The line between trademark licensing and franchising is often blurred, as we pointed out a few months ago.
The Toulouse Court of Appeal reiterated this in a ruling on May 6, 2025:
- The similarities between trademark licensing and franchising:
– the trademark licensing agreement is similar to the franchise agreement in two respects: the licensee and the franchisee may use the trademark of the licensor or franchisor and pay a royalty to their co-contractor.
- And the differences between these two agreements:
– the trademark license does not include the transfer of know-how or assistance.
In the case , the trademark license agreement began with introductory remarks on the “concept” and detailed the “know-how” developed by the licensor, particularly in terms of marketing, promotion, and training methodology.
It also stated that the licensor intended to promote and exploit this concept in the short term through a franchise network. A franchise agreement to be signed before the end of the license agreement was appended to the license agreement.
In addition, the concession agreement was supplemented by an initial training agreement.
All these elements led the Court to requalify the trademark license agreement as a franchise agreement.
The consequences of this requalification:
As the brand owner did not issue a FDD prior to the signing of the contract, the contract is canceled, with the following consequences: the network head is ordered to reimburse all sums paid since the signing (entry fee and royalties).
The choice of legal model is therefore decisive in determining a brand’s ability to build its development on a sound and sustainable foundation.