Buying a franchise: planning ahead for dispute resolution

Before joining a franchise network in France, it is natural to focus on opening and growing your business rather than litigation. Yet the dispute resolution clause deserves careful reading: it may determine where you have to defend your interests, which procedure applies and what costs you face. The aim is not to anticipate a conflict, but to ensure you have realistic ways to enforce your rights.

1. Identify the required steps if a disagreement arises

Do not simply look for the name of a court. Map out the full process set out in the contract: written notification, discussions between senior management, conciliation, mediation and, potentially, court proceedings or arbitration. These steps may be spread across several clauses and appendices.

For each step, note:

• the types of disagreement covered, particularly claims for payment;
• whom to contact and how to give notice;
• response deadlines and the maximum duration of any amicable resolution stage;
• how costs are shared;
• the consequences of failing to respond.

A mandatory amicable resolution procedure can have real legal consequences. Depending on how the clause is drafted, failure to follow it may make a court claim inadmissible. Make sure it is clear when this stage begins, when it ends and how you can prove that you have complied with it.

France has no single code governing the entire franchise agreement. General contract law and procedural rules apply, among other provisions. Pre-contractual disclosure is, however, subject to specific requirements under Article L. 330-3 of the French Commercial Code, introduced by the Doubin Law of 31 December 1989, and Article R. 330-1. Where the statutory conditions are met, the pre-contractual disclosure document, known as the DIP, and the draft agreement must be provided at least twenty days before signing or making any required advance payment. Use this minimum period to review the dispute resolution clauses as well.

2. Check that mediation remains accessible

Mediation offers a way to seek an agreement with the help of an independent third party. The mediator does not decide the dispute as a judge would: the parties remain free to accept or reject the proposed solution. This approach can help preserve a business relationship, but it does not guarantee an agreement.

Ask who appoints the mediator. A named organisation and balanced appointment arrangements provide greater clarity than a vague reference to someone chosen by just one party. Also check the applicable fee schedule, the initial deposit, how costs are shared and whether meetings can take place remotely.

A franchisee operates as an independent business owner: they are not automatically entitled to consumer mediation for a dispute with their franchisor. You need to examine the arrangements actually provided for this business-to-business relationship.

Finally, attempts to settle amicably should not turn into an indefinite wait. Have a lawyer review whether you can apply promptly to a court for urgent or protective measures. Nor should you assume that simply exchanging emails suspends limitation periods: the effect of mediation on these time limits depends on the statutory conditions being met.

3. Distinguish between a designated court and arbitration

A clause naming a distant court may increase travel and make practical arrangements more difficult. Under French law, Article 48 of the Code of Civil Procedure governs clauses that depart from the usual rules on territorial jurisdiction. In particular, all parties must have entered into the agreement in the legal capacity of a trader, and the clause must be displayed very prominently in the contractual undertaking of the party against whom it is invoked.

A clause is therefore not necessarily valid simply because it appears in the contract. Your legal status and the way the clause is presented matter, and any applicable special jurisdiction rules must also be considered.

Arbitration is different: the dispute is referred to one or more arbitrators rather than a state court. An arbitration clause can establish this arrangement when the agreement is signed. In a business-to-business agreement, do not assume that arbitration will be optional once a dispute arises.

Ask for an estimate of administrative charges, arbitrators’ fees and the deposits you would need to pay upfront. Check the seat of arbitration, the language, the number of arbitrators and the applicable rules. Rights to challenge an arbitral award are restricted: arbitration does not necessarily allow you to have the case freely reheard on appeal.

4. Negotiate a procedure proportionate to your business

Give your lawyer a practical scenario involving a disputed sum, an unfulfilled obligation and the need for a quick decision. Ask what steps would be required and which costs you would have to pay upfront.

You can then propose targeted changes: a time-limited mediation stage, balanced arrangements for appointing the mediator, remote meetings or a less costly procedure. Make sure any agreement is recorded in the signed documents; an oral promise does not safeguard your position under the contractual process.

Key takeaway: before signing, make sure you can explain who will handle a disagreement, how long the process will take and what it will cost. A clear, workable clause protects your ability to enforce your rights.