In many franchise networks, the franchisor operates an e-commerce website where consumers can buy items and collect them in a franchisee's store using a "click and collect" service. In a 17 February 2021 decision, the French Court of Cassation held that following a consumer's exercise of his right of withdrawal from his online purchase, the franchisor was liable to refund him jointly and severally with the franchisee store from which he collected his items.
A consumer purchased an item on the Feu Vert website, a French chain of automotive services centres. The consumer collected his item in a franchisee's outlet and eventually exercised his right of withdrawal pursuant to article L. 221-18 of the Consumer Code. However, he did not get a refund.
The consumer, seeking a refund for his purchase, filed a lawsuit against both the franchisor and the franchisee. The lower court ruled in favour of the consumer and ordered the franchisor as well as the franchisee to refund on a joint and several basis. The court held that even if the franchisor and the franchisee are two independent businesspersons under the franchise contract, the franchisor closely controls the way the franchisee operates its business and therefore may incur a certain liability.
The franchisor requested that the Court of Cassation reverse this decision. The franchisor argued that:
- it could not be found civilly liable for a contact (ie, the online sale contract) concluded by a franchisee and a consumer to which it was a third party; and
- the lower court did not consider the provision of the online terms and conditions of sales that stated that franchisees are fully responsible for sales concluded with third parties either in their stores or online, without any joint and several liability for the franchisor.
The Court of Cassation upheld the lower court's decision. The Court held that:
- the sale was concluded on the franchisor's website. The argument that the contract was concluded between the franchisee and the consumer with the franchisor as a third party to it was therefore irrelevant; and
- the franchisor complied neither with French law as regards the consumer's right of withdrawal nor with its own online terms and conditions of sale.
Therefore, the franchisor and the franchisee were ordered to refund the consumer on a joint and several basis.
Under article L. 221-18 of the Consumer Code, consumers are entitled to withdraw from online orders within 14 days. Where the order relates to a purchase of goods, as was the case here, the 14-day period starts from the delivery date. The date on which the online contract is concluded is not considered for the purposes of calculating this period. When exercising this right, consumers do not have to justify their withdrawal and they are entitled to full refund of their order. They only have to bear the cost of returning the good(s), in certain cases.
This right of withdrawal must be readably and understandably reminded on the franchisor's website prior to concluding the contract. Otherwise, the 14-day period is extended for an additional period of 12 months.
Where a consumer places a purchase order on a website operated by the franchisor, this right of withdrawal applies. If exercised, the franchisor may be found liable to refund, regardless of the fact that the consumer actually collected the item that had been ordered online in the franchisee's outlet
Therefore, franchisors should ensure that their websites correctly remind consumers of this right of withdrawal, and that franchisees properly answer to withdrawal requests from consumers whenever it is exercised in order to avoid any:
- extension of the withdrawal period; and
- joint and several liability with franchisees to refund.
For further information on this topic please contact Raphael Mellerio or Bertrand Baheu-Derras at Aramis Law Firm by telephone (+33 1 53 30 7700) or email ([email protected] or [email protected]). The Aramis Law Firm website can be accessed at www.aramis-law.com.