Can a French Franchisee Sell Online? Passive Sales and EU Competition Rules

Can a French Franchisee Sell Online? The Direct Answer

Can a French franchisee sell online? As a matter of principle, yes. A franchisee is an independent trader operating its own business for its own account, and EU competition law treats sales over the internet as passive sales that a supplier may not prohibit outright. A franchise agreement may impose conditions on how the franchisee presents the network and its goods; it may not close the online channel altogether or partition the market so that one distribution channel is reserved to the franchisor. The distinction that governs the whole question is between active selling, which an exclusivity clause may restrict within limits, and passive selling, which the franchisee remains free to carry out.

The practical picture is more nuanced than the principle. A franchisee who runs a separate merchant website of its own is rare. That is not because the law forbids it, but because the franchisor is entitled to impose network-image standards that most franchisees prefer not to fight, and because the franchisee joined the network precisely to benefit from a collective dynamic in which the network's own website is a leading instrument. The real battleground is therefore less the franchisee's own site than the franchisor's network site and how its sales interact with the territory the franchisee paid to exploit.

This article sets out what a French franchisee may always do online, where the franchisor may lawfully draw the line, and how the block-exemption framework and the Pierre Fabre case shape the answer. It should be read together with the companion articles on territorial exclusivity and on the franchisor's network website.

Active and Passive Sales: What a French Franchisee May Always Do Online

The starting point is the difference between active and passive sales, because the franchisee's freedom to sell online rests on the second category. Active selling means actively approaching individual customers or a specific customer group or territory — targeted advertising, direct mail, unsolicited visits, or channelling online traffic toward customers located in a territory that has been exclusively allocated to another distributor. Passive selling means responding to unsolicited requests from individual customers, including delivering goods or services to a customer without the sale having been initiated by actively targeting that specific customer, customer group or territory.

An exclusivity clause in a franchise agreement may restrain active selling into a territory reserved to another network member. It may never suppress passive selling. The block-exemption framework defines passive sales in terms that include sales made in response to spontaneous demand from individual customers, the delivery of goods or services to the customer that follows, and sales resulting from participation in public tenders or private procurement procedures. A customer who finds a franchisee and places an order — including a customer located outside that franchisee's own territory — is a passive sale that the network cannot forbid.

The consequence for the online question is decisive. Because an internet sale is, by its nature, a response to a customer who reached the site and placed an order, it is analysed as a passive sale. A clause that prevented the franchisee from selling online, or that reserved the entire online channel to the franchisor, would strike at passive selling and could not stand.

Passive Sales in a Franchise in France and the Limits of Territorial Exclusivity

Whatever exclusivity a franchisee is granted, that exclusivity does not entitle the network to bar passive sales. Franchise agreements frequently allocate an exclusive territory, and three forms are commonly distinguished: franchise exclusivity, under which the franchisor undertakes not to install another franchisee in the zone; implantation exclusivity, under which the franchisor also undertakes not to open its own branch there, so that the franchisee is the sole representative of the brand on its territory; and supply exclusivity, under which the franchisor will not even supply a third party located in the zone. These are addressed in detail in the companion article on territorial exclusivity in a French franchise.

In every one of these configurations, an exclusivity clause cannot have the effect of prohibiting passive sales — sales that follow spontaneous requests from individual customers, including the delivery of goods or services to the customer without the sale having been initiated by active targeting of that specific customer, customer group or territory, and including sales that result from participation in public tenders or from responding to private procurement procedures. A franchisee holding an exclusive territory may accordingly still receive and fulfil orders from customers outside that territory who came to it unsolicited, and, conversely, a franchisee cannot use its exclusivity to demand that other members be barred from serving passive demand that originates in its zone.

Online Sales Restrictions and EU Competition: the Pierre Fabre Rule

The prohibition on closing the online channel is a rule of EU competition law, and it applies whenever the franchise agreement is capable of affecting trade between Member States. The governing provision is Article 101 of the Treaty on the Functioning of the European Union, which prohibits agreements that have the object or effect of restricting competition. A clause that partitions the market by distribution channel — reserving online sales to one operator and confining the others to physical outlets — is liable to be treated as an anticompetitive restriction and is therefore prohibited.

The point was settled by the Court of Justice of the European Union in Pierre Fabre, Case C-439/09, 13 October 2011. The French competition authority (the Autorité de la concurrence) and the Court confirmed that a practice compartmentalising distribution channels — in that instance an effective ban on internet sales within a distribution network — is capable of being anticompetitive. A general ban on selling contract goods online amounts, absent objective justification, to a restriction by object: the very kind of clause that cannot be salvaged simply by pointing to the network's interest in its image.

That principle had already been spelled out by the European Commission. The guidelines issued in connection with the earlier block-exemption regulation stated in terms that each distributor must be authorised to sell the contract products online. Pierre Fabre gave the principle the authority of the Court and made clear that a network cannot dress up a channel ban as a mere quality requirement. The image and reputation of the network remain a legitimate concern, but they justify proportionate conditions on how goods are sold online, not the elimination of the channel.

The Block-Exemption Framework and Online Sales Restrictions in a Franchise

The answer to whether a French franchisee may sell online is now codified. Regulation (EU) 2022/720 of 10 May 2022, on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, replaced Regulation (EU) 330/2010 of 20 April 2010 with effect from 1 June 2022. The current regulation carries forward and confirms the protection of online sales: the earlier position, expressed in the Commission's guidelines to the effect that every distributor must be allowed to sell the contract goods over the internet, is now written into the block-exemption regime itself.

Within that framework, restrictions that would prevent a buyer from selling online, or that would materially curtail its effective use of the internet to sell to customers, are treated as serious restrictions that take the agreement outside the safe harbour. A franchisor may still set standards — for example, requirements that protect the brand's presentation — but the standards must not operate as a disguised ban and must be applied so that online selling remains genuinely possible. This is the block-exemption counterpart to the Pierre Fabre holding: the two work in the same direction.

Franchise agreements enjoy a degree of latitude that reflects their particular features — the use of a uniform business name, uniform business methods including the licensing of intellectual property rights, and the payment of royalties in exchange for the benefits granted. Restrictions strictly necessary to make the franchise system work can fall outside Article 101(1) altogether: for instance, restrictions that stop the franchisee from using the franchisor's know-how and assistance to benefit competitors, and non-compete obligations on the goods or services purchased by the franchisee that are necessary to maintain the common identity and reputation of the network. In that last case, the duration of the non-compete obligation does not matter, provided it does not exceed the duration of the franchise agreement. This latitude concerns the protection of know-how and network identity; it is not a licence to close the online channel.

Why a French Franchisee Rarely Runs Its Own Website

If the law protects the franchisee's right to sell online, why is a franchisee with its own merchant website so uncommon in practice? The answer lies not in prohibition but in two structural realities. First, the franchisor may always impose standards intended to preserve the image of the network, and it makes full use of that power. Those requirements are often so exacting that they discourage a franchisee from launching an initiative of its own. The right to open a site coexists with a set of conditions demanding enough that the site rarely materialises.

Second, the franchisee chose to join a network in order to benefit from a collective dynamic, and the network's website is one of the spearheads of that dynamic. A franchisee who has paid an entry fee and ongoing royalties to trade under an established banner has limited incentive to build and maintain a parallel online storefront that competes with the network's own. The franchisee's own theoretical freedom to operate a merchant site is therefore, in most networks, close to purely notional — not because it is unlawful, but because the economics and the image standards make it impractical.

This is why the sharper conflict in French franchising is not over the franchisee's own site but over the franchisor's network site. The network site is run by, and often for the benefit of, the franchisor. When it sells to customers who fall within a franchisee's zone, it converts the franchisee's investment in a physical outlet into a showroom for sales booked elsewhere. That tension is the subject of the next section.

Passive Sales, the Franchisor's Website and the Balance of Interests

The franchisor legitimately controls the network's website; operating it is within the franchisor's power. That power carries a risk for the franchisee, who may be reduced to a mere shop window: the franchisee bears the cost of installing and running a physical outlet, answers customers' questions, handles fittings and complaints, and absorbs the dissatisfaction, while the online sales are booked to the network site to the franchisor's benefit. Consumers increasingly treat physical shops as show-rooms — they look, they discuss, they try on, then they go home and buy online. A franchisee who assumes all the costs of a physical point of sale, yet is excluded from the profit of sales made on the network site to customers in its own catchment area, has been turned into a simple depositary.

Balancing these interests is the heart of the matter. The franchisor has a genuine and protectable interest in the identity, coherence and reputation of the network; that interest supports uniform standards and the central operation of the network site. The franchisee has an equally genuine interest in the profitability of its business, the customer base it builds, and its freedom to make passive and online sales. A network site that becomes an instrument of unfair competition against the very franchisees who sustain the brand cannot be reconciled with the loyalty that is the cement of a franchise relationship.

The most prudent course — and often, in some sectors, a practical necessity — is to negotiate a specific clause on this subject rather than leave it to the balance of bargaining power. It is entirely possible to stipulate that franchisees receive a commission on sales that give rise to a delivery within their territory. In the ready-to-wear sector, for instance, changing consumption patterns mean that customers frequently visit the shop only to try garments on, or to return and exchange goods bought more cheaply online, leaving the franchisee to manage fittings and after-sales service without a share of the sale. A commission or profit-participation clause addresses that imbalance directly.

Negotiating Online Sales Terms in a French Franchise Agreement

Because the general law leaves many of the sensitive questions to the parties, a candidate franchisee should treat the online terms as a negotiation point rather than a formality. The block-exemption framework guarantees that the channel cannot be closed, but it says little about how the proceeds of the network site are shared, how catchment areas are respected online, or who controls the customer data. Those are matters for the contract, and the franchisee's leverage is greatest before signature.

These points connect directly to two neighbouring subjects. Territorial exclusivity determines what the franchisee is entitled to protect against active selling, and is addressed in the companion article on territorial exclusivity in a French franchise. The operation of the franchisor's own network website — its promotions, its stock, its data, and the profits it books in the franchisee's catchment area — is addressed in the companion article on the franchisor's network website. Read together, they set the frame within which the online question is answered.

Frequently Asked Questions About Whether a French Franchisee Can Sell Online

Can a French franchisee sell online at all?

Yes. Online sales are analysed as passive sales in competition law, and a franchisor cannot lawfully prohibit them as a class. A clause that closed the online channel, or that reserved the entire online channel to the franchisor, would be an anticompetitive channel restriction.

What is the difference between active and passive sales for a franchise in France?

Active selling means actively approaching a specific customer, customer group or territory. Passive selling means responding to unsolicited demand from an individual customer, including delivering goods to a customer who initiated the sale. An exclusivity clause may restrict active selling into another member's territory; it cannot restrict passive sales.

Does my exclusive territory stop other franchisees from selling to customers in my area online?

Not entirely. Exclusivity protects you against another member's active selling into your territory. It does not bar a fellow member from serving passive demand — an unsolicited order from a customer who reached that member on their own initiative — even where the customer is located in your zone.

What did the Pierre Fabre case decide about online sales restrictions and franchise EU competition rules?

In Pierre Fabre (Case C-439/09, 13 October 2011), the Court of Justice of the EU and the French competition authority confirmed that compartmentalising distribution channels — in effect banning internet sales within a network — is capable of being anticompetitive under Article 101 TFEU. A general online ban is, absent objective justification, a restriction by object.

Which regulation governs online sales in a franchise now?

Regulation (EU) 2022/720 of 10 May 2022 is the current vertical-agreements block exemption. It replaced Regulation (EU) 330/2010 of 20 April 2010 from 1 June 2022 and codifies the protection of a distributor's right to sell the contract goods online.

Can my franchisor stop me from running my own website?

In principle no — forbidding franchisees from operating their own merchant website is unlawful, because online sales are passive sales. In practice, a franchisee-run website is rare: the franchisor may impose demanding image-preservation standards, and franchisees join the network to benefit from its collective site rather than to build a competing one.

Can I claim a share of the sales made on the network website in my territory?

Not automatically. The most reliable route is to negotiate a specific clause — for example, a commission on sales delivered into your territory. Without it, you risk carrying the costs of a physical outlet while the network site captures the sales booked in your catchment area.

Key Takeaways: Can a French Franchisee Sell Online?

How Our French Lawyers Can Help With Whether a French Franchisee Can Sell Online

Whether you are a foreign brand structuring a French network or a franchisee weighing an agreement, the online terms deserve close attention before signature. We advise on drafting and reviewing the clauses that govern the online channel, active and passive selling, and the operation of the network website, and on aligning them with Article 101 of the Treaty on the Functioning of the European Union, Regulation (EU) 2022/720 of 10 May 2022, and the Pierre Fabre line of authority. We also negotiate the profit-participation and transparency clauses that keep a network site from turning a franchisee into a showroom.

This article is for general information only. It does not constitute legal advice. The treatment of online and passive sales in a franchise depends on the exact wording of the agreement, the structure of the network, and whether trade between Member States is affected. Contact our French lawyers for qualified advice before signing a franchise agreement, launching a network website, or challenging an online-sales restriction.