Agents and distributors

Agents In France

Agents in France

Under French Law an agent acts for a principal and receives a commission on products or services sold.

In addition to the European Community provisions, there are a number of French statutory and regulatory provisions which are highly protective of the commercial agent.

For example, it is very difficult indeed to dismiss an agent and in the event of separation for whatever reason considerable compensation would generally be payable, for example (dependant upon the activity) two years commission could be paid to the agent by way of compensation upon termination.

Great care should therefore be taken in the drafting of the initial agreement with the agent, not least in defining his own obligations but also in setting out the circumstances where (subject to there being no contrary public policy provisions) his or her contract could be brought to an end in clearly defined financial circumstances.

The agreement may be drafted in English, but in the event that it were submitted for whatever reason to the French Courts, then de facto the French translation will always prevail in the eyes of the Judge.

From the perspective of the principal, it is thus suggested that a bilingual version of the agency agreement be prepared and that it be drafted by the principal as opposed to the agent.

companyformation

From the perspective of the principal, it is thus suggested that a bilingual version of the agency agreement be prepared and that it be drafted by the principal as opposed to the agent.

Distributors in France

Distributors purchase products from, say, the manufacturer and thereafter are free to sell these in their own market at whatever price they wish to fix and under whatever conditions (subject to possible prior contractual constraints).

Thus French distributors are free to set their own profit margin, decide upon their method of selling within French territory, decide upon advertising etc.

It is therefore possible for the manufacturer to bring an end to a distributors’ distribution agreement, even an exclusive agreement, without compensation.

However, distributors must be given reasonable notice and moreover distributors may be able to obtain specific compensation if they have invested in equipment, buildings etc solely for the purpose of distributing the product in question and this investment has not been amortised.