Force Majeure and Hardship (Imprévision) in French Franchise Contracts After COVID

Force majeure and hardship in a French franchise: what a crisis actually changes

When an unforeseen crisis strikes a network, the first questions a franchisee asks are practical: must I keep paying my royalties while my outlet is shut, and can I be pursued if I stop? The law that answers those questions is not a single doctrine but two, and they do very different things. Understanding force majeure and hardship in a French franchise — force majeure under Article 1218 of the Civil Code, and hardship, or imprévision, under Article 1195 — is the difference between believing you are released and discovering, months later, that you owed the money all along.

The starting point is a methodological one that is easy to miss. The legal classification of a crisis must not be confused with the classification of its consequences. A government-ordered closure may or may not amount to force majeure, but that question is separate from whether the resulting inability to trade can be analysed under some other rule — a defective performance by the counterparty, a change of circumstances, a right to a price reduction. A single event can be routed through several mechanisms, and the franchisee who fixes only on force majeure usually chooses the weakest of them.

The second point is that classification is relative. No event, however grave, is force majeure or hardship in the abstract. What matters is the severity of the situation and the specific position of each party. The same closure may be insurmountable for one franchisee and a mere inconvenience for another — a food-retail franchisee whose turnover held up through a lockdown cannot credibly plead the same disruption as a restaurant forced to close its doors. Each situation calls for its own assessment, and this article sets out the tools available and the relief each one delivers.

Force majeure in a French franchise: the three conditions of Article 1218

Article 1218 of the Civil Code defines force majeure in contractual matters as an event escaping the debtor's control, which could not reasonably be foreseen when the contract was concluded, and whose effects cannot be avoided by appropriate measures, so that it prevents the debtor from performing. The 2016 reform of contract law did not change the substance: the text restates the definition the courts had already built, so the same analysis applies whatever the date of the franchise contract. Commentators reduce it to a familiar triptych — externality, unforeseeability, irresistibility.

Externality. The event must fall outside the sphere for which the debtor must answer. By requiring an event "escaping the control of the debtor", Article 1218 confirms the requirement. An event caused by the debtor's own staff is not external, and neither, generally, is one the debtor brought on through its own conduct. The measures a government takes to fight an epidemic are external to a franchisee who is not itself infected, and can affect that franchisee's ability to perform even though it is not directly struck by the illness.

Unforeseeability. The event must have been unforeseeable when the contract was signed. This turns on the date of the contract and the nature of the event. A recurrent epidemic is harder to present as unforeseeable — French courts have held that a Dengue epidemic was not unforeseeable where the disease was already known to recur in the territory. A franchise signed well before a crisis stands on stronger ground than one signed once the risk was already visible.

Irresistibility. This is the hardest condition. The Cour de cassation insists on it with constancy: only the impossibility of performing releases the debtor. If performance has merely become more difficult, force majeure cannot be retained — and that is precisely the situation in most commercial crises. Where the obligation can still be performed, at greater cost or with greater effort, the debtor must look instead to hardship. This single line does most of the work in practice, because a franchisee that is short of cash is rarely in a position of true impossibility.

Why franchise force majeure rarely excuses a payment of money

The most important limit on force majeure, for a franchisee, is that it does not readily excuse an obligation to pay money. The Cour de cassation (Commercial Chamber) has held that the debtor of an unperformed contractual money obligation cannot exonerate itself by invoking force majeure. Taken at face value, that closes the door: royalties, entry fees and other sums due to the franchisor are money obligations, and a cash shortage is not, on this view, force majeure.

The reasoning offered for the rule is that money is a fungible thing, and fungible things do not perish — the debtor can always, in principle, find other money to pay with. Scholars are divided on how far that holds. The adage was built for the debtor who claims a fire destroyed the very banknotes it meant to hand over; it says nothing useful about the far commoner case of a debtor who simply has no money at all. Some argue the holding is too absolute, since the statutory text on force majeure draws no distinction according to the type of obligation, and that reading a money exception into it risks being contrary to the statute. The practical lesson for a franchisee is nonetheless prudent: do not assume that inability to pay, standing alone, will be treated as force majeure.

The rent precedent: a warning for franchise force majeure claims

The clearest guide to how French courts treat a crisis-driven inability to pay comes from the commercial-lease litigation that followed the COVID closures, and it should temper any franchisee's optimism. Tenants whose premises were shut by government order argued every available theory to escape their rent. Some of those theories were serious: that the landlord had imperfectly performed its obligation to provide enjoyment of the premises; that the closure amounted to a loss of the leased thing under Article 1722 of the Civil Code, on the old principle that a thing becomes "lost" once it can no longer serve the purpose for which it was let; and, of course, that the closure was force majeure.

The Cour de cassation (Third Civil Chamber) rejected the lot. It held that the general and temporary measure prohibiting the reception of the public, imposed by the executive and having no direct link with the contractual purpose of the leased premises, could not be equated with the loss of the thing under Article 1722, nor with a failure by the landlord to perform its delivery obligation, nor with a case of force majeure capable of releasing the tenants. The economic consequences of the opposite result would plainly have been too great to accept across the board.

For a franchisee, this is the closest available analogy to the fate of royalties in a crisis. A network is not a lease, and royalties are not rent, but the parallel is exact on the point that matters: a general, temporary public-order closure, external to the specific contract, has not been treated as force majeure exempting a commercial occupier from its periodic money obligation. A franchisee counting on force majeure to wipe out royalties during a forced closure should expect the same reception, and should build its position on the other doctrines instead.

Hardship (imprévision) in a French franchise: Article 1195

Where force majeure fails because performance is merely onerous rather than impossible, hardship takes over. Article 1195 of the Civil Code, introduced by the 2016 reform, brought the theory of imprévision into French law. It applies where a change of circumstances that was unforeseeable when the contract was concluded renders performance excessively onerous for a party that had not agreed to bear the risk of that change. The change may be economic, social or of any other kind; the wording is deliberately broad. The COVID crisis gave this new provision an immediate and vast field of experimentation.

Hardship shares one feature with force majeure — both proceed from circumstances that were unforeseeable. The great difference lies in the effect of the change. Force majeure prevents performance; hardship does not, it makes performance "excessively onerous". Exactly how onerous, and measured how, remains contested. The text points most naturally to the case where the cost of rendering the performance becomes excessive, though some argue it should also capture the case where the value of the performance received falls well below the agreed price. That grey area will be settled through litigation over time.

The mechanism runs in stages. The party that did not accept the risk of the change may request a renegotiation of the contract from its counterparty. Crucially, it continues to perform its obligations during the renegotiation — it does not get to stop paying while it talks. If renegotiation is refused or fails, the parties may agree to terminate the contract, at a date and on terms they set, or jointly ask the judge to adapt it. Failing agreement within a reasonable time, the judge may, at the request of either party, revise the contract or bring it to an end, at a date and on terms the judge fixes. That last power — judicial revision of a franchise contract — is what franchisors fear most.

The franchisor's opt-out clause and the good-faith limit on franchise hardship

Article 1195 is not mandatory. It expressly opens the way to its own contractual deactivation, and only a party that has not accepted the risk of a change of circumstances can invoke it. In the wake of the 2016 reform, many franchisors amended their standard contracts to insert a clause excluding the article, which they regarded as a source of anxiety. A candidate reviewing a French franchise contract today should expect to find such a clause and should read it closely: it is usually the franchisor's attempt to remove the judicial-revision power entirely.

Whether that strategy fully works is another matter. The clause should indeed paralyse the judge's power to revise the contract for hardship. But a party that refuses to negotiate any adaptation of the contract to a genuine crisis does not display exemplary good faith, and the duty of good faith governs the performance of every contract. A franchisor's flat refusal to come to the table could, on that footing, engage its own liability — a separate risk that the opt-out clause does nothing to remove. The clause buys the franchisor immunity from forced revision; it does not license bad-faith intransigence.

This matters for both sides. A franchisee facing an opt-out clause is not without leverage: it can frame the franchisor's refusal to discuss relief as a breach of good faith rather than as a hardship claim. A franchisor relying on the clause should still engage constructively, document its willingness to talk, and avoid handing the franchisee a good-faith grievance to set against its own default.

Force majeure vs hardship in a French franchise: trigger, effect, availability

The two doctrines are easy to confuse and expensive to mix up. The table sets out how they differ on the three axes that decide which one a franchisee or franchisor should reach for: what triggers each, what relief each gives, and whether the parties can contract out of it.

Force majeure clauses deserve a word of their own. Because Article 1218 is not public order, the parties may define in their contract which events count as force majeure, and the courts routinely uphold such clauses. But a clause that stretches or shrinks the legal definition risks creating a significant imbalance between the parties' rights and obligations. The competition-practices authority has treated as caught by the prohibition on significant imbalance the conduct of a supplier that invokes force majeure to escape all liability for its own non-performance while, at the same time, excluding from its purchase terms any adaptation, indexation or hardship clause allowing the contract to be renegotiated. A franchisor drafting an aggressive force majeure clause, and no hardship clause, invites exactly that objection.

Relief in a crisis: the levers around franchise force majeure and hardship

Between total release and business as usual sits a range of intermediate relief that is, in practice, where most crises are resolved. Each of these tools also doubles as a negotiation lever.

The extinction of a debt — as opposed to its deferral — is a far more sensitive proposition. It leads back to force majeure, with all the limits set out above, and to the defence of non-performance, which suspends rather than cancels. A franchisee should treat outright cancellation of accrued royalties as the exception, achievable by agreement or where the franchisor's own performance has genuinely fallen away, not as the default entitlement of a hard quarter.

How franchise royalties are treated during a forced closure

The single question that most agitated networks during the COVID crisis was whether a franchisee had to keep paying its royalties while its outlets were shut. Many franchisors read the situation correctly and voluntarily waived royalties for the closure period. Absent agreement, the answer is not uniform, and the right analysis begins by separating the different royalties. A franchise network does not disappear because its points of sale are closed; sometimes closure does not even prevent all activity, particularly at a distance. The three principal royalties — for the sign, for assistance, and for advertising — should not be treated alike.

• Sign royalty (redevance d'enseigne). The right to trade under the brand and its rallying signs survives a temporary closure. The network, the marks and the goodwill remain in place, so the consideration for this royalty is not wholly extinguished by a shutdown. This is the royalty least likely to fall away.
• Assistance royalty. This is the most exposed. Force majeure that temporarily prevents one party from performing grounds the other in withholding the corresponding counter-performance: a franchisor that is not currently able to provide assistance cannot collect a royalty billed for that assistance. The defence of non-performance points the same way. If assistance has genuinely stopped, the assistance royalty is the natural target for suspension.
• Advertising royalty. These sums are earmarked for advertising in the collective interest of the network and are meant to be held and accounted for separately. Whether they remain due turns on whether advertising actually continues during the crisis; if network promotion carries on, the justification for the royalty is not removed by the closure of individual outlets.

Above these distinctions sits hardship. More fundamentally than the point-by-point analysis, Article 1195 opens the possibility of revising a contract — and why not the rate of a royalty — where an upheaval of circumstances renders performance not impossible but excessively onerous. Each of these mechanisms can also be deployed as a lever in negotiation rather than pressed to judgment. The message for a franchisee is to disaggregate: do not stop paying "the royalties" as a block, but identify which royalty has lost its consideration and on which doctrine.

Negotiating relief and drafting a hardship (revoyure) clause

The law encourages the parties to settle crisis difficulties themselves, and the negotiated route is almost always better than the contested one. Both sides carry responsibilities here. The franchisor is the network's bulwark, bound by a general duty to promote its image; faced with a grave and sudden crisis, it cannot hide behind the odd clause providing for an annual convention. It should convene a crisis unit to work through the necessary adaptations and to organise the discussions that rebuild the network. Franchisees, for their part, gain from playing collectively — pooling their experience and speaking to the network head with a common understanding rather than one by one.

Drafting is where a well-advised party pre-empts the fight. Rather than leaving the outcome of the next crisis to the courts, the contract can build in a renegotiation trigger — a hardship or "revoyure" clause that obliges the parties to meet and adapt the contract when defined circumstances make performance excessively onerous. A model of this approach treats an excessively onerous royalty exactly as Article 1195 treats hardship generally: the franchisee may request a renegotiation; failing agreement, the parties may terminate on agreed terms or ask the judge to adapt the contract; and failing agreement within a reasonable time, the judge may revise or end the contract on terms it fixes. A franchisor that opts out of Article 1195 but offers nothing in its place invites the significant-imbalance objection; a bespoke hardship clause is the disciplined answer.

Frequently asked questions about force majeure and hardship in a French franchise

Can a franchisee stop paying royalties by invoking franchise force majeure?

Rarely on force majeure alone. The Cour de cassation has held that the debtor of a money obligation cannot exonerate itself by invoking force majeure, and royalties are money obligations. A franchisee is usually better served by the defence of non-performance, a price reduction, or a hardship claim, depending on which royalty is in issue.

What is the difference between force majeure and imprévision in a French franchise?

Force majeure requires that performance be impossible and, if established, extinguishes the obligation. Imprévision, or hardship, requires only that an unforeseeable change make performance excessively onerous, and it opens a right to renegotiation rather than release. Difficulty is the domain of hardship; impossibility is the domain of force majeure.

Did the COVID closures count as force majeure for a French commercial tenant?

No. The Cour de cassation held that the general and temporary prohibition on receiving the public, with no direct link to the contractual purpose of the premises, was not a loss of the leased thing, not a breach of the landlord's delivery obligation, and not force majeure releasing the tenants. That precedent is the closest guide to how a franchisee's royalties would be treated in a forced closure.

My franchise contract excludes Article 1195 — do I have any hardship remedy?

The opt-out should block judicial revision for hardship, but it does not license a franchisor to refuse all discussion. A party that refuses to renegotiate in a genuine crisis does not act in exemplary good faith, and the duty of good faith can ground a separate liability. The opt-out removes forced revision; it does not authorise intransigence.

How are different franchise royalties treated during a forced closure?

They should be separated. The sign royalty largely survives because the brand and network remain in place. The assistance royalty is the most exposed, because a franchisor that provides no assistance cannot collect a royalty for it. The advertising royalty turns on whether network advertising actually continues.

Can a French judge give a franchisee more time to pay in a crisis?

Yes. Under Article 1343-5 of the Civil Code, a judge may, taking account of the situation and the creditor's needs, defer or stagger payment within a limit of two years. The order can be sought urgently, and it suspends all seizures, including those already begun by the creditor.

What is a revoyure or hardship clause and should our franchise contract have one?

It is a clause obliging the parties to meet and renegotiate when defined circumstances make performance excessively onerous. It is advisable, particularly for a franchisor that opts out of Article 1195, because excluding the statutory hardship remedy while offering no adaptation mechanism can be attacked as creating a significant imbalance.

Can the rate of a royalty itself be revised for hardship?

Yes, in principle. Article 1195 allows revision of a contract where a change of circumstances makes performance excessively onerous, and that can extend to the rate of a royalty. A flat, turnover-independent royalty is the strongest candidate, because it does not already fall with a drop in activity.

How our French lawyers can help with force majeure and hardship in a French franchise

We act for foreign franchisors operating in France and for franchisees facing a crisis, and the two questions we are asked most are whether an event engages force majeure or hardship, and what can safely be done about the royalties. Getting either wrong is expensive: a franchisee that stops paying on a misplaced force majeure theory hands the franchisor a ground to terminate, and a franchisor that refuses all discussion behind an Article 1195 opt-out exposes itself to a good-faith claim.

Our work runs from the diagnosis — classifying the crisis and each affected obligation separately — through to the levers: negotiating deferrals, framing a defence of non-performance or a price reduction, seeking a judicial grace period under Article 1343-5, and drafting force majeure and hardship clauses that hold up against the significant-imbalance test. We prefer to be involved before the missed payment or the refused meeting, because those are the moments that fix the exposure.

This article is for general information only. It does not constitute legal advice. Whether a particular crisis amounts to force majeure or hardship, and how each royalty should be treated, depends on the terms of your contract and the facts of your situation. Contact our French lawyers for qualified advice before withholding a payment, refusing to renegotiate, or terminating a franchise contract in France.