State of the local market
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Originating from the implementation Decree of the Doubin Law in 1991, this term is at the origin of many precedents and has been widely discussed. The spirit of this text is about common sense. Can we reasonably allow franchisees to invest their savings and their life savings without taking a few prior precautions: i.e., check that the location of the franchisee in terms of local market corresponds to the repeating success of the franchise concept.
You should be aware that 80% of franchise litigation centres around this issue. In fact, if the operating account of the franchisee is at least 30% of the estimates, franchising lawyers try to demonstrate that there is a causal link between the failure of the operating accounts (assumed to approximately 30% below the forecast of the operating account) and the "lightness" of the analysis of the local market.
The law becomes increasingly severe and judges now tend to condemn the Franchisor, awarding damages corresponding to the losses of the franchisee.
