Who owns the client base in a Franchise agreement in France?
Updated: Feb 12
Pursuant to French law, the existence of a clientele belonging to the franchisee is uncertain when the business is operated under a commercial concession or franchise agreement. Indeed, the concessionaire or franchisee who uses a brand name, or even the corresponding sign, benefits from a pre-existing clientele which is that of the brand.
Thus, the franchisor has been recognized as the owner of a clientele in the following cases:
- the franchisee, in this case a hairdresser operating under the Jean-Louis David brand, had almost no room for manoeuvre, as the clauses of the franchise contract prevented any independent management of the business and even obliged the hairdresser to practice his art within the limits of the Jean-Louis David fashion and image, in accordance with very precise techniques; these clauses could not be explained by the simple desire to integrate the franchisee into the franchisor's network, but tended to align the management of the hairdresser’s business to the exclusive interest of the Jean-Louis David brand and name; the franchisor had therefore not allowed the franchisee to develop its own clientele (TGI Paris, 18th ch. 2nd sect, 30-10-1998, GP 1999.som.139 obs. J.-D. Barbier);
- the franchisor had set up a program to develop customer loyalty to his retailers by means of loyalty cards. In this case, the loyalty program had been developed and owned by the franchisor and the franchisee had no right to the data, of which he was only the collector; also, the financial advantage offered to customers holding the loyalty card was ultimately paid by the franchisor (CA Chambéry, ch. com, 2-10-2007 n° 06/01561 : RJDA 8-9/08 n° 900).
However, the clientele would belong to the franchisee if the franchisee proves that he has created or developed a personal local clientele, which would not have existed if the franchisee had not implemented the technical and other means he has put in place (such as, equipment and stock, tangible and intangible assets, including lease of the premises to which the clientele is attached).