Franchising: defining the activities permitted under the agreement

Before franchising an existing business, distinguish between what works in your own premises and what you will authorise each franchisee to sell. A service occasionally provided by the founder does not automatically become part of the franchise concept. Defining the activities permitted under the agreement helps you build a consistent franchise network without promising support you are not yet equipped to provide.

1. Take stock of the offering that can realistically be franchised

Start with your actual operations, not just your sales presentation. List the products sold, paid services, free services and work carried out exceptionally at a customer’s request.

For each item, ask four questions:

• Is this offering part of the promise made to customers under the brand?
• Is it delivered using a sufficiently well-established method that others can reproduce?
• Can you train and support an independent business owner to provide it?
• Does it require separate resources, insurance or authorisation?

A shop might, for example, sell products, offer maintenance services and occasionally accept complex repair jobs. If those repairs depend entirely on the owner’s personal experience, the fact that they are offered at the original premises is not enough to make them part of the franchise offering.

Then place each activity in a clear category: mandatory offering, permitted optional offering, offering subject to prior approval, or activity excluded from operations under the brand. This classification is a tool for preparing the agreement, not a set of categories prescribed by law.

2. Translate your selection into a clearly defined contractual scope

A phrase such as ‘operating the brand’s concept’ expresses an intention but leaves many questions unanswered. The agreement should make it clear exactly what the franchisee may offer and on what terms.

Describe the product or service categories in appropriate detail. A list of every individual product quickly becomes outdated, while an overly broad description risks including activities you have never tested. Aim for a middle ground: understandable categories, essential characteristics and explicit exclusions.

For optional activities, specify in particular:

• the premises, equipment and other resources needed to carry them out;
• any additional training required;
• the document checks to be completed before launch;
• the support the franchisor will actually provide;
• any additional costs and how these are addressed in the agreement.

Also distinguish the right to use the brand for an activity from an obligation to offer that activity. An optional service should not become mandatory simply through an informal instruction.

Finally, do not confuse the scope of activities permitted under the brand with a general ban on carrying out other activities. Any restriction on a franchisee’s outside activities requires a separate legal assessment, particularly under competition law.

3. Present the same scope before the agreement is signed

In France, franchising is governed, among other things, by general contract law and competition law. Pre-contractual disclosure is also regulated by Article L. 330-3 of the French Commercial Code, introduced by the law of 31 December 1989 commonly known as the Doubin Law, and by Article R. 330-1, which sets out the required content.

These rules apply where a person makes a trade name, trade mark or trading identity available while requiring an exclusive or near-exclusive commitment in carrying out the business activity. In such cases, the pre-contractual disclosure document, known in France as the DIP, and the draft agreement must be provided at least twenty days before the agreement is signed or, where applicable, before any required advance payment is made.

For the scope of your offering, the practical consequence is straightforward: your sales presentation, DIP and draft agreement must not describe different offerings. Do not promote a service as an assured benefit if permission to provide it remains subject to approval or additional investment.

The brand-specific expenditure and investment needed before opening form part of the information required under Article R. 330-1. Clearly identify those arising from the activities selected for the prospective franchisee. Have a lawyer familiar with franchising check that all the documents are consistent.

4. Plan how to handle requests outside the agreed scope

A franchisee is likely to receive unusual requests: a bespoke service, an additional sale or work for a new type of customer. Prepare a short procedure for assessing these without turning every exchange into an improvised negotiation.

The request should describe the proposed offering, the resources needed, the risks identified and the intended use of the brand. Appoint a contact responsible for responding and keep a written record of the decision. Make it clear that a lack of response does not constitute authorisation.

If approval changes contractual rights or obligations, formalise it appropriately, through an amendment if necessary. A local trial must also be distinguished from permanent authorisation applying across the network.

Key takeaway: before recruiting your first franchisee, prepare a matrix of mandatory, optional, approval-dependent and excluded activities. Then check that your sales proposition, agreement and capacity to provide support match that scope exactly.