FRANCE Trends and Developments Contributed by: François-Xavier Awatar and Lina Lahlou, Osborne Clarke
vide assistance, compliance with brand image by the franchisee, termination of the agreement, etc). This reinforces legal certainty and provides a clear frame - work for franchisors seeking to establish themselves in France. Franchise law nonetheless remains essentially con - tractual in nature. Accordingly, the franchisor is free to stipulate, within the agreement, the terms governing the use of the trade mark, the transfer of know-how, the treatment of the customer database upon expiry of the agreement and other matters. This necessarily requires that the franchisor obtain appropriate legal advice. As a counterpart to this contractual freedom, French law is particularly developed with respect to restric - tive competition practices. The franchisor may thus face claims based on significant imbalance or abrupt termination of established commercial relationships. Accordingly, the franchisor must ensure that a genuine balance is maintained within its franchise agreement, that it provides for a termination mechanism incorpo - rating a reasonable notice period and that the terms of the franchise agreement comply with applicable com - petition law. Employment law regulations are also par - ticularly onerous for businesses operating in France. Taxation Tax obligations in France are significant and may be subject to withholding at source where the franchisor is located outside France. In such cases, corporate income tax and value added tax (VAT) apply, rep - resenting a cost that must be anticipated. In addi - tion, franchisees, in their capacity as employers, are required to pay social security contributions and charges before disbursing salaries to their employees. Digitalisation Digitalisation is a favourable asset for franchise net - works as it facilitates, streamlines and accelerates company formations and transactions within the net - work.
With respect to corporate formalities, France has established a one-stop shop for business formali - ties ( Guichet unique des formalités d ’ entreprises ), managed by the French National Institute of Indus - trial Property ( French National Institute of Industrial Property –INPI), which enables the completion of formation, amendment and cessation of activity for - malities online. Applications are then directed to the relevant authorities – commercial court registries for commercial companies, Union for the Collection of Social Security Contributions and Family Allowance Contributions ( Union de recouvrement des cotisa- tions de sécurité sociale et d ’ allocations familiales – URSSAF), tax authorities, etc. This constitutes a major tool for franchisors seeking to develop their network in France. With respect to invoicing, France has recently imple - mented a framework for the dematerialisation of invoices. This reform offers a structuring opportunity that facilitates transactions within the network. As a result, the receipt and processing of invoices are faster, and data entry errors, duplicates and document losses are reduced. With respect to the execution of franchise agree - ments, electronic signatures are now accepted and have recognised evidentiary value. This facilitates the conclusion of agreements remotely with a franchisor seeking to expand into France. All of these digitalisation developments require signifi - cant adaptation by the franchisor within its network. Conclusion Although the economic situation has been affected by crises in Europe, the French franchise market remains promising and continues to grow. Establish - ing a presence in the French market also opens the door to the broader European market and the Schen - gen Area. While French legislation is highly regulated, it provides a secure framework for the parties to a franchise agreement.
27 FRANCHISING 2026
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