#Buying a Business in France: Fonds de Commerce Sale and Purchase Lawyer

Buying a Business in France: Fonds de Commerce Sale and Purchase Lawyer

Selling or buying a fonds de commerce (a business as a going concern) involves several areas of law: commercial law, contract law, tax law, employment law and lease law. Every transaction calls for due diligence, negotiation of the clauses, drafting of the deed, publication formalities, management of the escrowed price and post-sale support. Our firm acts in Paris and throughout France, for sellers and buyers alike, on behalf of traders, business owners, investors and groups.

This page describes the stages of a sale of a fonds de commerce, the mandatory content of the deed, the tax regime, the transfer of employment contracts and of the commercial lease, publication formalities and post-sale obligations. Each matter is assessed against the rules applicable on the date of the transaction.

What is a fonds de commerce?

A fonds de commerce is a set of tangible and intangible assets used to operate a commercial business. In principle, it includes the clientele, the trading sign, the trade name, the leasehold right, equipment and stock and, depending on the case, intellectual property, licences, administrative authorisations and contracts needed to run the business. Unless otherwise agreed, it does not include receivables, debts or the building in which the business is operated.

The legal regime derives from Articles L. 141-2 et seq. of the French Commercial Code (in French) (Code de commerce). It aims to protect both the buyer (through the pre-contractual duty to inform under Article 1112-1 of the French Civil Code and a mechanism for creditor objections) and the seller’s creditors (through publication and escrow of the price). Since Law No. 2019-744 of 19 July 2019, which repealed Article L. 141-1 of the Commercial Code, the deed is no longer subject to mandatory statements on pain of nullity. The seller remains liable if the information provided is incomplete, on the basis of Article 1112-1 of the Civil Code.

Due diligence and letter of intent

Before any commitment, we carry out targeted due diligence: the lease position (remaining term, rent, use clauses, schedule of condition, security deposit), trading accounts for three financial years, actual turnover, current contracts (suppliers, franchise, service providers), client portfolio, intellectual property (trade mark, trade name), administrative authorisations (Licence IV for restaurants, approval for certain activities), and employment and tax compliance.

A letter of intent or a promise to sell subject to conditions precedent structures the pre-contractual phase. Typical conditions precedent cover the buyer obtaining financing, renewal or confirmation of the lease by the landlord, obtaining administrative authorisations and, where relevant, clearing the municipality’s pre-emption right over businesses located in a local retail and craft protection area (Article L. 214-1 of the French Town Planning Code, Code de l’urbanisme).

Content of the sale deed

Since the repeal of Article L. 141-1 of the Commercial Code (Law No. 2019-744 of 19 July 2019), no statement is mandatory on pain of nullity. A complete deed nevertheless documents, under the duty to inform (Article 1112-1 of the Civil Code): the name of the previous seller, the price the seller originally paid, the schedule of liens and pledges, turnover for the last three financial years, operating results, and the commercial lease (date, term, name and address of the landlord, rent). The Commercial Code still requires the parties to initial, on the day of the sale, a document showing monthly turnover since the end of the last financial year; the seller keeps the accounting books for the last three financial years available to the buyer for three years (Article L. 141-2).

Beyond this information, the deed sets out the exact scope of the assets sold, the warranties (against eviction, against latent defects, specific warranty as to the accuracy of the accounts), the allocation of post-sale services, non-competition and non-solicitation. The price is allocated between tangible and intangible assets, and this allocation determines the basis for registration duties. Signing is most often accompanied by an escrow agreement that entrusts the price to a third party (the bâtonnier, i.e. the President of the Bar, a notary or a bank) while creditor objections are cleared.

Publication formalities and creditor objections

The sale must be published twice: in a publication authorised to carry legal notices within fifteen days of signing (Article L. 141-12 of the Commercial Code), then in the BODACC, the French official gazette of civil and commercial notices (Bulletin officiel des annonces civiles et commerciales). The seller’s creditors have ten days from the later of these publications to object to payment of the price (Article L. 141-14). The objection is lodged at the address elected for service, by extrajudicial act or by registered letter with acknowledgement of receipt; on pain of nullity, it states the amount and grounds of the claim.

If an objection is lodged, the seller may apply to the summary proceedings judge (juge des référés) to receive the price, either by depositing a sum sufficient to cover the grounds of the objection (Article L. 141-15), or where the objection is made without title or cause or is formally void (Article L. 141-16). Otherwise, the escrow agent retains the sums needed to pay the objecting creditors until they are paid in full or a court rules. A buyer who pays the seller before the objection period expires is not discharged as against third parties (Article L. 141-17).

Tax on the sale of a business in France

For the seller, the sale gives rise to a business capital gain. For sole traders and companies subject to income tax, the regime depends on Articles 151 septies (exemption for SMEs, subject to revenue conditions), 151 septies A (exemption on retirement, subject to conditions) and 238 quindecies (partial or full exemption for sales of complete business lines) of the French Tax Code (in French) (Code général des impôts, CGI). For companies subject to corporate income tax, the gain follows the ordinary corporate income tax rules.

For the buyer, registration duties are payable on the price: 0% up to €23,000; 3% between €23,000 and €200,000; and 5% above that, including the additional departmental and municipal taxes (Articles 719, 1595 and 1584 of the CGI). The 2% rate set by Article 719 is reduced to 0% for acquisitions made in France ruralités revitalisation zones, subject to an undertaking to keep the business running for five years (Article 722 bis of the CGI). The allocation of the price between tangible and intangible assets must be precise: new goods sold are subject to VAT if the seller is liable for VAT; they are then exempt from proportional registration duty (Article 723 of the CGI).

We work with our tax team to optimise the structure within the rules, in particular where the sale is combined with a contribution-and-sale (apport-cession, Article 150-0 B ter CGI) or a Dutreil pact (Article 787 B CGI). Every strategy is documented and may, where appropriate, be the subject of a tax ruling (rescrit, Article L. 80 B of the French Tax Procedure Code, LPF).

Transfer of employees and the lease

The sale of a fonds de commerce is a transfer of an autonomous economic entity within the meaning of Article L. 1224-1 of the French Labour Code (Code du travail). Employment contracts in force on the date of the sale transfer automatically to the buyer, with seniority and accrued rights. Employee representatives are informed and consulted in accordance with the applicable rules (Article L. 2312-8 of the Labour Code).

In principle, the leasehold right (droit au bail) forms part of the assets sold. Clauses prohibiting the tenant from assigning the lease to the buyer of the business are deemed unwritten (Article L. 145-16 of the Commercial Code); the lease may, however, regulate how the assignment takes place, hence the importance of reviewing it. Use clauses (clauses de spécialité) limit the activity permitted on the premises; changing them requires the landlord’s consent or a change-of-use procedure (déspécialisation, Articles L. 145-47 and L. 145-48 of the Commercial Code).

Special cases: informing employees and sales in insolvency proceedings

Employees have a right to prior information. In businesses that are not required to set up a works council (comité social et économique, CSE), the “Hamon” Act (Articles L. 141-23 et seq. of the Commercial Code) requires employees to be informed no later than one month before the sale, so that they can make an offer to buy. This time limit results from Law No. 2026-403 of 26 May 2026, for sales concluded at least two months after its promulgation. Where liability proceedings are brought, the court may, at the request of the public prosecutor, impose a civil fine of up to 0.5% of the sale price. In businesses with a works council, the council is informed and consulted on the plan (Article L. 141-28).

A sale in insolvency proceedings (sale plan, judicial liquidation) follows specific rules: the court selects a takeover offer, submitted to the liquidator or the administrator, under Articles L. 642-1 et seq. of the Commercial Code. For the buyer, this is an opportunity to acquire a viable business, but the buyer must master the specific rules (in particular the pre-pack sale or prépack cession, whose offer is gathered upstream by the ad hoc agent or the conciliator and then submitted to the court: Article L. 642-2). Our teams handle these matters in coordination with our insolvency team.

How our firm assists you

Our corporate team handles each matter from start to finish: due diligence on the business, drafting and negotiation of the promise to sell, preparation of the final deed, management of the escrow and publication, and liaison with the landlord and the buyer. We systematically coordinate the tax, corporate law and employment aspects.

To discuss your planned sale or purchase, please get in touch using the firm’s contact form. An initial discussion identifies the critical issues, timescales and next steps.

How much does a lawyer cost to buy or sell a business in France?

Fees vary with the complexity of the transaction: value of the business, position of the commercial lease, number of employees transferred, pending litigation, intensity of negotiations and timetable. The scope of the assignment also matters: a simple review of the deed, full drafting, or end-to-end support including due diligence, escrow and formalities.

Two billing methods predominate. A fixed fee suits well-defined assignments, such as drafting the sale deed. An hourly rate applies to matters whose scope cannot be set in advance, particularly where negotiations are lengthy. In all cases, a written fee agreement sets the terms before the assignment begins. Every situation is different: we prepare a tailored proposal after an initial discussion of your project.

Who drafts the sale deed for a fonds de commerce?

The sale deed may be executed as a private agreement, most often drafted by a lawyer, or as an authenticated deed before a notary (notaire). No legislation imposes either form: the choice depends on the matter and the parties’ wishes.

The formal requirements have changed. The mandatory statements under former Article L. 141-1 of the Commercial Code (turnover for the last three financial years, original purchase price, schedule of liens and pledges) were repealed by Law No. 2019-744 of 19 July 2019. The buyer remains protected by the pre-contractual duty to inform under Article 1112-1 of the Civil Code, which requires the seller to disclose the information that is decisive for the buyer’s consent.

A complete deed remains essential in practice: scope of the assets sold, price allocation, warranties, treatment of the lease and contracts, non-competition, escrow. The drafting lawyer secures these clauses, leads the negotiation and makes sure the deed is balanced for the party they advise.

Frequently asked questions

What are a lawyer’s fees for the sale of a fonds de commerce?

Fees depend on the complexity of the matter (size of the business, number of employees, pending disputes, type of lease), the scope of the work and its duration. Our firm favours written fee agreements, with clear visibility on billing arrangements. To discuss a specific project, please contact us using the form.

Who can draft the sale of a fonds de commerce?

Drafting may be entrusted to a lawyer or a notary. A lawyer has the advantage of covering all the related legal issues (tax law, employment law, intellectual property, litigation) and of supporting the negotiation. The choice depends on the needs of the matter and the client’s preferences.

How does the sale of a business (fonds de commerce) work in France?

In outline: due diligence on the business, signing of a promise subject to conditions precedent, satisfaction of the conditions (financing, landlord, authorisations), signing of the final deed with the price held in escrow, legal notices in an authorised publication and in the BODACC, ten-day creditor objection period, release of the escrow, and formalities with the RCS (Trade and Companies Register) and the single business formalities portal (guichet unique). The whole process takes two to four months, depending on the constraints.

Which statements are mandatory in the deed?

No statement has been required on pain of nullity since the repeal of Article L. 141-1 of the French Commercial Code (Law No. 2019-744 of 19 July 2019). In practice, under the pre-contractual duty to inform, the deed documents the price and its allocation, the schedule of liens and pledges, turnover for the most recent financial years and the commercial lease. Additional clauses are customary (description of the assets sold, price allocation, warranties, non-competition).

Can debts be transferred to the buyer?

In principle, debts remain the seller’s responsibility. They pass to the buyer only if the buyer expressly undertakes them in the deed (assumption of debt). For tax debts (Article 1684 CGI) and social security debts, statutory joint liability may apply within certain limits, hence the importance of due diligence and specific warranties.

What is the limitation period for warranty claims?

The warranty against eviction (Article 1626 of the French Civil Code) is not subject to a specific time limit; the warranty against latent defects is subject to a two-year period from discovery of the defect (Article 1648 of the Civil Code). Specific contractual warranties (accuracy of the accounts, absence of hidden liabilities) run for the agreed periods, often 24 to 36 months for general matters and until the tax and social security limitation periods expire for those matters.

Must employees be informed before the sale?

Yes, depending on headcount. In businesses that are not required to set up a works council (comité social et économique), the so-called “Hamon” Act requires employees to be informed no later than one month before the sale, so that they can make an offer to buy (Article L. 141-23 of the French Commercial Code). Where the business is subject to this requirement, the works council is informed and consulted on the plan (Article L. 141-28). Current employment contracts transfer automatically to the buyer (Article L. 1224-1 of the French Labour Code).

Can the municipality pre-empt the sale?

Yes, in local retail and craft protection areas (périmètres de sauvegarde du commerce et de l’artisanat de proximité) designated by the municipal council (Article L. 214-1 of the French Town Planning Code). On pain of nullity of the sale, the seller must then send the municipality a prior declaration stating, in particular, the price and terms of the sale. It is sent to the mayor by registered letter with acknowledgement of receipt or electronically, or lodged at the town hall against a receipt (Article R. 214-4 of the Town Planning Code).

Every situation is different: the information on this page is general and does not replace legal advice tailored to your case. The firm makes no promise of outcome; it commits to the means it deploys.