The French Ministry of Economic Affairs argues that Carrefour‘s franchise contracts are unbalanced and advises the courts to impose a fine of 200 million euros if the practices are not stopped immediately.
“Significant imbalance”
The practices “consist very concretely of suffocating franchisees by abusing a position of strength”. With these harsh words, the Ministry of Economic Affairs condemns the French supermarket chain’s franchise model. The conclusions of an investigation point to “numerous obligations that limit their freedom and commercial autonomy, which are disproportionate to the usual rules for operating a franchise“, La Lettre reports.
The trigger is a lawsuit filed by disgruntled franchisees before the court in Rennes, complaining about the “significant imbalance” in relations with the retailer. The ministry has now advised the court to impose a fine of 200 million euros and an order to stop the illegal practices immediately, with a penalty of 50,000 euros per day of delay.
Carrefour denies the allegations, but it has seen its shares plummet on the stock exchange. After all, franchising is a key strategic pillar for the group.
