Who Can Put a Business into Location-Gérance, and Who Can Take One On

Location-gérance: who can let a business out - and who can take one on

The location-gérance opens with two questions the deal cannot skip: is the owner entitled to let the fonds out, and can the taker lawfully run it? The first has become far simpler, the old requirement that the owner have operated the fonds for two years was repealed in 2019, but capacity still bites: spouses, co-owners, usufructuaries, minors, protected adults and companies in formation each have their own rule, and one of them voids the contract outright. The second turns on the tenant's fitness to be a trader, sometimes on proven professional competence, and always on a registration deadline. And around the signature sits the regime's real discipline: pre-contractual information that can annul the contract when it hides the essential, and a fifteen-day publicity whose omission does not void the letting - it just leaves the owner paying the tenant's debts.

This guide covers the entry conditions of the location-gérance: the 2019 repeal and what remains, capacity on the owner's side, the tenant's status and registration, the contract's formation and information duties, and the publicity with its consequences. The contract's content, clauses, redevance, duration, has the next guide in this cluster.

No more waiting period to grant a location-gérance

Since 21 July 2019, the lessor, individual or company, no longer needs to have operated the fonds for at least two years before letting it out: Article L 144-3 of the Commercial Code was repealed by the law of 19 July 2019. With it went everything the old rule dragged along - the judicial dispenses, the exceptions, the nullity that punished a premature letting. Contracts concluded before 21 July 2019 remain governed by the former regime; everything signed since is free of it. What survives from the old policing is qualitative, not temporal: the fonds must exist, a real clientele at the contract's date, proven by the owner, and the structures that empty the rule (lettings that are sales, sub-lettings in disguise) are requalified on the principles this cluster's opening guide covers.

Granting a location-gérance: owners, couples, minors, protected adults

Capacity, case by case. The owner must have capacity to conclude the contract - and the letting of a business is a serious enough act that the capacity rules deserve reading before signature:

• Usufructuary: where ownership of the fonds is dismembered, the usufructuary can let it without the bare owner's agreement (C. civ. Art. 595);
• Co-owners in indivision: prudence commands the agreement of all co-owners, or a special mandate from all - a location-gérance is important enough to be assimilated to a commercial lease, which sits outside the administration acts that holders of two-thirds of the rights can do alone (C. civ. Art. 815-3);
• Married owners: a spouse under the legal community regime who runs a separate profession can let the fonds, own or community property, without the other's consent (C. civ. Art. 1421). The exception is the collaborating spouse: a trader whose spouse collaborates in the operation of a community fonds cannot let it without that spouse's express consent, and the overlooked spouse can seek annulment for two years from learning of the act (C. com. Art. L 121-5);
• Minors: for an unemancipated minor, the contract is concluded by the parent exercising sole parental authority or both parents jointly (legal administration), or by the guardian with the family council's, failing which the judge's, authorisation (guardianship). An emancipated minor contracts freely, with an adult's civil capacity;
• Protected adults: under judicial safeguard, the adult contracts alone but can seek rescission for lesion or reduction for excess (C. civ. Art. 435); under curatorship, with the curator's assistance (C. civ. Art. 467); under tutorship, through the tutor with the family council's or judge's authorisation (C. civ. Art. 505);
• Company in formation: a company in formation cannot take a location-gérance - a contract naming as tenant a company in formation represented by its founders is null (Cass. com., 21 October 2014).

The owner's own status. Granting the location-gérance is a commercial act for an owner who operated the fonds, civil for the usufructuary lessor, and the owner need not be, or remain, registered in the trade registry once the fonds is let (unless it operates another). Staying registered without obligation has a price: the owner is then presumed a trader - and lost, in one case, access to the consumer over-indebtedness procedure.

Can you sign the location-gérance? The capacity check

Pick your situation - the check gives the rule and the required consents.

Taking a location-gérance on: the tenant's side

A trader's status - with a trader's conditions. The tenant-manager becomes a trader by operating the fonds (C. com. Art. L 144-2): it must therefore have the capacity to trade and be free of the interdictions and incompatibilities that bar commerce. Where the activity is regulated, the tenant must also prove the required professional competence, diplomas or the required card, as for travel agencies or drinks outlets.

Registration in fifteen days. A tenant not already registered must apply for registration within fifteen days of the start of its activity, the taking of possession, declaring, beyond the ordinary particulars, the owner's identity and domicile and the location-gérance's start and end dates, with any tacit-renewal term (C. com. Art. R 123-38). The owner, by contrast, need not register or stay registered once the fonds is let.

The commercial lease's protection survives sloppy registration. Where the fonds sits in rented premises, the statutory commercial-lease protections, the renewal right above all, apply even where the tenant-manager is not registered (C. com. Art. L 145-1, II); the case law adds two conditions with teeth: the location-gérance must be regular, and it must have been concluded before the date at which registration had to be effective - failing which it is the owner of the fonds who must be registered, a point the courts must verify.

Forming the location-gérance contract

Ordinary contract law - with a practical writing requirement. Beyond its special conditions, the location-gérance follows the general law of contract. Because it must be published, and sometimes registered, it must in practice be in writing. Two drafting reflexes spare the end-of-contract fight: state the composition and condition of the fonds let, and settle in advance the fate of the stock and the treatment of increases or losses in the fonds' value - the restitution guide in this cluster shows what those clauses are worth.

The information duties. The general pre-contractual information duty applies (C. civ. Art. 1112-1) - and where the contract, concluded in the parties' common interest, carries an exclusivity undertaking, the statutory pre-contractual disclosure of Article L 330-3 of the Commercial Code adds to it, with its prescribed content. Breach of the statutory disclosure is fined, but annuls the contract only where it vitiated the tenant's consent: an operator who had run the same company's service stations for six years in varied settings could not claim its consent was vitiated - while a food-shop location-gérance was annulled for fraud where the owner concealed that it was opening a competing outlet fifty metres away. The measure of the duty is the information's power to change the tenant's decision.

The location-gérance publicity - and what silence costs the owner

The publication. Within fifteen days of its conclusion, the contract must be published, as an extract or notice, in a medium authorised to carry legal announcements (C. com. Art. R 144-1); either party can see to it. No text prescribes the content - the publication informs third parties, so it should carry what informs them, including any clauses arranging the contract's end (improvements, stock take-back).

What omission does - and does not do. Missing publicity does not void the location-gérance. Its cost lands on the owner, in three ways:

• the publication starts the three-month window in which the owner's term creditors can ask the court to make their claims immediately payable (C. com. Art. L 144-6) - unpublished, the window never starts closing;
• publication ends the owner's solidary liability for the debts the tenant contracts in operating the fonds (C. com. Art. L 144-7) - the exposure this series' joint-liability guide details, tax edge included: every unpublished day is a day of answering for someone else's business;
• in the tenant's later insolvency, an owner who published before the proceedings opened can demand the fonds' restitution without a revendication procedure (C. com. Art. L 624-10) - the published contract is the owner's proof of title when it matters most.

The registry's mirror. The tenant's registration carries the letting's particulars; the contract's end has its own publicity, covered with the restitution rules in this cluster's ending guide. The discipline to retain is the calendar's: publish within the fifteen days, the same day as signature, in practice, because every consequence above runs from that date.

Your pre-signature location-gérance checklist

Pick your side - the check lists what must be done before and just after signing.

Frequently Asked Questions

This article is for general information only and states French law as published in the sources available at the date shown above, checked against official sources. It does not constitute legal advice. Always seek qualified advice before committing.