Buying a small business in France
Matthew Cameron, solicitor in the French Legal Services offices at Ashton Graham Solicitors looks at the legalities attached to buying a business over the Channel
For some moving to France will be a step in their business careers. It is of course possible to buy an existing business, and we shall consider here the main steps in the process. As the owner of a French business you will be liable for social contributions and French taxes, so seeking assistance regarding the most suitable ownership structure of the business is highly advisable.
Some businesses may require specific qualifications. To register at the local chamber of business you may need to prove you have the necessary skills and certification. You may also have to undertake training; for instance you must follow a training course before you can run a bar with an alcohol licence. The seller must provide turnover and earnings figures for at least three years.
If you do not buy the building, you will need to take on the existing lease, which will invariably be a bail commercial. It is usually for nine years although can be shorter. The tenant is entitled to renewal of the lease, although negotiations can be difficult especially regarding the rent. The lease would generally define permitted user rights, a tous commerces lease being the most suitable.
As with British ‘TUPE’ regulations, French employment law provides that on the business transfer employment contracts pass to the buyer.
The contract should include an inventory of furniture and equipment. Equipment may need to comply with French standards, for example in a hotel, security equipment must be checked; the business can be closed if security is inadequate.
You will buy the commercial name. Whether you want to keep the same name or use another, the agency in charge of brand protection (INPI) can consider your rights and obligations.
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When the business sells goods, an inventory must be made. Particular attention should be paid to this point: to ensure that any stock transferred is included and suitable, so you need to address this in advance of completion, however stock may be paid for separately.
Stamp duty varies from 0% below 23,000€, 3% up to 200,000€ and 5% thereafter. In some areas, reductions apply to encourage businesses. The process is similar to that for immoveable property: you sign a first contract and once all the conditions are met, completion takes place. The seller’s service and supply contracts to be passed on to you should be listed on the contract. You can then register as owners of the business at the local chamber of commerce.
This article is for general information purposes only and does not constitute legal or other professional advice. You should not act or rely upon this information.
Solicitor, French Legal Services
Ashton Graham Solicitors
Tel: 01473 232425
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Note to Editors
Ashton Graham is one the largest law firms in East Anglia with substantial commercial, private client and personal injury departments. Ashton Graham offers specialist legal services in: agriculture, commercial property, employment, dispute resolution, family, personal injury, residential property and French legal services. Ashton Graham’s legal specialists and teams are friendly and approachable and their enthusiasm and commitment ensure they provide the best possible service to clients. 19 Partners and just under 150 members of staff work from strategically placed offices in Ipswich, Bury St Edmunds and Felixstowe.
The firm is accredited by ISO 9001, Investors In People, and the Legal Services Commission and has achieved the Community Mark and LEXCEL.
Ashton Graham is authorised and regulated by the Financial Services Authority. Ashton Graham solicitors are regulated by, the Solicitors Regulation Authority No. 50075