A well-structured distribution agreement is essential for any company looking to sell products or services in France through a third-party network. Whether you are appointing an exclusive distributor, building a selective distribution system, or expanding a franchise network into the French market, the legal framework you use at the outset will determine your exposure to risk — and your ability to exit the arrangement cleanly if needed.
This guide explains the key legal considerations for distribution agreements in France, including French commercial law requirements, EU competition law compliance, and the critical distinctions that foreign companies often overlook.
Understanding Distribution Agreements Under French Law
Distribution agreements in France are governed primarily by the French Commercial Code (Code de Commerce), supplemented by general contract law principles under the Code Civil and, for cross-border or EU-scale arrangements, EU competition law.
Unlike employment contracts or agency agreements, distribution agreements are not governed by a single dedicated statutory framework. This flexibility is both an advantage and a risk: parties have significant freedom to structure their arrangements commercially, but this freedom means that poorly drafted agreements can leave significant legal gaps — particularly around termination, exclusivity, and liability.
The most important distinction in French distribution law is between a distributor and a commercial agent:
- A distributor buys products from the supplier and resells them in its own name, at its own price, and at its own commercial risk.
- A commercial agent (agent commercial) acts on behalf of the principal, negotiating and concluding contracts in the principal’s name, and receives a commission. Commercial agents are protected by mandatory French law — including a statutory right to compensation upon termination equal to approximately 2 years of gross commission.
Choosing the wrong structure can have major legal and financial consequences, particularly on termination.
Five Key Considerations for a Watertight Distribution Agreement
1. Defining the Territory and Exclusivity
Clearly define the geographic area in which the distributor is authorized to sell. Specify whether exclusivity applies — and if so, what type:
- Exclusive distribution: The supplier appoints one distributor per territory and agrees not to sell directly or appoint other distributors in that area.
- Selective distribution: The supplier appoints distributors based on qualitative criteria without granting territorial exclusivity.
- Open distribution: No exclusivity restrictions — multiple distributors may operate in the same area.
Each model has different implications for EU competition law compliance.
2. Pricing, Margins, and Resale Price Rules
Clearly state the pricing structure — wholesale prices, volume discounts, payment terms, and currency. Under EU competition law, you cannot fix your distributor’s resale prices. Minimum resale prices are prohibited. You may suggest a recommended retail price, but only if it is genuinely non-binding.
3. Exclusivity, Non-Compete, and Online Sales
Under the VBER block exemption, non-compete clauses during the contract are generally permitted for up to 5 years, provided the market share threshold is not exceeded.
Restrictions on online sales require careful drafting. Suppliers may set quality standards for online channels but cannot prohibit online sales outright. If your agreement restricts online sales in any way, EU competition law review is essential.
4. Intellectual Property Rights
The agreement must clearly define what IP rights are licensed to the distributor, territorial limits on the licence, standards for brand presentation, and ownership of any goodwill or customer data generated during the relationship.
If the distributor’s right to use the supplier’s brand is exclusive or quasi-exclusive, the Loi Doubin may apply, requiring the supplier to provide a pre-contractual information document at least 20 days before signing.
5. Termination, Notice, and Compensation
- Notice period: French commercial law requires a “reasonable” notice period before terminating an established commercial relationship (Article L.442-1 Commercial Code). Courts have found periods of 6 to 24 months reasonable for long-standing arrangements. A short contractual notice period will not protect the supplier from a rupture brutale (abrupt termination) claim.
- Compensation on termination: Distributors have no statutory right to compensation on termination, but may have claims for lost profit if the termination is abrupt or if they made significant investments in the supplier’s brand.
- Post-termination non-compete: Must be geographically limited and time-limited (typically no more than 1 year post-termination under VBER).
EU Competition Law and Distribution Agreements in France
Any distribution agreement with exclusive or restrictive clauses must be assessed against Article 101 TFEU. The Vertical Block Exemption Regulation (VBER) (updated 2022) provides a safe harbour for vertical agreements where both the supplier and distributor each hold market shares below 30%.
Outside the safe harbour — or if the agreement contains any “hardcore restrictions” — the agreement may be void. Hardcore restrictions include:
- Resale price maintenance — fixing minimum or exact resale prices
- Absolute territorial protection — preventing distributors from responding to passive orders from outside their territory
- Restrictions on online sales that amount to a total ban
I advise companies on drafting distribution agreements that are both commercially effective and compliant with EU and French competition law.
How I Can Help
I advise foreign companies and international businesses on all aspects of distribution law in France — from structuring the right type of agreement and ensuring EU competition law compliance, to managing complex termination situations and representing clients in commercial court proceedings.
Whether you are entering the French market for the first time or reviewing an existing network, working with an English-speaking lawyer who understands both French commercial law and the international context of your business makes a significant practical difference.
Get in touch for advice on distribution agreements in France: contact me.
Frequently Asked Questions About Distribution Agreements in France
What is the difference between exclusive and selective distribution in France?
An exclusive distribution agreement grants one distributor the sole right to sell products in a defined territory. A selective distribution system allows the supplier to choose distributors based on qualitative criteria without granting territorial exclusivity. Both types are subject to EU competition law under the VBER block exemption. Feel free to reach out to LysLegal for a consultation.
What notice period is required to terminate a distribution agreement in France?
French commercial law requires a “reasonable notice period” (preavais raisonnable) under Article L.442-1 of the Commercial Code. The required notice period depends on the length and exclusivity of the relationship. A notice of 6-24 months is common for long-established arrangements. Feel free to reach out to LysLegal for a consultation.
Do distribution agreements in France need to comply with EU competition law?
Yes. Distribution agreements are subject to Article 101 TFEU. Exclusive territory clauses, resale price maintenance, and restrictions on online sales can all trigger competition law issues. The VBER provides a safe harbour where both parties have market shares below 30%. Feel free to reach out to LysLegal for a consultation.
What is the Loi Doubin and does it apply to distribution agreements?
The Loi Doubin requires suppliers granting exclusivity alongside a brand to provide a pre-contractual information document (DIP) at least 20 days before signing. Failure to comply can render the contract voidable. Not all distribution agreements trigger the Loi Doubin. Feel free to reach out to LysLegal for a consultation.
What is the difference between a distributor and a commercial agent in France?
A distributor buys and resells at its own risk. A commercial agent negotiates on behalf of the principal and earns a commission, with statutory protection including a right to compensation on termination (typically 2 years’ commission). Distributors have no equivalent statutory right. Feel free to reach out to LysLegal for a consultation.