Selling into France: The Cross-Border Legal Guide

Selling into France: the five routes to market

A foreign company that wants to sell goods into France does not need a French entity to do so. There are five recognised routes to market, and the choice between them shapes almost everything that follows: which law governs the deal, who carries the credit risk, who owns the customer relationship, and what happens when the arrangement ends. The five routes are the direct cross-border sale, appointing a distributor, appointing a commercial agent, granting a franchise, and incorporating a French subsidiary.

In a direct sale you invoice the French buyer yourself on your own general terms and conditions, and you keep control of price and margin. A distributor buys your goods and resells them in its own name, taking the stock, the margin and the credit risk, so you deal with one professional buyer rather than a scattered customer base. A commercial agent, by contrast, negotiates or concludes sales in your name without ever owning the goods, in exchange for commission, and benefits from a protective statute. A franchise licenses your brand and know-how to an independent operator, and a subsidiary makes you a French seller in your own right, with the tax and compliance footprint that follows.

Each route trades control against cost and risk. Direct sale and a subsidiary give you the most control over pricing and the customer relationship but expose you to French compliance and, for a subsidiary, to French corporate and tax obligations. A distributor or agent is quicker and cheaper to launch but hands part of the market to a third party whose relationship with you is protected by law. The table below summarises the trade-offs; the sections that follow explain the legal issues that cut across every route.

Which law governs your sale into France

The first legal question in any cross-border sale is which law governs it. Under the Rome I Regulation (EC) 593/2008, which applies in the French courts, the parties are free to choose the governing law. If they make no choice, a contract for the sale of goods is governed by the law of the country where the seller has its habitual residence. For a foreign seller shipping into France, that default often points to the seller's own law, but only where the contract is silent and no other rule displaces it.

Layered on top of the choice-of-law analysis is the CISG (Vienna Convention 1980), the United Nations Convention on Contracts for the International Sale of Goods, which France ratified with effect from 1988. The CISG applies of its own force to a business-to-business sale of goods where the parties have their places of business in different contracting states, or where the rules of private international law lead to the law of a contracting state. It supplies a uniform substantive law of formation, obligations and remedies, and it displaces the domestic French sales rules unless the parties exclude it. Many sellers do not realise that a bare choice of French law does not exclude the CISG, because the Convention is part of French law for international sales.

The practical upshot is that you should decide, deliberately, both the governing law and the position on the CISG, and record that decision in a clear choice-of-law clause. The Convention governs the seller's liability for non-conforming delivery and the buyer's remedies, but it leaves questions of validity and the transfer of property to the applicable national law. Our guide to the applicable law and court for a cross-border sale explains how the governing law, the CISG and jurisdiction fit together, and how to draft a clause that holds up in a French court.

Making your general terms and conditions enforceable in France

Whichever route you choose, the enforceability of your general terms and conditions (GTC) is what turns a commercial arrangement into a defensible legal position. In France, a buyer that purchases for its professional activity may request your GTC before the sale, and your terms are the natural place to fix the governing law, the delivery and risk allocation, the warranty position, and payment security. Terms that are never communicated, or that appear only on the back of an invoice sent after the order, are vulnerable to challenge.

Between businesses, French law also polices the substance of the terms, not only their communication. A clause that creates a significant imbalance in the rights and obligations of the parties can be struck down under Article L442-1 of the Commercial Code, and warranty exclusions and liability caps face their own limits. This matters most to a seller who tries to import, unchanged, the aggressive limitation clauses of another legal system: some will hold, others will not, and the difference is not obvious without French-law review.

The right terms also depend on the route. In a direct sale your GTC do the heavy lifting. With a distributor, the framework supply agreement governs your relationship and the distributor's own GTC govern the onward resale. With an agent, an agency agreement sits over the sales the agent brings you. Aligning these documents, so that the law, the Incoterms and the payment security all point the same way, is a core part of setting up any sale into France.

VAT, customs and product compliance when selling into France

Selling into France carries tax and regulatory obligations that sit alongside the contract and cannot be waived by agreement. On the tax side, VAT treatment depends on where you are and what you sell. A supplier established in another EU member state moving goods to a French business will usually deal with an intra-EU acquisition, where the French buyer accounts for the VAT, but distance sales to French consumers and the holding of stock in France can create a French VAT registration obligation. A seller from outside the EU faces import VAT and customs formalities at the border.

Customs is a separate layer again. Since Brexit, sellers from the United Kingdom and other non-EU states must clear goods into the EU, classify them under the correct tariff heading, and evidence origin where a preferential rate is claimed. The choice of Incoterm decides who is the importer of record and who bears the import VAT and duty, which is why an ill-considered term such as DDP can quietly load the foreign seller with French import obligations it never intended to take on.

Product compliance is the third obligation. Goods placed on the French market must meet the EU product-safety and conformity regime, which for many categories means CE marking, technical documentation and specific labelling, plus sector rules for regulated products such as electrical equipment, toys, cosmetics or foodstuffs. The obligations attach to the operator that places the product on the market, so a direct seller, a distributor and an importer may each carry compliance duties. None of this is contractual: it is a condition of lawful sale, and it should be confirmed before the first shipment.

The French language requirement (loi Toubon)

Foreign sellers are often surprised that France requires the French language in certain commercial documents. Under the loi Toubon and related consumer rules, the essential information provided to a consumer — product descriptions, instructions for use, warranty terms, safety information and labelling — must be available in French. English-only packaging or manuals for goods sold to French consumers is a compliance failure that can attract penalties, regardless of the language the parties negotiated in.

The rule bites hardest on the consumer-facing edge of your business. In a purely business-to-business contract negotiated in English between sophisticated parties, the French courts will generally respect the parties' chosen contractual language, and an English-language agreement is enforceable. But the moment your goods reach a French consumer, the labelling, instructions and guarantee information must be in French, and a distributor or franchisee cannot cure defective source documents on its own if you never supplied them.

For a market-entry plan this means separating two questions. The contractual language of your supply agreement, agency agreement or GTC can remain English, and a governing-law clause can point to a foreign law, subject to French mandatory rules. The consumer documentation, however, must be produced in French to the required standard. Planning translation and French-compliant packaging early avoids a launch that stalls at the point of sale.

Payment security and the retention-of-title reflex

Selling across a border multiplies credit risk, and French law gives the seller a powerful tool that many foreign suppliers underuse: the retention-of-title clause. By retaining ownership of the goods until the price is paid in full, the seller keeps a proprietary claim to the goods even if the buyer becomes insolvent, allowing the seller to reclaim unsold stock rather than rank as an ordinary unsecured creditor. In French insolvency practice this reflex frequently makes the difference between recovering the goods and recovering nothing.

A retention-of-title clause only works if it is agreed in the right form and communicated before delivery, and the seller must be able to identify the goods in the buyer's hands. It is not a substitute for sensible payment terms. France also imposes statutory limits on business-to-business payment periods and mandatory late-payment penalties, so your terms need to fix a compliant deadline, reserve interest and the fixed recovery indemnity, and combine the retention of title with any other security the deal warrants.

The wider point is that payment security should be designed into the sale, not bolted on after a default. That means aligning the Incoterm, the moment ownership and risk pass, the retention-of-title clause and the payment terms so they reinforce one another. Where a distributor or agent sits between you and the market, the security position has to be mapped across both the framework agreement and the onward sale, so that a failure downstream does not leave you exposed upstream.

Termination exposure: rupture brutale and the agent's indemnity

The risk that catches most foreign sellers is not how a French relationship begins but how it ends. Two French rules create real financial exposure on termination. The first is Article L442-1 of the Commercial Code, which imposes liability for abruptly ending — even partly — an established commercial relationship without sufficient written notice. This rupture brutale and established supply relationships regime applies to ongoing supply and distribution relationships regardless of any breach, and it is independent of the contract's own termination clause.

What makes a relationship established is its stability and the reasonable expectation of continuity, not the existence of a written contract. Where the rule applies, the party ending the relationship must give notice proportionate to its duration and other factors such as economic dependence and the difficulty of finding a replacement. Cutting off a long-standing French distributor or customer with only a few weeks' notice is a classic way to incur damages measured by the margin lost over the notice that should have been given.

The second rule is the commercial agent's indemnity. A commercial agent within Article L134-1 of the Commercial Code and following benefits from a protective statute, and on termination is entitled to compensation for the harm suffered, an indemnity that French courts commonly assess at around two years' gross commission. This is why the choice between a distributor and an agent is not a matter of labels: it decides whether you face a statutory indemnity, a rupture brutale claim, or both. Our guide comparing direct sale, distributor or commercial agent works through the consequences of each.

Choosing the right structure for selling into France

There is no single best route into France; there is a best route for a given product, margin and appetite for control and risk. A high-value, technical product sold to a handful of professional buyers may suit direct sales on carefully drafted terms. A consumer product needing local stock and after-sales support may call for a distributor. A relationship where you want to keep the customer and the pricing may point to an agent, at the cost of the statutory indemnity. Weighing these factors deliberately, before you commit, is the whole exercise.

Because the routes carry different tax, compliance and termination consequences, the structure decision should be made once, at the start, with the downstream consequences understood. Getting it right lets you scale in France with predictable costs and a defensible legal position; getting it wrong tends to surface as a VAT assessment, a seized shipment or a termination claim long after the launch, when the options are narrower and the cost is higher.

Frequently asked questions about selling into France

How can a foreign company sell into France?

There are five routes: a direct cross-border sale on your own terms, appointing a distributor who buys and resells, appointing a commercial agent who sells in your name for commission, granting a franchise, or incorporating a French subsidiary. Each trades control against cost, credit risk and termination exposure, so the choice should follow your product and strategy.

Do I need a French entity to sell in France?

No. A foreign company can sell directly into France, or through a French distributor or commercial agent, without incorporating locally. A subsidiary is one option among several, and it brings a fuller French tax and compliance footprint. Even without an entity, you may still face French VAT registration, customs and product-compliance obligations.

Which contracts must be in French?

Business-to-business contracts can be negotiated and signed in English, and the French courts will generally respect the chosen language. But consumer-facing information — labelling, instructions for use, safety notices and warranty terms — must be provided in French under the loi Toubon and consumer rules. Plan translation and French-compliant packaging as part of market entry.

Do I need to charge French VAT?

It depends on your establishment and what you sell. An EU supplier selling to a French business often deals with an intra-EU acquisition, where the buyer accounts for the VAT, but holding stock in France or distance-selling to consumers can trigger a French VAT registration. A non-EU seller faces import VAT and customs formalities, and the Incoterm decides who bears them.

What is the risk of using a distributor?

A distributor takes the stock and credit risk and gives you fast market access, but the relationship is protected. Ending an established supply relationship without sufficient written notice exposes you to a rupture brutale claim under Article L442-1 of the Commercial Code, with damages measured by the margin lost over the notice you should have given.

What law governs my sale into France?

Under the Rome I Regulation the parties can choose the governing law; absent a choice, a sale of goods is governed by the seller's law. On top of that, the CISG (Vienna Convention 1980) applies automatically to a B2B goods sale between parties in different contracting states unless it is expressly excluded — and choosing French law alone does not exclude it.

Does a French commercial agent get a termination indemnity?

Yes. A commercial agent within Article L134-1 of the Commercial Code benefits from a protective statute and, on termination, is entitled to an indemnity that French courts commonly assess at around two years' gross commission. This statutory entitlement is a key reason to weigh the agent route against using a distributor, who has no such indemnity.

How our French lawyers help with selling into France

Petroff Avocats advises foreign suppliers on the full path into the French market and French buyers on the terms they are offered. We help sellers choose between direct sale, distribution, agency, franchise and a subsidiary; draft enforceable GTC, framework and agency agreements; fix the governing law and CISG position; secure payment with retention of title and compliant payment terms; and manage VAT, customs, CE marking and the French language requirement. On the buy side, we review supplier terms, test warranty and liability clauses, and act on distribution and agency disputes, including rupture brutale and agent-indemnity claims, so both sides know where they stand before a disagreement becomes litigation.

This article is for general information only. It does not constitute legal advice and does not create a lawyer-client relationship. The law and its application to cross-border sales into France turn on the specific facts of each transaction. Contact our French lawyers for advice on your situation.