Limitation Period, Franchise Agreements & Significant Imbalance – Key Takeaways from the Douai Court of Appeal

This recent decision provides valuable insight into how French courts assess the limitation period in franchise relationships, especially where a contract is extended by amendment:

– No novation without express stipulation: The Court reiterated that the mere extension of a franchise agreement through an amendment does not constitute a novation unless explicitly stated. The 2013 amendment only extended the term of the original 2010 contract.

– No new Pre-contractual Disclosure Document (DIP): As the amendment only modified the duration, no new DIP was required or issued, confirming there was no new contractual relationship.

– Starting point for limitation period: The five-year limitation period began in 2010, when the original contract was signed—not in 2013. The Court noted that the franchisee was aware of their losses early on (deficits, renegotiations, debt acknowledgements), which triggered the clock.

– Late claim rejected: The claim for pre-contractual fault and significant imbalance (under Article L. 442-1 I 1° of the French Commercial Code), filed in 2018, was found to be time-barred.

– Reminder: Courts cannot rule on the merits of a claim once it is prescribed. Franchisees must therefore remain vigilant about deadlines, even if the contract is later extended.

📌 Key takeaway: Extending a franchise agreement does not reset the limitation clock when the amendment only relates to duration. The original contract date and initial awareness of harm are decisive.