As a franchisor, you need to have your future franchisee sign a pre-contractual information document (DIP). What are your obligations, and how can you use this document to get your relationship with your franchisee off to a good start? Find out from the experts at Franchise On Cloud! What is a
What is the DIP?
The DIP, or pre-contractual information document, is based on la loi Doubin qui encadre les formes de commerces organisés. This law, which came into effect on December 31, 1989, allows:
- the franchisor to guarantee complete transparency to its candidate regarding elements concerning its network,
- the franchisee to make an informed decision and sign the contract with all the information at their disposal.
“ Any person who makes a trade name, trademark, or brand name available to another person, requiring that person to commit to exclusivity or quasi-exclusivity in the exercise of their activity, is required, prior to the signing of any contract concluded in the mutual interest of both parties, to provide the other party with a document containing truthful information that allows them to make an informed commitment. ”
The law was subsequently codified in 2000 by ordinances to l’article L 330-3 du Code de commerce.
What purpose should the DIP serve for you and your future franchisee?
The pre-contractual information document allows you to present the network from an administrative, financial, legal, and contextual perspective. It brings transparency to the relationship with your franchisee and provides them with the information they need to sign with confidence. It outlines the market in which the point of sale will be positioned.
Reading and signing the pre-contractual document does not bind either party. Only the franchise agreement gives effect to the franchisor-franchisee relationship and its terms and conditions.
Give your future franchisee time to read the document and think about their commitment. Any pressure you exert could be perceived as ambiguous and would not work in your favor. Don't wait until the last minute to give it to them, and make sure you are available to answer any questions they may have.
The franchise candidate should take this time to read the document thoroughly and fully understand everything it entails. Answer their questions clearly, as this will only serve to strengthen their confidence.
To reassure the candidate, don't limit yourself to providing only the information required by law. Give the future franchisee everything they need to make an informed decision. Complete the document with details of the project planned at this stage.
You can entrust the drafting of your DIP to the lawyer who advises your network. This will ensure that your document complies with legal requirements. Franchise experts can also assist you with this task. All the documents you provide to your candidate will also reflect the seriousness of your brand. Take care with them!
Your obligations under the DIP as a franchisor
The Doubin Law is clear: the DIP must contain all the information the franchisee needs to make a decision and sign the franchise agreement. It must therefore be provided to the franchisee at least 20 days before the agreement is signed. To be compliant, the pre-contractual document must include certain information, as specified by l’article 1 du décret Doubin du 1er avril 1991.
The DIP must contain:
- information on the network head (address of registered office, nature of activities, legal form, identity of director(s), share capital)
- lthe registration number in the Trade and Companies Register or in the trade register of the network head, where applicable, the date and registration number of the trademark in the national trademark register
- the bank account of the head office, limiting it to the five main domiciles
- the date the company was established, a presentation of its evolution and the factors that justify the manager's experience
- the list of companies that are part of the network, in particular those bound by the same type of contract as the one to be offered, their addresses, and the date of conclusion or renewal of these contracts
- if the network works with more than 50 companies, a list of those that left the network in the year prior to signing and the reason for termination of the contract, as well as all establishments in which the products or services covered by the contract are offered.
- the characteristics of the proposed contract: its duration, conditions for renewal, termination, or transfer, and the scope of exclusivity
The DIP must also include appendices presenting:
- the annual accounts for the last two financial years
- or the reports prepared for the last two financial years.
If you fail to comply with the terms of the law, you risk two main penalties:
- a fine for 5th class offenses,
- the cancellation of the contract concluded with the candidate and the restoration of the situation to the state it was in prior to the signing of the contract.
How can Cerca help you set up the DIP?
Cerca is a web platform that will help you streamline your candidate recruitment process. As soon as candidates show interest, a dedicated candidate space is created where they can find all the steps and attached documents. To facilitate the process, documents, including the DIP, can be signed directly online. Candidates can access their space where you will have uploaded the documents concerning them.
Candidates feel guided through the steps and can access the various documents at any time, from any device. The interface is customized according to your brand's graphic charter. This immerses future franchisees in your brand's universe from the very beginning of the recruitment process.
Drafting a pre-contractual disclosure document in accordance with the law is essential to the success of a franchise. It lays the foundations for communication and a relationship of trust. Don't just stick to the minimum requirements; give your future franchisees as much information as possible. The more informed their decisions are, the more successful you will be together in your projects!
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