Does a franchisee who continues to operate under another brand belonging to the same group as that of its franchisor violate its non-affiliation obligation?
A franchisee was bound by a non-affiliation clause prohibiting it from operating under a competing brand within one year of the end of the contract (CA de Paris, 26 février 2025, RG n° 23/09914).
The franchisee continued to operate as a real estate agency under a competing brand, but belonging to the same group of companies as the franchisor, less than a year after the end of the contract.
The franchisor claimed in particular that this behaviour was constitutive of a breach of the non-compete obligation, with the aim to obtain payment of damages.
First, the judges assessed the validity of the clause challenged by the franchisee.
As a matter of principle, clauses that have the effect of restricting the freedom to engage in commercial activity after the end of certain contracts, including franchise agreements, are ineffective unless they meet the following criteria (Art. L. 341-1 of the Commercial Code):
- They concern competing goods and services,
- They are limited to the land and premises from which the operator carries out its activity during the term of the contract,
- Their duration does not exceed one year after the expiry or termination of the contract,
- They are essential for the protection of the substantial, specific, and secret know-how transmitted.
The franchisee claimed that this clause did not satisfy the last condition since:
- it was not necessary for the protection of know-how and
- it was disproportionate in the restriction it places on his own commercial activity.
The franchisee claimed that the franchisor’s know-how consisted mainly of software solutions and distinctive signs to which it no longer had access or use at the end of the contract.
The judges rejected this argument : know-how also covers the experience of the franchisor and its network in the real estate business. The post-contractual non-affiliation clause “not only prevents the franchisee from immediately using the experience acquired through the know-how transferred to operate a business with a competing network at the end of the contract, but also protects the identity of the network sharing practices.” “
Secondly, the franchisee argued that the non-affiliation clause cannot apply between companies belonging to the same group.
The judges ruled that the clause applies, even if it concerns affiliation with a competing company belonging to the same group of companies as the franchisor, ”these companies remain distinct and engage in competing activities. »
The franchisee was therefore ordered to pay damages.
Surprisingly, the Court did not highlight the potentially overly broad nature of the clause, which applied to the premises and a radius of 200 meters around them.
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