In a decision dated March 19, 2025, the French Supreme Court ruled that there could be no breach in advance of a non-competition clause.
In the case at hand, a franchise agreement contained a non-competition clause. The franchisor, having learned of the franchisee’s future plans to set up a competing business, as evidenced by various preparatory acts, sued the franchisee for compensation for the damage resulting from the breach of the non-competition clause and terminated the franchise agreement.
The French Supreme Court ruled that, since the competing activity envisaged by the franchisee was not actually carried out during the period covered by the non-competition clause, the franchisee was entitled to take preparatory steps to set up a competing business, without this constituting a breach of the non-competition clause or of the general obligations of loyalty and good faith inherent in any contractual relationship.
