Essential Clauses of the Dealership Agreement 2026

Companies developing their distribution network rely heavily on the dealership agreement, a complex legal instrument that structures the commercial relationship between the grantor (concédant) and the dealer (concessionnaire). Given the rapid change in commerce and new regulatory requirements, drafting this type of contract calls for particular attention to the contractual clauses that will determine the success or failure of the commercial relationship.

Territorial and temporal exclusivity clauses

Maximum duration of exclusivity undertakings

The French legal framework imposes strict limits on exclusivity clauses in distribution contracts. Article L. 330-1 of the French Commercial Code provides that “the period of validity of any exclusivity clause by which the purchaser, assignee or lessee of movable property undertakes vis-à-vis its seller, assignor or lessor is limited to a maximum of ten years”. This fundamental provision protects freedom of contract by avoiding perpetual undertakings that could restrict competition.

For grantors, this time limit calls for rigorous strategic planning. Renewals should be anticipated and exclusivity clauses structured so as to preserve the effectiveness of the distribution network while complying with this legal constraint.

Management of successive contracts

Article L. 330-2 of the French Commercial Code specifies the regime applicable to successive contracts: “where the contract containing the exclusivity clause referred to in Article L. 330-1 is subsequently followed, between the same parties, by other similar undertakings relating to the same type of goods, the exclusivity clauses contained in those new agreements end on the same date as the one appearing in the first contract”.

This rule prevents the ten-year limit from being circumvented by multiplying successive agreements. In practice, it requires the parties to rethink their contractual strategy where they wish to maintain a lasting commercial relationship beyond ten years.

Pre-contractual information obligations

Mandatory documentation on the network

The dealership agreement forms part of a distribution network that must be the subject of transparent information. Article R. 330-1 of the French Commercial Code requires precise information to be provided on the existing structure of the network, in particular where “the network comprises more than fifty” establishments.

These information obligations include communicating the dates on which existing contracts were concluded or renewed, as well as their current status. The text expressly provides that “the document states whether the contract has expired or has been terminated or annulled”. This transparency allows the prospective dealer to assess the stability and durability of the network it is about to join.

Analysis of local competition

Pre-contractual information must also cover the competitive environment. The French Commercial Code requires disclosure relating to “the presence, in the area of activity of the location provided for by the proposed contract” of other operators liable to affect the activity of the prospective dealer.

Financial and economic clauses

Structure of fees and commissions

The dealership agreement must define precisely how the grantor is remunerated. This remuneration may take various forms: entry fees, periodic royalties, commissions on turnover, or a contribution to advertising investment.

Drafting these contractual clauses requires a balance between the profitability of the distribution network for the grantor and economic viability for the dealer. The calculation methods, payment dates and indexation mechanisms must be clearly stipulated to avoid any later dispute.

Investment and quality standards

Investment obligations are a central element of the dealership agreement. These clauses determine architectural standards, the fitting out of premises, technical equipment and the minimum stock to be maintained.

It is essential to provide mechanisms for adapting these requirements to technological developments and new commercial standards. The clauses must also allocate the costs of upgrading and set the time limits for adapting to new requirements.

Performance and control clauses

Commercial targets and sanctions

The dealership agreement must set measurable and realistic performance targets. These targets may relate to turnover, sales volume, market share or customer base development.

The contractual clauses must provide for the consequences of failing to meet these targets: formal notice, reinforced support, financial penalties or, in the event of serious and persistent breach, termination of the contract. Graduating the sanctions allows performance difficulties to be managed proportionately.

Control and audit mechanisms

The grantor's right of control is exercised with respect for the dealer's legal independence. The clauses must define precisely how this control is exercised: frequency of audits, areas audited, verification procedures and reporting obligations.

These provisions must reconcile the grantor's legitimate interest in preserving the image and standards of its network with respect for the dealer's management autonomy.

Intellectual property protection clauses

Use of trademarks and distinctive signs

The dealership agreement governs the use of the grantor's trademarks, logos and other distinctive signs. This licence of use must be strictly circumscribed in order to preserve the value and coherence of the brand image.

The contractual clauses must define the conditions of use, the permitted media, the graphic standards to be observed and the specific prohibitions. They also provide for the fate of these elements on termination of the contract.

Protection of know-how and confidentiality

The transfer of know-how is often an essential element of the dealership agreement. Confidentiality clauses must protect the sensitive information passed on by the grantor: commercial methods, customer files, sales techniques or marketing strategies.

These confidentiality obligations generally survive the expiry of the contract and may be backed by deterrent penalties in the event of breach.

Termination and exit clauses

Conditions of termination

The dealership agreement must provide for termination for fault and define precisely the breaches that amount to serious fault. Case law requires these clauses to be drafted with sufficient precision to allow the counterparty to adapt its conduct. The key clauses of these contracts and the disputes arising from their termination are examined in our article on the exclusive distribution contract.

Termination procedures must respect the adversarial principle and provide for appropriate formal notice periods. Termination for fault must be distinguished from termination for convenience, which has different legal and financial consequences.

Post-contractual obligations

The end of the dealership agreement generates specific obligations for each party. The dealer must generally cease using the trademarks, return confidential documentation and comply with any non-competition clauses.

These contractual clauses must provide for the buy-back of stock, the fate of equipment financed by the grantor and the terms of transfer of the customer base. The balance of these provisions often conditions the prospective dealer's acceptance of the contract.

Sector-specific features and regulatory developments

Adapting to business sectors

Each business sector has specific features that must be taken into account when drafting the dealership agreement. The automotive sector, food distribution and services present distinct regulatory constraints and commercial practices.

Knowledge of the sector makes it possible to adapt the contractual clauses to professional usage and to the specific requirements of each market. This tailoring improves the operational effectiveness of the contract and reduces the risk of disputes.

Anticipating legislative developments

Distribution law is constantly evolving under the influence of European law and new commercial practices. Dealership agreements must include mechanisms for adapting to future regulatory developments.

These safeguard clauses make it possible to maintain contractual balance in the face of unforeseeable legislative changes that could affect the economics of the contract or the parties' obligations.

Practical recommendations for negotiation

Negotiating a dealership agreement requires a methodical approach that takes into account the legitimate interests of each party. Prior analysis of the existing distribution network, its economic performance and its legal stability is an indispensable first step. The stages of negotiation and drafting at which the involvement of an adviser is justified are set out in our article on instructing a lawyer in commercial contracts.

Companies must pay particular attention to the balance of the contractual clauses in order to ensure the durability of their commercial relationship. An unbalanced contract often generates tensions that undermine the effectiveness of the network and may lead to costly disputes.

Given the growing complexity of these contracts and the considerable economic stakes they represent, the support of a legal adviser experienced in this field is often indispensable. This knowledge makes it possible to anticipate difficulties, secure the essential clauses and optimise the contractual structure in line with each company's specific objectives.