In cooperation with Cerca, Cecile Peskine revisits, in an accessible way, the fundamentals of franchise law through videos.
“What is the DIP? Who must provide it and when?
The franchisor is required to provide franchise candidates with the DIP: the pre-contractual information document. Where does this obligation come from? It is quite old. When franchising arrived in France from the United States, there were franchise fairs, and people would visit these fairs and leave in the evening with a signed franchise agreement, a huge investment, and a cheque for the entry fee. And that same evening, these people realised that they had committed themselves without really anticipating that they would need financing and a location. These people had not sought the advice and assistance of a solicitor to read and understand the contract. The DIP must be provided so that the consequences of the commitments can be understood. The DIP must be given to anyone who has a franchise or brand licence project. But when should it be given? At least 20 days before the contract is signed and at least 20 days before any expenditure related to the contract.
However, in practice, we realise that several months often pass between the submission of a DIP and the signing of the contract, because the DIP is the start of the future partner’s deliberations and, based on this document, the partner will find banks, financing, a business plan, premises, etc. before signing the contract. All of this takes several months. The 20-day period is really the minimum time frame, and it also runs before the reservation contract. Some brands offer reservation contracts to reserve an area before the franchisee signs the franchise agreement, and in this case, a DIP must also be submitted before the reservation contract is signed.”