Whether you are a franchisor or a franchisee, perhaps today you are faced with a conflict and wish to stop an entire collaboration. You feel you do not know if the franchisee or the franchisor has the rights to the disputed commercial establishments. As the franchisee, can you leave the collaboration freely? And as franchisor, should you accept the proposition of the franchisee, or do you have ways to avoid this choice? PICOVSHI lawyers has developed some answers for these important questions.
The Particular Characteristics of the commercial establishments of the franchisee
Firstly, a commercial establishment is comprised of tangible and intangible personal property, tangible personal property being, all that is considered the material of commerce relative to its exploitation, its storage, etc… and intangible personal property being all that is concerned with the logo, the trade name, the clientele, and the rights to intellectual property.
Now in franchise law, there must be a difference in the beginning: the logo belongs to the franchisor. Therefore, it is impossible for the franchisee to transfer it to a third party without the franchisor having already been consulted and agreeing. Alternatively, the franchisee can sell his commercial rights without the logo or name of the business attached to it.
If the franchisor refuses the application of a buyer of the commercial establishments associated with the logo of the franchisee (remember that the franchise agreement is firstly a contract “intuit personae,” that is to say attached to the person co-contractually), the franchisor has a right to pre-emption. Meaning that within a certain time limit, the franchisor has priority, and may take business assets belonging to the franchisee.
The assignment of commercial establishments by the franchisee without a sign
The franchisee can be tempted to give up their commercial establishments with out being attached to them by a logo, thus ruling out problems with the franchisor.
Pay attention in the case of giving up commercial establishments without a logo, it should be ensured that the initial contract does not have a clause prohibiting affiliation, and if necessary to study their reach. In effect a strict clause of disclaimer of affiliation prohibiting affiliation may prohibit the franchisee’s business assets being used even after cession.
Besides that, the franchisor can also decide to use the penalty clause relating to the franchise agreement in case of the cession of commercial establishments without a logo, consisting of the payment of indemnities by the franchisee. However, if the latter does not forget the obligations conferred by the approval and pre-emptive clauses, the payment of the penal clause will constitute a threat to the franchisor, but this is rarely a reality, as the courts are reluctant to confront these situations.
Lawyers and the commercial establishments of the franchisee: what advantages?
If you are a franchisor or franchisee and you wish to legally secure your contracts, it is recommended to call upon a lawyer at the beginning of the collaboration, at the same time as the communication of precontractual information (failure to do so may cause serious consequences for the franchisor).
If the situation seems idyllic at the start, many become frustrated later on for not having considered all the possible situations. Lawyers in franchise law are meant to look ahead for all of the situations that at risk and alleviate all eventual difficulties in the future. Clauses relating to “know-how,” to non-concurrence, to the reclassification of contracts related to work contracts, or finally negotiation of the cession of clientele or of business, PICOVSCHI Lawyers will help you develop a network of solutions.
