Commercial Chamber of the Court of Cassation, December 1, 2021, n°18-26.572
In a judgment of December 1, 2021, the Court of Cassation confirms the condemnation of a franchisor, on the basis of fraud, to the payment of a sum of more than 190,000 euros, in compensation for the damage suffered by one of its franchisees.
Before the scheduled signing date of the franchise agreement
In this case, the franchisor had provided the franchisee with unrealistic or incomplete information, which, according to the High Court, had the effect of misleading the franchisee by causing an error in his mind about the profitability of his activity.
More specifically, the latter had been provided with "a forecast account for the first three years of operation, the data of which proved to be grossly unrealistic and the difference between it and the turnover achieved exceeded the margin of error inherent in all data of a forecast nature.
The pre-contractual information document (DIP)
The franchisee had also received a Pre-contractual Information Document (DIP) deemed to be incomplete, on the grounds that this document:
- was six (6) pages long, a relatively short length given the amount of mandatory information required by Articles L330-3 and R330-1 of the Commercial Code;
- did not include any mention of local competition and the state of the network.
These shortcomings have, according to the Court of Cassation, proved the franchisor's desire to deceive the franchisee.
On this basis, the Court of Cassation therefore rejects the arguments of the franchisor tending to assert the obligation for the franchisee to find out about the network, where the professional experience prior to arriving in the network (in this case, the franchisee had held sales management positions for more than 18 years in a market segment identical to that of the brand concerned).
This decision recalls that such arguments cannot be opposed to the franchisee who must have sincere, sufficient and realistic data.
