Selling a fonds de commerce (business assets/going concern) is a major milestone in an entrepreneur's life, whether it is to take a well-deserved retirement, launch a new project, or realise a capital gain. This transaction, which is highly regulated by French law, requires absolute rigour to secure the deal and avoid painful legal reclassifications or tax reassessments. Whether you are an experienced merchant or a foreign entrepreneur settled in France, this comprehensive guide details, step by step, the substantive rules, practical procedures, and pitfalls to avoid to successfully complete your sale with peace of mind.
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Before starting the process, it is essential to understand exactly what you are selling. In French law, the fonds de commerce (business assets) is a universalité de fait (a factual universality), made up of tangible and intangible elements that make it possible to attract and retain customers.
The sale of a fonds de commerce must obligatorily include:
Unless there is a clause to the contrary or very specific cases, the sale of the fonds de commerce does not include:
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Preparation is the key to a successful sale. Before signing any document, you must make a precise assessment of your business activity.
To set a realistic selling price, several methods are generally combined:
1. The professional scale method: Applying a percentage to the average turnover of the last 3 years (often between 30% and 120% depending on the business sector).
2. The profitability method: Multiplying the restated Excédent Brut d'Exploitation (EBE / Gross Operating Surplus) by a coefficient (often between 3 and 5).
> Concrete example:
> Jean owns a bakery-pastry shop in Lyon. His average turnover over the last three financial years is €250,000 and his restated EBE is €45,000.
> * According to the bakery scale (often valued between 70% and 110% of turnover), the business is worth between €175,000 and €275,000.
> * According to the EBE method (coefficient of 5), the business is worth €225,000 (45,000 x 5).
> Jean decides to put his fonds de commerce up for sale at a price of €230,000, which corresponds to the upper average of the local market.
The bail commercial (commercial lease) is the lifeblood of the business. You must check its remaining duration (a lease is concluded for a minimum of 9 years), the rent amount, service charges, and above all, restrictive clauses (for example, the landlord's approval clause for the buyer or the seller's joint and several guarantee clause).
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French law imposes strict information obligations prior to the sale, aimed at protecting employees and the local municipality.
In accordance with Article L. 141-23 of the Code de commerce, in companies with fewer than 250 employees, the owner of the business must inform their employees of their intention to sell at least 2 months before the signature of the deed of sale. This measure is intended to allow them to submit a buyout offer.
If the fonds de commerce is located within a périmètre de sauvegarde des commerces et de l'artisanat de proximité (protection zone for local shops and crafts), the municipality has a right of pre-emption (Article L. 214-1 of the Code de l'urbanisme / French Town Planning Code).
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Once the buyer is found, the parties sign a compromis de vente (bilateral sales agreement, or promesse synallagmatique de vente), generally subject to conditions precedent.
Although the law of 19 July 2019 removed the obligation to mention certain information under penalty of nullity (such as the name of the previous seller or the turnover of the last 3 years), it remains highly recommended to include these elements to ensure the transparency of the transaction:
The compromis almost always contains conditions suspensives (conditions precedent) designed to protect the buyer:
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The signing of the acte de vente définitif (final deed of sale, often drafted by a lawyer or a notary) triggers a crucial transitional period: the séquestre (escrow) of the price.
Unlike other sales, the seller does not immediately receive the money from the sale. The price is blocked (escrowed) in a special account (usually the compte CARPA of the lawyer or with the notary) for a period of 3 to 5 months.
This hold protects the buyer against potential creditors of the seller who might come forward after the sale, as well as the tax administration.
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After the signing of the deed of sale, several strict legal formalities must be completed within very short deadlines.
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[Signing of the Deed] ──(15 days)──> [Registration with Tax Authorities]
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├──(15 days)──> [Publication in JAL] ──(3 days)──> [Filing with Registry / BODACC]
│
(10 days)
│
[Objection Period]
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The deed of sale must be registered with the Service de la Publicité Foncière et de l'Enregistrement (SPFE / Land Registry and Registration Service) within 15 days following the signature. It is at this stage that the droits d'enregistrement (registration duties, payable by the buyer) are paid.
Scale of registration duties:
> Example of registration duties calculation:
> Let's take the example of Jean's bakery sold for €230,000.
> * Bracket from €0 to €23,000: €0
> * Bracket from €23,000 to €200,000 (i.e., €177,000): €177,000 x 3% = €5,310
> * Bracket from €200,000 to €230,000 (i.e., €30,000): €30,000 x 5% = €1,500
> * Total duties owed by the buyer: €6,810
From the date of publication in the BODACC, the seller's creditors have a period of 10 days to lodge an opposition (objection) to the payment of the sale price via a commissaire de justice (bailiff). It is during this period that the escrow fully serves its purpose.
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The sale of a fonds de commerce generates immediate tax obligations for the seller.
The seller must declare the profits made from the close of the last financial year up to the day of the sale. This declaration must be made within 45 days from the publication of the sale in the BODACC (or 60 days in certain cases).
The sale may generate a plus-value (capital gain, which is the difference between the sale price and the net book value of the business). In principle, this capital gain is subject to tax. However, French tax law provides for several total or partial exemption schemes:
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As a general rule, the buyer covers the drafting fees of the deed (fees of the lawyer or notary) as well as the tax registration duties. However, the parties remain free to negotiate a different distribution in the compromis de vente.
Yes, in principle. Article L. 145-16 of the Code de commerce states that clauses prohibiting the tenant from assigning their lease to the buyer of their fonds de commerce are null and void. Nevertheless, the lease may contain valid restrictive clauses, such as the obligation to call the landlord to participate in the deed or to obtain their written approval (which cannot be refused without legitimate grounds).
This is an almost systematic clause by which the seller agrees not to reopen a similar or competing business within a defined geographical area and for a limited duration (for example, 5 years within a 10-kilometre radius). To be valid in French law, this non-competition clause must be proportionate and limited in time and space.
The stock (raw materials, finished goods) is generally not included in the overall price of the fonds de commerce. It is subject to a joint inventory and a separate valuation on the day of the sale (often at cost price excluding taxes). The stock is paid for by the buyer immediately on the day of taking possession, without being subject to registration duties.
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Legal information for guidance only, not personalised legal advice. For your specific situation, ask your question free of charge on AvocatAI — answers based on French law, in your language.