French Supreme Court, Commercial Chamber, 18 December 2012, Case no. 11-27.068
Two franchisees in the food distribution sector challenged the validity of a clause prohibiting them from
- (i) becoming affiliated with other nationally and regionally-known stores within a 5km radius during a period of one year after the end of their agreement and
- (ii) selling products bearing trademarks linked to these stores.
The Supreme Court upheld the Court of Appeals’ decision, which found that:
‘the local food distribution activity is performed almost systematically in the scope of organized franchise networks and with nationally and regionally-known stores’ and ‘the franchisees’ small grocery store was run in a small village’, to then infer that the clause, which ‘resulted in the former franchisees being denied the support of the supply network in their business sector and being unable to continue operating their business in economically profitable conditions, was not proportionate to the franchisor’s legitimate interests and should be rescinded.’
Didier Ferrier, agency, distribution and franchising Country Expert for France.
