Publications

 

Comments on the ruling issued by the Paris Commercial Court against SUBWAY cancelling clauses of the franchise agreement on the ground of significant imbalance.

 

 

Olivier Binder, IDI – International Distribution Institute, 16 septembre 2021

 

The case law encompasses all the ingredients of a reflection that the Franchisors and their Counsels usually have when drafting a Franchise contract.

 

Executive summary

The case law encompasses all the ingredients of a reflection that the Franchisors and their Counsels usually have when drafting a Franchise contract.

The court was severe with regard to SUBWAY, by broadening the scope of Article L. 442-6-I-2 of the French Commercial Code and by adopting often audacious solutions unfavorable to SUBWAY, the franchisor.

The decision of 48 pages is not without criticism and the lessons that can be learned from it have to be qualified, as the defendants (Subway) have already filed an appeal early January 2021. The case is currently pending before the Court of Appel of Paris.

It is nevertheless of particular interest since its substantial rationale guides operators in the drafting of their contracts and, more broadly, in the building of their networks.

 

 

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