Brand licensing: a false good idea?

The reclassification of licensing agreements as franchise agreements is common. This raises the question of jurisdiction: civil court or commercial court/TAE.

The Paris Court of Appeal (Division 5, 4th Chamber, March 8, 2023, No. 20/08662) ruled on this issue. The reclassification results from the transfer of know-how stipulated in the contract (e.g., in the preamble and in the contract) and an obligation to provide assistance, without the communication of a pre-contractual information document being characteristic of franchising. The brand’s promotional communications (brochures, website, interviews with executives) touting the creation of a franchise unit and the existence of assistance services are additional indicators of franchising, with the consequences that this entails.

In the same case, after cassation, the Paris Court of Appeal (Division 5, 4th Chamber, November 26, 2025, No. 25/03887) followed the same line of reasoning. Failure to comply with the pre-contractual information obligation leads to the nullity of the contract.

The Toulouse Court of Appeal (2nd Chamber, May 6, 2025, No. 22/ 04520) points out that a trademark license agreement is one by which the licensor authorizes the use of a trademark to a licensee in exchange for payment of a fee, but that trademark licensing is not defined as such by the code and that, in the absence of specific provisions, reference should be made to the rules on the leasing of property in Article 1713 of the Civil Code.

It states that a franchise agreement involves the transfer of know-how, distinctive signs, and ongoing assistance to the franchisee. If any of these three elements is missing, the agreement cannot be classified as a franchise agreement.

Once again, the reference in the preamble to the concept and know-how developed (marketing, promotion, and training methodology), the planned transition to a franchise, the training in know-how that « goes beyond the simple use of a trademark, » and the license fee identical to that of franchise agreements lead to the reclassification of the franchise agreement.

The Paris Court of Justice (3rd Chamber, Section 3, October 8, 2025, No. 24/01527) did not reclassify the contract in the absence of an obligation to provide assistance and left this issue aside in the absence of fault on the part of the licensor, in particular with regard to the error in profitability alleged by the licensee in light of the information in the DIP

In contrast, the Lyon Court of Appeal (3rd Chamber A, October 2, 2025, No. 22/01888) ruled on a request by the franchisor to disqualify the franchise agreement as a commercial concession agreement. The Court upheld the judgment, stating that « the franchise agreement is mainly characterized by the provision of the franchisor’s distinctive signs, the transfer of know-how, and ongoing assistance to the franchisee, » whereas « the commercial concession agreement is an agreement whereby an independent trader, the ‘concessionaire’, obtains from another manufacturer or wholesaler, the ‘licensor’, products that he undertakes to market under the licensor’s brand name, which grants him limited geographical exclusivity. »

The Court notes the terms of the preamble to the contract and the contract itself, which refer to ongoing assistance to the franchisee and confidential know-how, » « it follows from the contractual provisions that [the franchisor] did not merely supply products [to the franchisee].

It adopts the now customary definition of know-how: « know-how may thus include the franchisor’s ‘know-how in selecting’ products or ‘know-how in selling’ resulting from the provision of appropriate advice for their sale. »

The contract is therefore not « a simple commercial concession » but a « franchise network contract. »

It should be noted that the limitation period for an action for reclassification is five years and that « the action for reclassification of the initial contract (…) was time-barred, as the summons was issued (…) more than five years after the conclusion of the contract, » even if the contract was renewed: because « if tacit renewal gives rise to a new contract, » the action brought did indeed concern the initial contract and not the tacitly renewed one (Douai Court of Appeal, 1st Chamber, Section 2, July 3, 2025, No. 23/04227).

Frédéric Fournier