The acronym DIP in the world of franchising means Pre-contractual Information Document. This document must be given to your franchisees., at least 20 days before signing of any franchise agreement. The goal is to offer anyone who wants to join a network the possibility to do so knowingly. In practice, its disclosure generally occurs once the seriousness of the application is established, in order to protect the confidentiality of the network's strategic data. The DIP thus presents a Major issue in the relationship between the franchisor and its franchisees. It is indeed on this basis of information that candidates agree or not to join the network. This document must therefore be transparent, objective, and factual, but also presents another major challenge: credibility.
This article was written with the help of Master Charles Meteaut, a lawyer registered with the Paris Bar.
In accordance with Article L330-3 of the French Commercial Code, since the enactment of the Doubin law, the franchisor is required to transmit to its candidates a Pre-contractual Information Document (DIP). This file must be provided at least twenty days before any contract signing or financial payment. This document must strictly remain transparent, objective, and factual, avoiding any promotional presentation that could misleadingly influence the future partner.
The article L330-3 dispose ainsi que « toute personne qui met à la disposition d’une autre personne un nom commercial, une marque, une enseigne, en exigeant d’elle une exclusivité ou une quasi-exclusivité pour l’exercice de son activité, est tenue, préalablement à la signature de tout contrat conclu dans l’intérêt commun des deux parties de fournir à l’autre partie un document donnant sincere information which allows him to to commit with full knowledge».
The article R330-1 of the Commercial Code presents all the elements that the DIP must contain.
Thus, the Preliminary Information Document must include the following elements:
The franchisor's identity, namely the name and address of the company's headquarters, its legal status, the identity of the company head or directors, and their professional experience.
The company presentation, namely, in addition to the legal form and the amount of share capital, the registration number with the Trade and Companies Register (RCS) or the registration number with the Chamber of Trades, the date and registration number of the trademark, the duration of licenses, the bank domiciliation(s) (this information may be limited to the five main ones), the date of company creation, the main milestones in the company's development.
The transparent presentation of the network, namely the list of franchisees with their addresses and contract creation and renewal dates, the list of companies that left the network during the previous year, indicating if the contract expired, was terminated, or canceled, the evolution of the network over the last five years, the presence of other franchisees in the territory of establishment or clarification of territorial exclusivity.
The market presentation (the specialty of’EPSIMASspecifically, a general market overview, a local market overview (not to be confused with market research, which is the franchisee's responsibility), and market development prospects.
Financial results, namely the annual accounts for the last two financial years.
The main clauses of the planned contract, namely the duration, the terms of renewal, the terms of termination, the terms of assignment, the amount and nature of the necessary investments, any other financial obligation, the planned exclusive(s).
The DIP commits legal responsibility of your network, although it is not a full contract. It should also be noted that case law in this matter is complex and constantly evolving. Non-compliance of the DIP with legal expectations exposes the brand to a Major legal and financial risk. Therefore, the drafting of this document must be entrusted to an expert in the subject matter to ensure the expected transparency and compliance. In this case, EPSIMAS recommend hiring a professional for drafting the disclosure document for franchise agreements and the franchise contract Charles Meteaut (Lawyer at the Paris Bar, with recognized expertise in network structuring).
Don't hesitate to contact us to discuss your projects!
You can leave us your contact information via the Contact form, or book an appointment directly below.
