(Competition Authority, decision no. 11-D-20 of December 16th, 2011)
The French Competition Authority has just accepted and made mandatory the commitments made by Carrefour vis-à-vis one of its franchisees trading under the Champion trade name.
This franchisee had brought a claim before the Authority in August 2010: it claimed that Carrefour had abused of its situation of economic dependency in the context of the non-renewal of its commercial lease and of the introduction of the new Carrefour Market agreement linked to the trade name change made by Carrefour.
In a decision no. 11-D-04 of February 23rd, 2011, the Authority had denied the request for interim measures made by the franchisee, but considered that replacing the franchisee's Champion franchise agreement with an agreement containing more restrictive provisions was likely to constitute an abuse of economic dependency. On the other hand, according to the Authority, the implementing of the commercial lease termination procedure in conformity with the legal deadlines was not deemed abusive in the case at hand: this analysis was confirmed by the present decision.
With regard to the first aspect, Carrefour proposed commitments on July 29th, 2011, which specifically modified certain provisions of the Carrefour Market trade name agreement. Carrefour agreed to modify the agreement's term, to delete the non-re-affiliation and post-contractual non-compete clauses, to limit the franchisor's priority right to the term of the agreement and to delete the entry fee with deferred payment.
As pointed out by the Authority, these commitments fully comply with its recommendations issued in its opinion no. 10-A-26 of December 7th, 2010, regarding independent store affiliation agreements and with the terms of acquisition of commercial property in the food distribution sector, in particular with respect to the term of the agreement and of the post-contractual obligations.
This decision confirms that, franchisors should not wait for a law, seeking to implement these recommendations to be voted and should already take these recommendations into account in their relationships with their franchisees.