Franchising : new obligations regarding employees

Franchise networks of a significant size shall adapt to new regulation arising from the « El-Khomri » Act.

This act imposes the creation of “dialogue committees” consisting of franchisee’s and franchisor’s employees (Article 64 of the Act), despite the strong opposition of market players.

The law reads as follows. First, the obligations below apply  when a franchise network contains franchisees whose aggregate number of employees is at least three hundred hired in France, and when the franchise agreement binding on the franchisor and franchisees contains provisions affecting the organization labor and working conditions in the franchisee’s companies. In this case, if a trade union organization which has an activity  in the business (e.g. for restaurant franchising, a trade union acting for restaurant employees), the trade union may require from the franchisor to negotiate with the trade union the  creation of a dialogue committee gathering representatives of employees of the franchisees and représentatives of the franchisees. This committee shall be chaired by the franchisor. 

The members of the committee and the franchisor shall enter into an agreement which purpose is to determine its members, appointment , the duration of their appointment, the frequency of the meetings, and how long the time granted to employees, members of the committee over their working hours to participate to the committee. Failing this, the number of the instance of meetings shall be two per year and a decree shall be enacted which will determine the other conditions.

The agreement shall also define the budget and material means to be granted to the committee members for their missions, including travel and accommodation costs. One may fear that the franchisor shall be expected to pay these costs.

The committee shall be inform of any decision from the franchisor which could affect the number or organization of employees, the working hours or the labor conditions…

The committee may propose any improvement of working conditions, labor and training.

The text will be applicable only after publication of the above-mentioned decree . Franchisors falling under the scope of the new regulation should carefully review their franchise agreements.

Frédéric Fournier

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