Transfer of Business Assets: Beware, Trade Marks Do Not Automatically Transfer the Distribution Contract

You have just acquired a business (fonds de commerce) in Couzeix, together with its well-known trade marks. You think you can continue to distribute the products as the previous owner did? Not so fast. The French Supreme Court (Cour de cassation) has just ruled: the transfer of trade marks does not, unless otherwise stipulated, entail the transfer of the selective distribution contract or the operating licence. A cold shower for many buyers.

Imagine: you buy a shoe shop in Saint-Junien, with the "Lagarde" brand. You sign the deed, you pay, and you discover that the distribution contract with the historic supplier is not included. You can no longer sell the same products. What can you do?

This decision of 18 February 2026 (No. 23-23.681) clarifies a point often overlooked in business transfers. It protects the historic distributors but traps careless buyers. Let's analyse it together.

The facts: a story that happens every day

The company Lagarde, specialising in the marketing of footwear, operated a business (fonds de commerce) in Couzeix. It owned trade marks and benefited from a selective distribution contract for well-known-brand products, as well as an operating licence for those trade marks. In 2019, it transferred its business to a buyer. The transfer deed expressly mentioned the transfer of ownership of the trade marks. But nothing was said about the selective distribution contract or the licence.

The buyer, confident, began to operate the business. But very quickly, the supplier refused to continue the distribution contract, considering that it was not bound. The buyer sued the seller, seeking nullity of the transfer for error (vice of consent) and damages. He succeeded at first instance: the court held that the transfer of the business implicitly included the distribution contract and the licence. The seller appealed.

The Court of Appeal reversed the judgment. It held that the transfer of the trade marks alone did not entail the transfer of the selective distribution contract or the operating licence, unless otherwise stipulated. The buyer appealed to the Supreme Court. The Supreme Court, in its decision of 18 February 2026, dismissed the appeal and confirmed the Court of Appeal's position.

The reasoning of the court — broken down

The Supreme Court relies on the principle of autonomy of contracts. It recalls that the transfer of a business (fonds de commerce) is governed by Articles L. 141-1 et seq. of the French Commercial Code, which require publicity and specific content. But nothing obliges the transfer of so-called "accessory" contracts such as the selective distribution contract or the trade mark licence.

The buyer's argument was nevertheless strong: trade marks are the main tool of the business. Without the right to distribute the products bearing them, the trade mark is worthless. He invoked the indivisibility between the trade mark and the distribution contract. But the Court responds that indivisibility is not presumed. It must be stipulated in the deed. In the absence of a clause, each contract remains autonomous.

The same applies to the operating licence. The buyer argued that it was ancillary to the distribution contract and therefore transferred with it. The Court rejects this argument: the licence is a separate contract, which is not automatically linked to the business. It is only transferred if the deed expressly provides for it.

The decision confirms consistent case law: the transfer of trade marks does not amount to the transfer of operating contracts. It reminds practitioners of the importance of assignment clauses.

What this changes for you — concretely

For the buyer of a business: you must check in the transfer deed whether the distribution contracts and licences are listed and transferred. If not, you risk being left without supply. Example: you buy a shop in Saint-Junien for €150,000, including €50,000 for the trade marks. Without the distribution contract, your business loses 80% of its value. You can then claim a reduction in price or damages, but it is lengthy and uncertain.

For the seller: you must be transparent. Mention all current contracts. If you do not wish to transfer a contract (for example, to keep it for another activity), state this. Otherwise, you risk being sued for fraudulent concealment (réticence dolosive, Article 1137 of the French Civil Code).

For the supplier (licensor): this decision protects you. You are not obliged to contract with a buyer you have not approved. Check your contracts: they often contain an approval clause. If the buyer does not meet the conditions, you can refuse to continue.

For the owner of the premises (landlord): indirectly, the loss of the distribution contract may lead to the disappearance of the business. Ensure that your tenant (seller) informs you of transfers of important contracts. You could demand a guarantee.

Four tips to avoid this type of dispute

• List all contracts in the transfer deed: make a precise inventory of distribution contracts, licences, commercial leases, franchise contracts, etc. Each contract must be identified and its transfer expressly provided for.
• Negotiate an assignment of contracts clause: in the preliminary agreement, require the seller to undertake to obtain the consent of the counterparties for the transfer of essential contracts. Provide for a condition precedent.
• Check approval clauses: before signing, ask the seller to provide you with the contracts. Identify clauses that make the transfer subject to the supplier's consent. If necessary, contact the supplier in advance.
• Use a specialised lawyer: a business transfer is complex. A professional will prevent you from missing essential clauses. In Couzeix as in Saint-Junien, I see files every year where the absence of a clause has cost thousands of euros.

Further analysis: related case law and developments

This decision is part of a consistent line. Already, in a judgment of 10 July 2018 (No. 17-18.123), the Supreme Court held that the transfer of a business does not entail the transfer of a franchise contract, unless expressly stated. Similarly, for insurance or finance lease contracts, case law requires an explicit mention.

However, the recent trend has been towards greater protection of the buyer. Some Court of Appeal decisions had admitted an implicit transfer when the contract was essential to the operation of the business. The Supreme Court puts a stop to this trend. It favours legal certainty and predictability. In the future, expect drafters of deeds to be even more vigilant. Perhaps the legislature will intervene to impose a list of contracts transferred by default? That is far from certain.

In practice: what to do

FAQ: 5 essential questions

1. Can I require the seller to transfer the distribution contract to me?
Yes, if you stipulate it in the deed. Otherwise, you cannot require it afterwards, unless you can prove fraudulent concealment (dol).

2. What if the supplier refuses to contract with me?
Check whether the initial contract contains an approval clause. If so, the refusal is legitimate. You can then turn against the seller for failure to deliver conforming goods.

3. What are the time limits to act?
The action for nullity for error or fraudulent concealment is subject to a 5-year limitation period from the discovery of the defect. The action for contractual liability is 5 years from the transfer.

4. Can I transfer a trade mark licence without the distribution contract?
Yes, it is possible, but pointless if the licence is linked to distribution. The decision confirms that they are separate. You must therefore transfer both separately.

5. What is the value of a business without the distribution contract?
It can drop by 50 to 80%. Have the business valued by an accountant before the transfer, including the value of the contracts.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →