#Selling a Business in France: Lawyer for the Sale of a Fonds de Commerce

The sale of a business (fonds de commerce) is a transaction governed by precise legal rules, which protect the buyer, the seller and the business’s creditors alike. These rules impose disclosure obligations, specific formalities and mandatory time limits; failure to comply may render the sale void or give rise to the parties’ liability.

Whether you are the seller or the buyer, the stakes are high: the transaction transfers a living commercial asset, with its clientele, its contracts, its employees, its commercial lease and any liabilities. A poorly prepared transaction exposes the buyer to unidentified liabilities and the seller to post-sale claims.

Due diligence before the sale

Before acquiring a business, prior due diligence is essential. It covers the components of the business (clientele, leasehold right, equipment, stock, contracts), the financial position (turnover for recent financial years, profitability, level of debt), current contracts (commercial lease, supplier contracts, customer contracts, employment contracts), any disputes and the employment situation (headcount, collective agreements, status of employment contracts).

We conduct this due diligence for the buyer and help the seller prepare the documents needed to carry it out.

Drafting the deed of sale

The former Article L141-1 of the French Commercial Code (Code de commerce), which required mandatory statements in the deed of sale, has been repealed. The seller remains bound by a duty to inform: on the day of the sale, the parties initial a document showing the monthly turnover achieved since the end of the last financial year, and the seller makes the accounting books for the last three financial years available to the buyer for three years (Article L141-2 of the Commercial Code (in French)). Incomplete or inaccurate information may give rise to the seller’s liability.

We draft complete deeds of sale, tailored to the circumstances of each transaction, with appropriate warranties from the seller on the condition of the business.

The municipality’s pre-emption right

Where the business is operated within a local retail and crafts protection zone (périmètre de sauvegarde du commerce et de l’artisanat de proximité) defined by the municipal council, its sale is subject to the municipality’s pre-emption right. The seller must send a prior declaration to the municipality, failing which the sale is void (Article L214-1 of the French Town Planning Code (Code de l’urbanisme) (in French)). This pre-emption procedure must be completed before the deed is signed.

Formalities and time limits

The sale of a business is subject to legal formalities: publication in a legal notices medium and in the Official Bulletin of Civil and Commercial Notices (BODACC) within fifteen days (Article L141-12 of the Commercial Code (in French)), registration with the trade register, and observance of a creditor objection period during which the price cannot be freely paid to the seller. These formalities must be completed within the time limits and in the required form.

The commercial lease

The commercial lease is one of the most important components in the sale of a business. The buyer must check the terms of the lease, its remaining term, the assignment and subletting clauses, the renewal conditions and any restrictions. The landlord’s consent may be required, depending on the clauses of the lease.

For business sales involving a transfer of shares rather than of a fonds de commerce, see our pages for a mergers and acquisitions lawyer and an SPA lawyer.

When to consult us

Before entering into negotiations on the sale or purchase of a business. When drafting the preliminary sale agreement. To complete the legal formalities. In the event of a post-sale dispute over the price or the warranties given.

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.