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Franchise News - Article
25.09.2008
What is the French Doubin law ?
There is not really a law on franchise. In order to fix potential problems and protect the franchisee, the Doubin law has been voted in december 1989
This law compels the franchisor to provide several informations – which content is fixed by the edict – to the future franchisee which hence can make his choice with full knowledge of the facts.
First article of the December 31st 1989 law (Doubin law) : Any person who makes available for another person a commercial name, a brand or a brand name, and which asks to this person an exclusive or quasi exclusive commitment concerning the activity must, prior to the signature of any contract, provide to the other signer a document which gives faithful information in order to commit with full knowledge of the facts.
This document – which content has been decided by an order published on the 1st April 2001 – specifies nthe age and the experience of the company, the development prospects of the market, the importance of the operators channel, the duration, the renewal, cancellation, rights cession and field of exclusivity conditions.
When a payment is demanded prior to the signature of the contract, notably in order to book a location, the services given in counterpart of this amount of money are made clear on a written document, as well as the mutual obligations in case the contract is not signed afterwards.
The document described by the first indent, as well as the contract project must be transmitted at least 20 days before the signature of the contract, or before the payment of the sum which is described in the previous indent.
The effective order of the first article of the 4th April 1991 specifies which information the franchisor has to give the the potential franchisee.
The document described in the first indent must give the following
informations :
1) The address of the company's main office and the nature of
its activities, with juridic specifications, the name of the chief executive of
the company, if it is a person, or of its company managers. If necessary, the
amount of capital can be specified. ;
2) The identity number of the company.
3) The bank location(s) of the company. This can be limited to the 5 main banks of the company.
4) The date of the creation of the company, and the main steps of its evolution, including the evolution of the channel of operators, if necessary, and every indication which could give information on the professional experience acquired by the company manager.
The informations of the last indent cannot be about more than the last 5 years before the delivery of the document. These informations must be completed by a presentation of the general and local opportunities of the market, products or services which are linked to the contract and the development opportunities of this market.
This part of the document must specify the annual balance sheets of the last two years, or for companies which asks for public loans, the reports established for the last two years (law n°66-537 of the 24th July 1966).
5) A presentation of the channel of operators must be about : a) the list of the companies which are part of the channel, with the development mode of every company. ; b) The address of the companies which are established in France which are linked to the person who offer the contract. ; c) The number of companies which, linked to the channel by the same bounds than in the contract offered, have ceased to be part of the channel during the year before the delivery of the document? The document must specify if the contract just ended or if it has been cancelled ; d) if necessary, the presence in the activity area planned by the offered contract of any company in which the contracts are offered, with the explicit approval of the person who offers the contract, the products or services offered in the contract.
6) The specification of the duration of the offered contract, the renewal,
cession or cancellation conditions, as well as the field of exclusivities.
Besides, the document must specify the nature and the total amount of the
expenses and investments which are specific to the brand or to the brand name,
and that the person about to sign the contract will have to do before beginning
the exploitation.
Jean Samper
www.ac-franchise.com
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