Franchising in France: ensuring proper delivery of the DIP to prospective franchisees

Turning an existing business into a franchise network involves organising an essential step: delivering the pre-contractual disclosure document, known in France as the DIP (document d’information précontractuelle). This is neither a sales brochure nor a formality to deal with at signing. Before recruiting your first franchisees, establish a procedure that ensures accurate information, sufficient time for consideration and reliable evidence of what has been supplied.

Understand the statutory period under the Doubin Law

In France, Article L. 330-3 of the Commercial Code, introduced by the legislation known as the Doubin Law of 31 December 1989, governs pre-contractual disclosure where one business makes a trade name, trade mark or trading identity available to another while requiring an exclusive or near-exclusive commitment in relation to its business activity. Its scope therefore extends beyond franchising alone.

Where these conditions are met, the DIP and draft agreement must be provided at least twenty days before the agreement is signed or, where applicable, before any advance payment is made, particularly to reserve a territory. The document’s required contents are set out in Article R. 330-1 of the Commercial Code.

Good practice is to identify the first planned step in your recruitment process that involves a commitment. If a payment is due before the franchise agreement is signed, your timetable must also take that payment into account. Relabelling a payment as an ‘administration fee’ does not automatically take it outside the rule.

This period is a statutory minimum, not a sales target. Prospective franchisees may need more time to consult their advisers. A statement that they wish to sign quickly does not remove the requirement to observe the waiting period.

Compile a complete, dated disclosure pack

Before sending anything, appoint someone to take responsibility for the version supplied. They should bring together the legal, financial and commercial information, then check that it is consistent with the draft agreement.

The DIP includes information about the business, its directors, its experience, the trade mark, accounts for the two most recent financial years, the market and the network. It also sets out the main contractual terms and the expenditure and investment specific to the trading identity or trade mark that must be incurred before operations begin. This list is not exhaustive: use a checklist based on Article R. 330-1.

For a business starting to franchise, clearly distinguish company-operated outlets from franchised businesses. Do not present the original business’s years of trading as equivalent years of experience managing a franchise network. If the franchisor company was recently established, have the presentation of its history and accounts checked, without attributing another company’s history or accounts to it.

Prepare a clearly identified pack containing:

• the DIP, dated and bearing a version number;
• the draft agreement and any appendices needed to understand it;
• an inventory of the files supplied;
• contact details for the person responsible for answering questions.

Keep a fixed copy of the entire pack. A shared folder whose files are regularly replaced is not, on its own, sufficient to establish what the prospective franchisee actually received.

Prove delivery and prevent premature commitments

Choose a delivery method that establishes the recipient’s identity, the date of delivery and the contents supplied. In practice, delivery against a detailed acknowledgement of receipt, or an electronic solution with an appropriate audit trail, can help provide this evidence.

The acknowledgement of receipt must refer to a precisely identified pack. It records delivery: it must not become a waiver of the prospective franchisee’s rights or a blanket endorsement of all the information provided.

Include three mandatory fields in your applicant tracking system: verified delivery date, version supplied and earliest permitted commitment date. Have the calculation of the waiting period checked and allow a margin rather than scheduling signature at the earliest possible moment.

Keep your accounts team informed too: no payment covered by these rules should be requested before the waiting period has expired. This coordination prevents a situation in which a salesperson follows the timetable while another department requests a deposit.

Deal with changes before signing

Information may change between delivery and signing: a member may leave the network, the required investment may change, or significant amendments may be made to the draft agreement.

Arrange a final check. If a development affects the prospective franchisee’s assessment, provide updated information and ask your legal adviser to review its implications for the timetable. Not every correction automatically requires a fresh waiting period of the same length; however, a material change calls for particular care and may warrant issuing a new disclosure pack with an appropriate waiting period.

Archive questions, answers and successive versions. The DIP should remain a tool for informed decision-making, not merely an administrative record.

Key takeaway: before recruiting your first franchisee, test the entire procedure: a complete pack, proven delivery, a checked waiting period, payments blocked until permitted, and a final review before signing.