Mandatory
Good faith in negotiating, forming and performing a franchise is of public order (ordre public) under Article 1104 of the Civil Code; the parties cannot contract out of it.
5–10%
Typical range of the operating royalty, indexed on the franchisee's turnover; the Paris Court of Appeal has refused to deduct aggregator commissions from that base.
10 years
Maximum duration of an exclusive-supply clause under Article L 330-1 of the Commercial Code; any excess is void only for the part beyond ten years.

How the courts read obligations in a French franchise

The obligations in a French franchise are read first against the contract itself, then against a small set of Civil Code rules that no drafting can displace. A franchise agreement is a bilateral (synallagmatic) contract: it creates duties on both sides, and each set is the consideration for the other. Before examining what each party owes, a foreign brand or candidate needs the interpretive frame a French judge will apply, because that frame decides how far the written clauses reach and who bears the risk of an ambiguity.

The starting point is binding force. Under Article 1103 of the Civil Code, contracts lawfully formed take the place of law for those who made them; the franchise agreement is therefore law for franchisor and franchisee alike, and neither can rewrite it alone. Article 1193 confirms the point: a contract may be modified or revoked only by mutual consent or on grounds the law authorises. A clause reserving a unilateral power of modification to the franchisor is not automatically void, but it must remain controlled — under cover of adapting the concept, the franchisor may not upset the general economy of the partnership.

Good faith then runs through the whole relationship. Article 1104 requires contracts to be negotiated, formed and performed in good faith, and states that this rule is of public order (ordre public). Good faith is not decorative in a franchise: it is structural, because the network rests on a common interest and neither party can prosper if the other acts disloyally.

The interpretive default

Where a clause is unclear, Article 1188 of the Civil Code directs the judge to the parties' common intention. Article 1194 adds that the contract binds not only to what it states but to all the consequences that equity, usage and the law attach to it. Article 1190 completes the picture: in an adhesion contract, doubt is resolved against the party who proposed it. Because the franchise agreement is almost always drafted by the franchisor, that party carries the cost of its own ambiguities.

Three consequences follow: the written clauses do not exhaust the parties' duties, since the franchisor's essential obligations exist independently of any specific stipulation; the franchisor cannot draft its way out of good faith; and it should expect an opaque or one-sided clause to be construed against it. The sections below take each set of obligations in turn and point to the dedicated article in this series where the detail lives.

The franchisor's six core obligations in a French franchise

The franchisor's obligations in a French franchise are usually summarised as three: transmit know-how, make the distinctive signs available, and provide assistance. That summary is incomplete. The franchisor owes six essential obligations, and a foreign brand that treats the last three as optional exposes itself to contractual liability that bears directly on network profitability.

Know-how (savoir-faire). Know-how must exist when the contract is signed, on pain of nullity, but the duty does not stop there. During performance the franchisor must transmit its know-how continuously and in good time, and keep it constantly updated and adapted to the sector and to technology, because know-how is only a means of building and preserving a competitive advantage. The franchisor must also defend it against pillaging. The law of 30 July 2018 on trade secrets, now Articles L 151-1 et seq. of the Commercial Code, widens the arsenal: information qualifies as a protected trade secret only where it is not generally known or readily accessible, has commercial value because it is secret, and is subject to reasonable protective measures. Article L 152-6 of the Commercial Code lets a franchisor whose protected information is exploited unlawfully recover its lost profit and moral prejudice and the investment savings the infringer made. The choice of the sales outlet is itself an element of know-how, so the duty can require the franchisor to help the candidate select a viable location.

Distinctive signs (signes distinctifs). The franchisee joins in consideration of a network operating under a common banner, so the franchisor must make the distinctive signs available, chiefly the trademark and the sign (enseigne), by way of a licence or a loan of the sign. The franchisor must secure and maintain its rights, renew its trademark registration, and act against third parties who misuse the network's signs. If the franchisor holds no rights in the signs, the contract is void.

Assistance. The Paris Court of Appeal has held that assistance is one of the franchisor's essential obligations, independently of any specific contractual stipulation. It has a double dimension, commercial and technical, and it is continuous rather than confined to launch. Its manifestations are typically detailed in the contract and now regularly extend to the imposed or recommended IT tools, which must be kept adapted.

Publicity. Standing at the head of a network, the franchisor is responsible for its image: it must discipline franchisees who depart from the concept and would harm the whole, and it must promote the network, which grounds a positive obligation of publicity. Because franchisees fund a share of that spend through an advertising royalty, a duty of transparency should attach — the franchisor should account for the actions taken. Where the franchisor also negotiates terms with the network's referenced suppliers, it acts as an intermediary and owes an account; a franchisee may seek communication of the relevant contracts, if necessary through the pre-trial evidence procedure of Article 145 of the Code of Civil Procedure, and business secrecy is not a blanket shield against that.

Diligence. The franchisor must be serious and competent. It is by definition the specialist of its concept, and must respond without delay to its franchisees' legitimate expectations: deliveries on time and in conformity, attractive and adapted supply, timely economic and legal information. A stock-out, a lapse in re-stocking of best-selling lines, or inertia in the purchasing centre engages the franchisor's contractual liability precisely because such failures bear directly on each outlet's profitability.

Homogeneity. Because the contract sits within a network, franchisees must in principle be treated alike, and any difference in treatment must rest on objective reasons — an obligation developed in its own section below.

Go deeper

Each of the six obligations has a dedicated article in this series: the anatomy of the six core obligations; what qualifies as know-how and how it must be transmitted and updated; and protecting know-how as a trade secret against departing franchisees under the law of 30 July 2018. The disclosure obligation that precedes all of this — the pre-contractual disclosure document under Article L 330-3 of the Commercial Code (the loi Doubin) — is treated separately in the pre-contractual series.

The franchisee's obligations in a French franchise

The franchisee's obligations in a French franchise fall into two groups: essential obligations that flow from the nature of the contract, and complementary obligations that apply only where the clauses provide for them. The essential obligations are financial and behavioural — a trilogy of payments and a duty of loyalty.

The royalty trilogy. In return for the franchisor's undertakings, the franchisee assumes a series of financial obligations, usually stipulated on three grounds:

1

Entry fee (droit d'entrée)

A lump sum that is the price of access to the network. Its amount is a matter of contractual freedom; young networks sometimes waive it for their first franchisees. A clause providing that the entry fee stays acquired to the franchisor whatever the outcome cannot apply where the contract is annulled — it shares the fate of the contract.

2

Operating royalty (redevance d'exploitation)

Remunerates the services rendered throughout the contract. It may be a flat fee, but is usually indexed on turnover — generally 5 to 10%, sometimes on a degressive scale. The Cour de cassation has accepted that a franchisor may reserve a unilateral power to change the rate, an economically hazardous solution. Royalties must not become a mere annuity: where the corresponding services are not or no longer supplied, the franchisee may suspend payment.

3

Advertising royalty (redevance de publicité)

Usually a percentage of turnover (1% or 2%) financing national advertising, with local advertising borne by the franchisee. The sums must be applied to advertising ends; otherwise they mask an unjust enrichment, which is why regular accounting is owed. Failing that, the franchisee may obtain judicial sequestration of the royalties or suspend payment.

The duty of loyalty (fidélité). Loyalty grounds both a negative and a positive duty. The negative duty is not to compete: the franchisee must not carry on a similar business where it would compete with the franchisor or another franchisee. The positive duty is to respect the franchisor's commercial methods and know-how, with its many corollaries — following the training, applying the promotional and supply norms, respecting the graphic charter, installing the network's specific fittings and using its distinctive signs.

Loyalty is not subordination

Loyalty is not dependence. The franchisee keeps a natural margin of manoeuvre, and the franchisor may not fix minimum resale prices. Where the constraints imposed become too heavy or intrusive — imposed opening hours, a compulsory uniform, control of bank accounts, control over hiring — the relationship risks requalification as an employment contract, or triggers the branch-manager status of Articles L 7321-1 et seq. of the Labour Code. In insolvency, an over-intrusive franchisor may even be treated as a de facto manager of the franchisee's company.

Complementary obligations. Where the clauses provide, the franchisee may also owe an exclusive- or quasi-exclusive-supply obligation, accept approval and pre-emption clauses on any assignment of its business, and be held to performance targets. These bind only if stipulated, and each carries its own validity conditions — the exclusive-supply obligation, in particular, is capped and controlled.

Exclusive supply: the limits

Under Article L 330-1 of the Commercial Code an exclusive-supply clause may not exceed ten years, and Article L 330-2 aligns later analogous engagements on the first contract's end date. In competition law the clause is lawful only where it is indispensable to preserve the identity and reputation of the network — the test set by the Court of Justice of the EU in Pronuptia (Case 161/84, 28 January 1986) and applied by the French courts. A disproportionate purchasing tie can be struck under Article L 420-1 of the Commercial Code or found to create a significant imbalance under Article L 442-1. Where the network affects trade between Member States and the tie exceeds 80% of purchases, Regulation (EU) 2022/720 of 10 May 2022 treats it as a non-compete obligation whose duration must, in principle, be limited.

Assistance and when a franchisee may withhold royalties in a French franchise

Assistance is the obligation that most often decides litigation over the obligations in a French franchise, because it is the point where the franchisee's payments and the franchisor's performance meet. The franchisee pays for the know-how transmitted, the right to use the mark and the services rendered throughout the contract; when those services fail, the balance of the contract shifts — and so does the franchisee's right to pay.

The assistance obligation transcends the letter of the contract. Whatever the wording the franchisor drafted, Article 1194 of the Civil Code binds it to all the consequences that equity, usage and the law attach to the agreement, and assistance is part of the DNA of franchising. It cannot be reduced to the diligences listed in the contract, nor satisfied by mere control of the franchisee's implementation of the concept: the franchisor must be able to intervene at any moment, at every level, to help the franchisee resolve difficulties and operate profitably.

Façade assistance does not discharge the duty. Sending an inexperienced field agent incapable of answering the franchisee's difficulties, or meeting a chronic profitability problem with a one-off gift of free goods or a few months' royalty holiday, is not performance: it relieves the cash position without solving the underlying problem. Nor does later effort purge the franchisor's own error — unrealistic forecasts or an unsuitable location cannot be repaired after the fact, and the franchisee remains entitled to seek nullity.

The exception d'inexécution — Article 1219

A franchisee is entitled to withhold all or part of its royalties, though they are due and payable, where it shows that the franchisor is refusing to perform its assistance obligation loyally and effectively. Because assistance is an essential obligation of the franchisor, any non-performance of it is by nature "sufficiently grave" within the meaning of Article 1219 of the Civil Code to justify the plea of non-performance (exception d'inexécution). Non-payment of royalties is normally a serious breach by the franchisee — but not where the franchisor is not delivering the counterparties the royalties pay for.

Two qualifications matter. The cost of assistance is not unlimited: royalties are taken to cover the ordinary assistance owed to every franchisee — help implementing the concept, communication campaigns, control of management ratios — while genuinely exceptional interventions may be billed in addition. And the franchisee must call for assistance appropriately, neither too early, before attempting its own corrective measures, nor too late, when the franchisor can no longer act usefully. Yet the franchisee is not the only trigger: the franchisor receives each franchisee's monthly turnover and annual accounts and sends field agents on review visits, so it has a duty of vigilance and must act on its own initiative when its findings call for it.

Go deeper

The scope of assistance — its manifestations, its cost, whether it is an obligation of means or of result, and the structured field-review reports (visites bilan) — is treated in a dedicated article, as is the standalone question of when a franchisee can lawfully withhold royalties under Article 1219.

Homogeneity and non-discrimination: the franchisor's obligations in a French franchise

Homogeneity is among the least understood obligations in a French franchise, and among the most useful to a franchisee. Because the franchise sits within a network, franchisees are and must be treated on equal terms; any difference must be justified by objective reasons. It is uniformity and common identity that characterise the franchise, and departures from equal treatment offend the most elementary loyalty.

The obligation reaches beyond relations among franchisees. Where the franchisor also develops its network through its own branches (succursales), the franchisees may not be exposed to unfair competition from those branches through, for example, less favourable pricing conditions, nor may the franchisor concentrate its advertising for the benefit of its branches alone. Franchisees are not there to serve as shop windows or show-rooms for company-owned outlets; that too is a question of loyalty, and the good-faith duty the French courts have developed to prevent a network head from competing unfairly with its own members applies here.

What this gives a franchisee

Non-discrimination is a concrete lever. A franchisee facing worse supply terms, pricing or marketing support than comparable outlets — or than the franchisor's own branches — can require the difference to be justified on objective grounds, failing which it points to a breach of the homogeneity obligation and of good faith.

The prohibition on imposed resale prices belongs to the same family of limits: the franchisor may recommend prices and set the concept's parameters, but it may not fix minimum resale prices, on pain of competition-law sanctions. Equal treatment across the network and resale-price limits are each developed in dedicated articles.

The customer base and online reviews: the property dimension of obligations in a French franchise

Beneath the obligations in a French franchise sits a question of property, and it is where the network model comes under greatest strain. Franchisor and franchisee remain legally independent undertakings. The franchisee is neither an employee nor an agent nor a manager; it operates a business for its own account, and the customer base it exploits is an element of the goodwill (fonds de commerce) it owns. The franchise is a vehicle for the franchisee's growth, not an instrument for capturing its clientele.

Three pillars support the model — profitability, loyalty and property — and online commerce places all three under pressure, because the network's website is run by, and often profits, the franchisor alone. A franchisee can find the network site running promotions it cannot match, stocking products it cannot obtain, and selling to customers within its own catchment area — turning its outlet into a fitting room and a complaints desk while the online margin accrues elsewhere.

French law does not yet resolve these tensions by dedicated text, which is why drafting carries so much weight. A merchant website is not treated as the implantation of an outlet in a protected territory, so territorial exclusivity does not automatically protect a franchisee against the network site. The prudent course is a specific clause — for instance, a commission on online sales delivered within the franchisee's territory, close to indispensable in sectors such as ready-to-wear.

Data and reviews at exit

Customer data attached to a franchisee's area, and the customer reviews (avis clients) generated by its outlet, should remain with the franchisee: it alone served those customers, and it continues the same activity after the contract ends. A clause whose object or effect is to deprive the franchisee of its right to those reviews, especially at the end of the contract, should be treated as unwritten (réputée non écrite). The ownership of the customer base and reviews should be settled in the agreement, not left to the party that controls the site.

Go deeper

Ownership of customer data and online reviews, the territorial-exclusivity and e-commerce conflict, and whether a franchisee may sell online under the passive-sales rules — confirmed by the Court of Justice of the EU in Pierre Fabre (Case C-439/09, 13 October 2011) and now codified in Regulation (EU) 2022/720 — each have a dedicated article in this series.

The franchisor's power to modify the concept in a French franchise

Whether the franchisor can change the concept mid-contract is a recurring question on the obligations in a French franchise, and the answer follows from binding force. Under Article 1103 of the Civil Code the agreement is law for both parties, and Article 1193 confirms it may be varied only by mutual consent or on grounds the law authorises. A franchisor cannot simply impose new terms.

Some agreements reserve a power of unilateral modification to the franchisor. The purpose is legitimate: it lets the franchisor adapt its know-how, and its network, to technological, economic and sociological change, and where the power is fixed from the outset it can be understood. But it must remain controlled, if only to prevent abuse — under cover of adaptation, the franchisor may not upset the general economy of the partnership. Updating know-how is itself an obligation, not merely a right, so the power to modify and the duty to modernise are two sides of the same coin, both bounded by good faith and proportionality.

The test in practice

A modification clause is read against the drafter under Article 1190 of the Civil Code and policed for abuse. The dividing line is whether the change adapts the concept without overturning the balance the parties struck. A franchisor that uses a modification power to shift risk onto franchisees, or to bypass their territorial or economic protections, steps outside the clause and into liability.

Franchisor and franchisee obligations in France, side by side

The obligations in a French franchise are best understood as matched sets: each of the franchisor's duties has a counterpart on the franchisee's side, and the balance between them is what good faith protects. The table below maps the two, dimension by dimension.

DimensionThe franchisor owesThe franchisee owes
Business formatTransmit and continuously update know-how; make the trademark and sign available and defend themApply the methods, follow the training, respect the graphic charter and supply norms, use the network's signs
MoneyJustify royalties as consideration for real services; account for advertising spendPay the entry fee, the operating royalty and the advertising royalty
SupportContinuous commercial and technical assistance, on its own initiative where its findings requireCall for assistance appropriately; report monthly turnover and annual accounts
Fair dealingEqual treatment, non-discrimination, promotion of the network image, no imposed minimum pricesDuty of loyalty and non-compete within the network
PropertyRespect the franchisee's customer base, data and reviews; not capture its clienteleMaintain the network's common identity and reputation

Read together, the matrix explains why a breach on one side so often unlocks a remedy on the other. Fail on assistance, and the franchisee's payment obligation weakens through the plea of non-performance; discriminate or divert the franchisee's clientele online, and the property and loyalty pillars are engaged. The obligations do not stand alone — they answer each other.

Frequently asked questions about obligations in a French franchise

What are the franchisor's core obligations in a French franchise?

Six essential obligations: transmitting and updating know-how, making the distinctive signs available, providing continuous assistance, promoting the network (publicity), acting with diligence and competence, and ensuring homogeneity. The last three bind as fully as the first three, and several exist independently of any specific clause.

What are the franchisee's main obligations in a French franchise?

The royalty trilogy — entry fee, operating royalty (usually 5–10% of turnover) and advertising royalty (often 1–2%) — together with a duty of loyalty: not competing with the network and respecting the franchisor's methods, training, norms and signs. Complementary obligations such as exclusive supply apply only where the contract stipulates them.

Can a franchisee stop paying royalties if the franchisor fails to help?

Yes, within limits. Under Article 1219 of the Civil Code a franchisee may withhold all or part of its royalties where it shows the franchisor is refusing to perform its assistance obligation loyally and effectively. Because assistance is essential, its non-performance is treated as sufficiently grave to justify the plea of non-performance. Document the failure and act promptly.

Can the franchisor change the concept during the contract?

Only by mutual consent, or under a modification clause fixed at the outset and exercised in good faith. Articles 1103 and 1193 of the Civil Code prohibit unilateral change, and any reserved power to modify must not upset the general economy of the partnership. Updating the know-how, by contrast, is a duty the franchisor owes.

Who owns the customer base and online reviews when a French franchise ends?

The franchisee. The clientele it serves is an element of the goodwill it owns, and the data and reviews attached to its outlet should remain with it, all the more so as it continues the same activity after the contract. A clause depriving the franchisee of its reviews, especially at exit, should be treated as unwritten.

Is territorial exclusivity part of the obligations in a French franchise?

No exclusivity is of the essence of the franchise, and its absence does not by itself void the contract or create a significant imbalance. In practice most franchisees have a protected zone, but the network website is not treated as an outlet in that zone, so a specific clause — for example a commission on online sales into the territory — should be negotiated.

How does an adhesion contract affect how obligations are interpreted?

A franchise agreement is usually an adhesion contract drafted by the franchisor. Under Article 1190 of the Civil Code, doubt is resolved against the party that proposed it — the franchisor. Ambiguities are construed in the franchisee's favour, a strong reason for franchisors to draft with precision.

Are there limits on how much loyalty a franchisor can demand?

Yes. Loyalty is not subordination. A franchisor may not fix minimum resale prices, and constraints that are too heavy or intrusive — imposed hours, uniforms, control of accounts or hiring — risk requalification as an employment contract or trigger the branch-manager status under Articles L 7321-1 et seq. of the Labour Code. In insolvency, an over-intrusive franchisor may be treated as a de facto manager.

Key takeaways on obligations in a French franchise

In brief
The agreement is law for both parties (Article 1103); it cannot be modified unilaterally (Article 1193) and good faith in it is mandatory (Article 1104).
As an adhesion contract, ambiguities are read against the franchisor under Article 1190 of the Civil Code.
The franchisor owes six essential obligations: know-how, distinctive signs, assistance, publicity, diligence and homogeneity.
The franchisee owes the royalty trilogy — entry fee, operating royalty, advertising royalty — plus a duty of loyalty and any stipulated complementary obligations.
A franchisee may withhold royalties for un-delivered assistance under the exception d'inexécution (Article 1219 of the Civil Code).
Equal treatment is the rule; any difference must rest on objective reasons, including against the franchisor's own branches.
The franchisee owns its customer base, data and reviews; a clause stripping those rights at exit should be treated as unwritten.

How our French lawyers can help with obligations in a French franchise

The obligations in a French franchise reward precise drafting and careful enforcement. Our firm advises foreign franchisors structuring or operating a network in France, and franchisees who need to understand or enforce their rights. On the franchisor side, we draft and audit the franchise agreement so that the six core obligations, the royalty structure, the modification power and the treatment of the network website and customer data hold up under Articles 1103, 1190 and 1193 of the Civil Code and the competition rules. On the franchisee side, we assess whether assistance has genuinely been delivered, whether royalties may lawfully be withheld under Article 1219, whether treatment across the network is discriminatory, and who owns the customer base and reviews at exit.

Franchise obligations, drafted and enforced

We build and review French franchise agreements around the franchisor's and franchisee's obligations, and we act when those obligations are breached — from withheld royalties to network-website and customer-data disputes. Speak to us before you sign, amend or challenge a franchise agreement in France.

Discuss your matter

This article is for general information only. It does not constitute legal advice, and the obligations in a French franchise turn on the exact wording of each agreement and its circumstances. Contact our French lawyers for qualified advice before drafting, signing, amending, enforcing or challenging a franchise agreement in France.