FRANCE Law and Practice Contributed by: François-Xavier Awatar and Lina Lahlou, Osborne Clarke
overriding mandatory provisions of French law shall apply to any franchise agreement performed within French territory, in accordance with Article 9 of the Rome I Regulation. Accordingly, regardless of the governing law chosen by the parties, the franchisor is required to comply with all other applicable overriding mandatory provi - sions of French law whenever the franchise agreement is to be performed in France. 8.2 Local Law Requirements There is no requirement under French law that the franchise agreement be governed by French law. However, as set out in 8.1 Possibility of a Franchisor Stipulating Non-Local Law , the overriding manda - tory provisions of French law, within the meaning of Article 9 of the Rome I Regulation, shall apply to any franchise agreement performed within French terri - tory, irrespective of the law designated by the parties to govern the agreement, the application of which is deemed necessary for the safeguarding of the politi - cal, social or economic organisation of France. These include, in particular, the pre-contractual dis - closure requirements derived from the Doubin Act (Articles L. 330-3 and R. 330-1 of the Commercial Code), the mandatory rules of contract law, includ - ing the obligation of good faith (Article 1104 of the Civil Code), the provisions relating to restrictive trade practices set forth in the Commercial Code and the obligations arising under competition law. With respect to intellectual property rights, there is similarly no requirement that such rights be governed by French law. However, where the franchisor’s trade mark is not registered in France, it does not benefit from legal protection within French territory. Given that the franchisor’s trade mark and distinctive signs form an integral part of the franchise agreement, and that the franchisee pays royalties in consideration for the right to use such signs and for the protection afforded by their exclusive character, the absence of trade mark registration in France may deprive the fran - chise agreement of its essential consideration. In such circumstances, the franchisee may seek the annul - ment of the agreement on the ground of derisory or
illusory consideration, pursuant to Article 1169 of the Civil Code. 8.3 Mandatory Content French law does not prescribe any specific manda - tory content to be included in a franchise agreement, provided that the agreement contains the essential obligations inherent to the franchise relationship, namely the transmission of know-how, the provision of assistance and the grant of a trade mark licence. Furthermore, the general provisions of the Civil Code are implied in the franchise agreement as a matter of mandatory law. In particular, the obligation of good faith in the performance of contracts (Article 1104 of the Civil Code), the pre-contractual duty of disclosure (Article 1112-1 of the Civil Code) and the requirement of contractual balance apply to franchise arrange - ments. The franchise agreement must not give rise to a sig - nificant imbalance between the rights and obligations of the parties within the meaning of Article L. 442-1 I of the Commercial Code. By way of illustration, a contractual provision depriving the franchisee of the right to terminate the franchise agreement or to bring proceedings before the competent court has been held to constitute such a significant imbalance. 8.4 Prohibited Provisions in Local Law French law does not contain any blacklist of prohibited provisions specific to franchise agreements. However, the following categories of clauses shall be deemed unwritten or unenforceable as a matter of mandatory law: • post-contractual non-competition clauses which do not satisfy the cumulative conditions set forth in Article L. 341-2 of the Commercial Code; • exclusive supply clauses exceeding a duration of ten years, in accordance with Article L. 330-1 of the Commercial Code; • clauses constituting hardcore restrictions within the meaning of EU Regulation 2022/720 on vertical agreements (VBER), including, in particular, resale price maintenance and absolute allocation of mar - kets or customers;
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