In a judgement issued on 15 May 2024, the Court of Cassation clarified the scope of the concept of intuitu personae in franchise agreements.
In line with previous case law based on the autonomy of the legal entity, the Court of Cassation confirmed that the transfer of all the shares of the franchisor to a third party and the change of its directors do not change the legal entity with which the franchisee has entered into the contract. This transfer does not therefore constitute a transfer of the franchise agreement and does not require the prior consent of the franchisees, unless the agreement provides otherwise.
The Court of Cassation had already ruled in the same way with regard to a change of control of a distributor bound to a supplier by an exclusive distribution agreement (Cass. com., 29 Jan. 2013, No. 11-23.676). However, the solution is quite different in the case of a merger, as a franchise agreement cannot be transferred to a third party without the consent of the franchisee in this case (Cass. com., 3 June 2008, No. 06-18.007).
The Court of Cassation’s decision of 15 May 2024 is therefore a useful reminder that the effects of intuitu personae are limited in the event of a transfer of shares. An exhaustive and well-drafted contract will therefore be the surest way for the franchisee to assert his rights in this context.
