The sale price of a French business (fonds de commerce) is not paid to the seller on signing. It is placed in escrow. The sale must be published in a local legal-notices publication and in the BODACC official gazette within a fortnight, the seller’s creditors then have ten days to lodge an objection with the escrow agent, and the tax authorities can pursue the buyer for ninety days. Between signing and release of the funds, three to five months typically pass in practice.
A restaurant owner signs the sale of their business on a Friday in June, for 380,000 euros. They planned to clear their bank overdraft the following Monday and pay two suppliers who are chasing them. On Monday, their account has not moved. The drafting lawyer explains that the funds are with the escrow agent, that the sale must be published, objections awaited, the tax authorities’ deadline awaited, and that, at best, they will receive something by late September. This sequence is not administrative slowness: it is the very mechanism that protects the seller’s creditors, and it is prepared well before signing.
What is sold, and what is not
A fonds de commerce is a set of intangible elements, chiefly the customer base, the trade name, the business name and the right to the lease, together with equipment and, where applicable, inventory. Article L. 141-5 of the Commercial Code requires separate prices to be set for these three categories, because the seller’s statutory lien applies to each of them separately. This breakdown is not a formality: it determines the scope of the seller’s security in the event of a resale, and it affects how registration duties are calculated.
What does not transfer automatically deserves just as much attention. Ongoing contracts do not follow the business, absent a statutory exception. Receivables and debts arising before the sale remain with the seller. The bank account, insurance policies other than those transferred by law, personal licences, and administrative authorisations granted intuitu personae remain the seller’s responsibility or must be obtained afresh by the buyer. A restaurant business without a transferable licence, or one whose activity depends on a non-transferable permit to occupy public land, is worth far less than the price would suggest.
The mandatory particulars have disappeared, the disclosure requirement has not
Law no. 2019-744 of 19 July 2019 simplifying, clarifying and updating company law repealed Article L. 141-1 of the Commercial Code, which had required the deed to contain a list of particulars on pain of nullity: chain of title, revenue and results for the last three financial years, the state of liens and pledges, the terms of the lease. Many concluded that the deed could be lightened. That is a misreading.
The pre-contractual duty of disclosure under Article 1112-1 of the Civil Code and fraudulent concealment under Article 1137 continue to apply, and they are now the only battleground. The difference is that the buyer can no longer obtain nullity simply by pointing to a missing particular: they must show that the information was decisive to their consent and that it was concealed from them. In practice, this shifts the effort towards prior due diligence and towards drafting the seller’s representations in the deed. A properly drafted sale deed today contains more representations and warranties than before 2019, not fewer.
Publication: a fortnight, legal notices, the BODACC
Article L. 141-12 of the Commercial Code requires the sale to be published within a fortnight of its date, as an extract or notice, in a publication authorised to carry legal notices in the department where the business is based, and then in the Bulletin officiel des annonces civiles et commerciales (BODACC). Article L. 141-13 requires, on pain of the publication being void, that the deed have been registered beforehand, and that the extract state the date, volume and registration number, the identity of the parties, the nature and location of the business, the price, the objection period, and an address for service within the jurisdiction of the court.
If the business includes branches or establishments located elsewhere in France, Article L. 141-18 requires the same publication where each of them is based. This is a point regularly overlooked in the sale of restaurant or retail businesses operated across several sites, and the omission causes the objection period to run at the wrong time.
The creditors’ ten-day objection period
Article L. 141-14 gives the seller’s creditors, within ten days of the last of the publications, the right to object to payment of the price by extrajudicial act. The objection must, on pain of nullity, state the amount and grounds of the debt and contain an address for service within the jurisdiction of the court. An objection that merely announces a debt without quantifying it or stating its grounds is irregular, and this is regularly litigated.
Two limits are worth knowing. The landlord cannot object in respect of rent already due or falling due, without prejudice to their other rights. And Article L. 141-17 penalises a buyer who pays the seller without having made the publications, or before the ten-day period has expired: the buyer is not discharged towards third parties, which means they can be ordered to pay a second time. This is why no serious drafting lawyer hands the funds directly to the seller.
Escrow, release, and interim relief under Article L. 141-15
The price is deposited with an escrow agent, usually the drafting lawyer or a contractual escrow agent designated by the parties. It is only released once the objection period, any objections themselves, and the tax-solidarity period have all lapsed. The seller is not, however, condemned to wait passively.
Article L. 141-15 allows the seller, from the day after the objection period expires, to apply for interim relief before the presiding judge of the court to be authorised to receive the price despite the objection, on condition of depositing a sufficient sum to secure the objecting creditor. This is the “cantonnement,” and it is the tool to use when a creditor objects for 8,000 euros and blocks 380,000. Article L. 141-16 further allows an objection made without title or cause, or void as to form, to be struck down. Article L. 141-19 also requires the escrow agent to keep the deed available to any creditor for twenty days after publication in the BODACC, which makes it possible to know who has seen what.
The seller’s statutory lien and the right of rescission
Where part of the price is paid on credit, the seller retains a lien on the business, provided the sale was recorded in a registered written deed and the lien was registered with the commercial court registry. Article L. 141-6 provides that a registration made within thirty days of the sale takes priority over any registration made in the buyer’s name within the same period, and that it is enforceable against any subsequent safeguard, receivership or liquidation proceedings against the buyer.
A decisive and often-missed point: the right of rescission under Article 1654 of the Civil Code must be expressly stated and reserved in the registration, failing which it is lost as against third parties. A seller who accepts seller financing without this mention ends up as a mere unsecured creditor if the buyer becomes insolvent. Article L. 141-7 sets out the effects of rescission, in particular the return of the business elements and an adversarial expert valuation of them.
The buyer’s ninety-day tax solidarity
Article 1684 of the General Tax Code makes the buyer jointly liable with the seller for income tax or corporate tax due for the financial year of the sale and, in some cases, the preceding one. This liability is capped at the price of the business and the buyer can only be pursued for ninety days, running from the date of the cessation declaration required under Article 201 of the same Code if filed on time, or from the last day of that filing deadline otherwise.
The entire escrow mechanism revolves around this deadline. Its starting point depends on a step that is the seller’s own responsibility: filing the cessation declaration. A negligent seller mechanically extends the period during which their own price remains blocked. In well-prepared sales, the deed sets a filing timetable and attaches a penalty to any delay, precisely to avoid this hold-up.
Employees: prior information and automatic transfer
In businesses without a social and economic committee exercising the powers under the second paragraph of Article L. 2312-1 of the Labour Code, Article L. 141-23 of the Commercial Code requires employees to be informed no later than one month before the sale, so they can submit an offer. The equivalent regime for the sale of a majority shareholding is set out in Article L. 23-10-1. This information requirement is not a mere courtesy: failure to comply is sanctioned, and it must be provable.
Separately from this information requirement, Article L. 1224-1 of the Labour Code provides that all employment contracts in force on the date the employer’s legal situation changes continue between the new employer and the staff. The buyer takes on the contracts, seniority, accrued leave and, subject to the applicable regime, collective commitments. A buyer who priced the deal without auditing employment contracts, unpaid overtime and any pending labour-tribunal disputes discovers the bill after signing.
The commercial lease: the operation’s practical bottleneck
The right to the lease is often the most valuable single element of the business. Any lease clause making the assignment subject to the landlord’s consent, or requiring the landlord to join the deed, must be read before any price negotiation. The seller’s joint-guarantee clause, very common, is time-limited by Article L. 145-16-2 of the Commercial Code, but it still leaves the seller exposed for three years after the sale if not negotiated.
It is also necessary to distinguish the sale of the business from the sale of the premises. Article L. 145-46-1 of the Commercial Code gives a commercial tenant a right of first refusal where the owner intends to sell the premises, with one month to decide and two months to complete the sale, extended to four months if financing a loan. Transactions where the seller disposes of both the business and the premises must coordinate these two timetables, failing which one of the two sales is put at risk.
Timetable and orders of magnitude
For a sale with no particular difficulty, allow two to six weeks between the agreement in principle and signing if due diligence runs in parallel, a fortnight for publication, ten days for objections, then ninety days of tax solidarity from the cessation declaration. Full release of the funds therefore rarely comes before the fourth month, and often the fifth. Sales go wrong where the lease was not read, where employee information was not documented, or where a 5,000-euro objection blocks everything because no one applied to the interim relief judge.
The firm acts on both sides. For the seller, the work consists of securing publication and registration of the lien with the reservation of the right of rescission, driving the tax declaration to start the deadline running as early as possible, and applying to the presiding judge for a cantonnement where a disproportionate objection blocks the funds. For the buyer, it consists of conducting due diligence, drafting the representations and warranties that replace the former mandatory particulars, checking that the lease and permits are transferable, and not letting a single euro out before the deadlines have run.
Are you preparing to sell or acquire a business and want a workable timetable and secured funds? The firm acts in Paris and across France, from the agreement to release of the price. Discuss your sale.
Frequently Asked Questions
Can the seller receive the price on the day of signing?
No, not without serious exposure. Article L. 141-17 of the Commercial Code deprives a buyer who pays before publication or before the ten-day period expires of any discharging effect towards third parties: they risk paying twice. The price is therefore held in escrow and released in instalments, once objections and tax solidarity have lapsed.
How long does the price stay blocked?
In practice, three to five months. Creditors have ten days to object after the last publication, but the tax-solidarity period under Article 1684 of the General Tax Code is ninety days from the cessation declaration. It is this second deadline that drives the timetable, and it only starts running once the seller files that declaration.
Can a creditor block 300,000 euros over a 5,000-euro debt?
Not for long. Article L. 141-15 of the Commercial Code allows the seller, once the objection period expires, to apply for interim relief before the presiding judge to be authorised to receive the price by depositing a sufficient sum to secure the objecting creditor. Article L. 141-16 also allows an objection made without title or cause, or void as to form, to be struck down.
Did repealing the mandatory particulars simplify the deed?
Not really. Since Law no. 2019-744 of 19 July 2019, a missing particular no longer suffices to obtain nullity, but the duty of disclosure under Article 1112-1 of the Civil Code and fraudulent concealment under Article 1137 remain fully applicable. Disputes have shifted to the seller’s representations and to prior due diligence, making the deed more detailed, not shorter.
Must employees be informed before the sale?
Yes, in businesses without a social and economic committee exercising the powers under the second paragraph of Article L. 2312-1 of the Labour Code. Article L. 141-23 of the Commercial Code requires them to be informed no later than one month before the sale, so they can submit an offer. Separately, Article L. 1224-1 of the Labour Code automatically transfers all current employment contracts to the buyer.