manager compensable harm .

Cass. soc., 10 March 1988, LawLex201000000758JBJ.

CA Besançon, 18 November 1987, LawLex200200004407JBJ.

CA Grenoble, 18 February 1990, LawLex200200004315JBJ.

but not the losses or damages owed to the poor state of the delivery reported no later than 48 hours after the date of delivery or those resulting from the poor state of the premises (Collective agreement of 18 July 1963, Article 23, B).

Cass. soc., 8 December 2009, LawLex201000000027JBJ, which quashes and cancels CA Aix-en-Provence, 4 March 2008, LawLex201000000078JBJ, as regards a termination of contract described as a dismissal without real and serious cause because the termination procedure has been initiated after expiry of the statute of limitations relative to the breach.

Cass. soc., 4 October 1995, LawLex200200004528JBJ, upholding CA Toulouse, 13 December 1991, LawLex200300000585JBJ.

CA Montpellier, 10 May 2000, LawLex200200004267JBJ. See also CA Pau, 19 April 1991, LawLex200200004432JBJ, as regards the continuous and repetitive practice of changing sale prices fixed.

CA Aix-en-Provence, 30 May 1994, LawLex200200006287JBJ.

Cass. soc., 12 February 1992, LawLex201000000770JBJ.

CA Montpellier, 10 May 2000, LawLex200200004267JBJ.

Cass. soc., 31 May 1989, LawLex201000000769JBJ.

Cass. com., 31 May 1989, LawLex201000000769JBJ; 4 April 1990, LawLex200200004505JBJ, which specifies that, unless otherwise provided for, the manager assumes the inventory shortfall even in the absence of gross misconduct.

Cass. soc., 28 September 2011, LawLex201100001530JBJ;  9 January 2013, LawLex201300000027JBJ, ruling that the voided clause automatically causes harm to the manager; 27 March 2013, LawLex201300000867JBJ.

Cass. soc., 5 October 2016, LawLex201600001639JBJ.

Cass. soc., 14 October 2009, LawLex200900003211JBJ, which quashes and cancels CA Aix-en-Provence, 11 March 2008, LawLex200900003237JBJ. See also Cass. soc., 28 October 1997, LawLex200200004514JBJ, which confirms CA Lyon, 26 September 1994, LawLex200300000644JBJ: the clause of a non-salaried management contract of a branch of a food business which makes it possible to describe the inventory shortfall as serious misconduct resulting in a termination of the contract without compensation or notice, is not binding on the labor court; Cass. soc., 11 March 2009, LawLex200900001598JBJ, which quashes and cancels CA Lyon, 15 December 2006, LawLex200900001646JBJ: a clause of a managing agency contract cannot in advance deprive the manager of the guarantees offered by labor law at the time of the termination of the contractual relationships by considering that the inventory shortfall is gross misconduct; Cass. soc., 27 March 2013, LawLex201300000867JBJ.

CA Lyon, 6 November 2014, LawLex201400001278JBJ.

A statement of accounts enforceable with respect to both parties must be established. If the manager cannot be represented, an official ("officier ministériel") attends the inventory operations.

Cass. soc., 17 November 1988, LawLex200200004526JBJ which quashes and annuls CA Aix-en-Provence, 30 October 1986, LawLex200200006358JBJ.

Cass. soc., 17 November 1988, LawLex200200004526JBJ.

CA Paris, 12 December 1994, LawLex200200004426JBJ.

CA Nîmes, 10 December 1998, LawLex200200006213JBJ.

French Distribution Law

568. Rights of the non-salaried manager.

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568. Rights of the non-salaried manager.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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