The post-contractual non-reaffiliation clause plays a key role in protecting franchisors’ networks and know-how.
It aims to prevent franchisees from joining or creating another competing network after the end of their franchise contract.
Since August 6, 2016 (the date of entry into force of the “Macron Law” of August 6, 2015, which codified and clarified the applicable regime), four cumulative conditions shall be met (cf. article L. 341-2 of the French Commercial Code):
- The clause shall prohibit the franchisee from joining a competing network – and not any franchise network.
- The clause shall apply only to the premises where the franchisee operated its business.
- The clause shall be essential to protect the franchisor’s know-how.
This criterion implies that the non-reaffiliation obligation applies only to persons likely to disclose or exploit the franchisor’s know-how.
For example, the clause is invalid if it applies to “any natural person or legal entity having at any time during the performance of the contract exercised functions in or for the franchised company” and to “any universal or individual successor in title“.
- The ban on non-reaffiliation must be for a maximum of one year from the date of termination of the franchise agreement concerned.
In a recent ruling, the French Supreme Court (Cour de cassation) indicated that these conditions are applicable to any network operating a business selling goods to consumers or services to individuals, such as a real estate agency (Cass. com., June 5, 2024 n°23-15.741).