Macron Act (retail): Franchisors: take your pens and erasers

Macron Act (retail): Franchisors: take your pens and erasers.

Take your pen is the effect of the future Article L.341-1 of the French Commercial Code resulting from Macron Act. Franchisors often use groups of contracts (franchise agreemet, management agreements, procurement and supplies), termination of one of these contracts will now mean termination of all, except for the commercial lease (as defined under French law) and for partnerships or companies. One may anticipate the effects of such termination: termination shall carry implications for the monies or indemnities mutually owed, rights of intellectual property, stocks and inventories and various restitutions between the parties. The effects of the indivisibility are known for financing operations in particular but now shall govern the franchise-related agreements. 

This new provision will nevertheless combine with that which involves the responsibility of the party terminating an agreement in a too quick manner: indeed, the Macron law certainly does not have the effect of excluding the application of the provisions of Article L.442 -6 I 5 ° of the French Commercial Code on steady commercial relations. Except if there is a legitimate merit for the termination of a contract –and now the termination of other agreements–, such as a serious default or payment default …, the party which terminates an agreement shall already evaluate the right notice period taking into account to full duration of the relationships, its intensity, or potential dependence, or, in some cases, the use applicable in a profession. The combination of Article L442-6 I 5° with the Macron Act will naturally lead to anticipate with higher care the issue of the notice period, as this will now impact several agreements at the same time.

The eraser will operate for the implementation of the provision of the future Article L. 341-2. – I, which covers « any clause that, after the expiration or termination of the contracts referred to in Article L. 341-1, restrict the freedom of exercise of the commercial business of the party” who previously signed the franchise contract, “is deemed unwritten. « 

Number of franchisor already removed the post-contractual non-compete or non re-affiliating clause, aware of the reluctance of the courts to enforce them, especially in markets where supplies require an affiliation with a specialist provider and no direct procurement is possible from suppliers (foods…).

The pen shall again be useful to correct such non-compete clauses when unnecessarily extensive.

Macron Act aligns with competition law (Council Regulation No 330/2010, the Guidelines on vertical restraints), and case law established including food retail and in the real estate sector).

The clause shall remain valid if it is cumulatively (i) limited to goods and services in competition, (ii) limited to point of sale, (iii) necessary to protect the know-how substantial, specific and secret transmitted, appropriate justification, (iv) limited to one year after the expiration or termination of the contracts referred to in Article L. 341-1.

This provision shall apply within a year.

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Frédéric Fournier

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