Cassation brief — McDonald's

IR DE GASSATIONI TEFFE CIVIL (ROB) 28. DEC. 20001 COUR DE CASSATION CHAMBRES CIVILES STATEMENT OF DEFENCE ON BEHALF OF The public limited company (société anonyme) MC DONALD'S FRANCE AGAINST: 1) Monsieur Bernard COLLORAFI; 2) S.A. SEBOL; 3) S.A.R.L. B & O; 4) S.A.R.L. LES PINS: SCP A. BOUZIDI Observations in defence to the appeal no. X 00 - 14 487 FACTS 1 - The present dispute which opposes the public limited company MC DONALD'S FRANCE, respondent (MC DONALD'S) to: - Monsieur Bernard COLLORAFI; - S.A. SEBOL, of which Monsieur COLLORAFI is the majority shareholder and the Chairman; - S.A.R.L. B & O, of which Monsieur COLLORAFI is the sole shareholder and the manager. - S.A.R.L. LES PINS, of which Monsieur COLLORAFI is the sole shareholder and the manager, By contract of 5 August 1987, the company MC DONALD'S France gave a fast-food business under lease-management (*location-gérance*) for twenty years to Monsieur COLLORAFI. This restaurant was located in a CARREFOUR shopping centre, in ANTIBES (subsequently called ANTIBES 1). The financial conditions of this contract were as follows: - a basic fee of 12% of the turnover excluding taxes achieved by the restaurant, an annual minimum of 1,800,000 francs, - a service fee of 5% of the turnover excluding taxes. These fees remunerated, at MC DONALD'S, a world-renowned know-how and constant assistance to its contracting partners: - the sign is in fact one of the most renowned there is; - this know-how is the subject of very meticulous communication, to the lessee-managers: it first takes the form of a 9-month training course offered by MC DONALD'S, before permanent, almost daily assistance, which includes among other things the constant updating of this know-how. It should be specified from the outset that the rights of occupation of the premises belong to MC DONALD'S (whether it is owner or holder of a lease) and that the drinks licences are issued to MC DONALD'S. Thus, each business is registered in the RCS as a secondary establishment. Monsieur COLLORAFI, precisely, who was previously manager of a bank branch in MOUGINS - after having worked 18 years at BNP - followed this training period: he had every opportunity to learn from the many other lessee-managers the economic conditions of their activity. As a former banker, he could particularly well appreciate its characteristics and qualities, Indeed, the MC DONALD'S "system" is very well represented on French territory, totalling 687 restaurants, 27,000 employees (from 20 to 50 employees per restaurant), for 234 independent entrepreneurs, lessee-managers operating 576 restaurants. With these 234 lessee-managers, disputes are minimal: apart from Monsieur COLLORAFI, Monsieur de TOURRIS is the only contracting partner of MC DONALD'S in dispute with it. Likewise, only three restaurants have closed. It should consequently be stressed that the dispute currently before the Court of Cassation is absolutely exceptional, and the appellants cannot claim that the MC DONALD'S franchise system would lead its partners to ruin and necessarily bring them into legal proceedings. By amendment of 31 August 1987 to the contract of the preceding 5 August, Monsieur COLLORAFI assigned all the rights and obligations arising from this agreement to a company SEBOL, of which he held almost all the shares (2,494 out of 2,500). As anticipated, the growth of this first restaurant was rapid and continuous until 1993: - 4,446,211 francs in 1987, - 12,843,501 francs in 1988. - 18,310,712 francs in 1989, - 21,184,987 francs in 1990, - 22,290,561 francs in 1991, - 25,422,882 francs in 1992, - 27,422,009 francs in 1993, then stable from that year: 27.1 million francs of turnover and 1.3 million francs of net result after tax, of which Monsieur COLLORAFI was the beneficiary. In reality, these results were consistent with the forecasts that MC DONALD'S had given in various projections on working documents of operating advisers which, although in no way constituting a contractual commitment, nevertheless proved accurate. II - The year 1995 saw the beginning of a slight decline, both in turnover and in net result: a QUICK competitor had indeed opened in July 1995 a few hundred metres from the ANTIBES 1 restaurant. It included a service allowing customers to be served in their vehicles ("drive" service). Decided to react, failing which ANTIBES 1 would have totally declined, MC DONALD'S prepared in 1996 the setting up of a new restaurant called "ANTIBES NORD", equipped with a "drive" service, facing the QUICK restaurant - according to a particularly well-honed siting system - and, consequently, close to the one operated by the company SEBOL. Monsieur COLLORAFI, who had until then amply benefited from the MC DONALD'S system after 10 years within the network, applied to take this new establishment under lease-management (*location-gérance*). His insistence on becoming the lessee was very strong and, by his own admission, he often "came back to the charge" to obtain this new business. His partner gave him satisfaction. By contract of 9 October 1996, MC DONALD'S entrusted for twenty years the lease-management (*location-gérance*) of this restaurant to Monsieur COLLORAFI, in return for: - a basic fee of 20% of turnover excluding tax with a minimum of 2,940,000 francs per year, which would be reduced for 1997 to 17% of the said turnover with a minimum of 2,160,000 francs, - a service fee of 5% of turnover excluding tax. By amendment, the rights and obligations of this contract were transferred by Monsieur COLLORAFI to a company B & O, in which his holding was this time 100%. Naturally, the pre-contractual information documents provided for by the law of 31 December 1989 (loi DOUBIN) and by its implementing decree of 4 April 1991 were then given to him: Monsieur COLLORAFI again acted in full knowledge of the facts (prior experience and statutory information). From 9 October to 31 December 1996, this restaurant achieved a turnover of 3,388,837 francs. III - In a third phase, MC DONALD'S planned the opening of new businesses at ANTIBES OUEST and VALLAURIS, within the framework of its policy of densifying the network, the Côte d'Azur offering very significant potential - it was also a matter of preventing the setting up of competing establishments, as that of QUICK offers a good example -. Monsieur COLLORAFI again wished to continue to take part in these creations; he asked to become lessee-manager of the future businesses. His letters attest to his determined will to pursue his expansion: "I met I. KUSTER regarding the forthcoming opening of the Antibes-Ouest restaurant for which MC DONALD'S has obtained the building permit. I told her of my motivation and of my ability to take on this restaurant under lease-management (*location-gérance*). (...) I have a team ready to ensure development in a town and I need other restaurants to offset the turnover impacts and absorb the fixed costs. (...)" (letter of 16 December 1996) or again: "Thank you for kindly receiving me in the presence of I. KUSTER regarding the forthcoming opening of the two restaurants of Antibes-Ouest and Vallauris for which MC DONALD'S has obtained a building permit and for which I am a candidate for lease-management (*location-gérance*). (..) If the decision not to allocate these two restaurants to me were confirmed, I would consider it a genuine casus belli." (letter sent on 10 January 1997 to the chairman of MC DONALD'S France). MC DONALD'S agreed to give him the operation under lease-management (*location-gérance*) of the ANTIBES OUEST business: from then on, he managed three restaurants of the brand in the town of ANTIBES, whose local conditions he knew better than anyone. On 31 January 1997, Monsieur COLLORAFI wrote: "I take note of this allocation and thank you warmly for the trust you show me. (...) I persist in asking that VALLAURIS also be allocated to me." Originally, it was planned that this lease-management agreement (*location-gérance*) would be given to him under a so-called "straight licence" contract, for which the lessee must, for an opening other than that of a first restaurant, finance with equity (that is to say not borrowed) 25% of the pre-opening costs, equipment, furniture and signage, benefiting in return from a 20-year contract. Monsieur COLLORAFI nevertheless refused this financing: MC DONALD'S modified the proposed agreement and granted him a so-called "BFL" contract with an option, for the benefit of the lessee-manager, to convert it within three years into a "straight licence" contract. Thus, the contract signed for ANTIBES OUEST on 18 June 1997 which, like the previous one, complied with the pre-contractual information provided for by the law of 31 December 1989 (loi DOUBIN) and by its implementing decree, had a term set at 28 April 2000, with the possibility of extension until 28 April 2017. It provided for: - a basic fee of 15% of turnover excluding tax with a minimum of 1,200,000 francs, - a service fee of 5% of turnover, - an equipment fee of 4.5% of turnover: it was intended to remunerate (unlike the other types of lease-management (*location-gérance*)), the financing by MC DONALD'S of the fittings and equipment of the restaurant. By amendment of the same day, Monsieur COLLORAFI transferred the rights and obligations arising from this contract to a SARL LES PINS, of which he owned the entire capital. MC DONALD'S indications did provide for an initial turnover of 13 million francs per year, with an increase of 2% per year, a net profit of 133,000 francs in the first year, for an average of 861,000 francs over the 10 years ahead. The figures did not follow, since 8 months after its opening, the ANTIBES OUEST restaurant reached a turnover of 6.4 million francs (annual trend of 9.3 million francs), with a loss of 440,000 francs. As at the same time, the companies SEBOL and B&O ceased to honour their commitments, the lease-management (*location-gérance*) of the fourth restaurant (VALLAURIS) was definitively refused to him. IV.1 - Indeed, invoking a collapse in the turnover of the company SEBOL, discrepancies between the operating forecasts given by the company MC DONALD'S at the openings of the restaurants and, in a general way, the lack of profitability of the three restaurants, Monsieur COLLORAFI and his 3 companies abruptly stopped paying the fees owed to MC DONALD'S. Numerous invoices were likewise left unpaid (well above one million francs). IV.2 - By deed of 26 June 1997 - only a week after the signing of the lease-management agreement (*location-gérance*) of the ANTIBES OUEST restaurant on the preceding 18 June, from which it follows that the action brought by Monsieur COLLORAFI is not improvised - the companies SEBOL, B & O and LES PINS as well as Monsieur COLLORAFI summoned the company MC DONALD'S before the Commercial Court of PARIS in order to obtain payment of various sums, for a total amount of 45,350,000 francs in compensation for the harm suffered (30,000,000 francs to SEBOL, 5,000,000 francs to B&O, 10,350,000 francs to Monsieur COLLORAFI), all sums subject to increase, plus for each the sum of 50,000 francs under article 700 of the new Code of Civil Procedure, provisional enforcement being requested. In parallel, a financial audit, planned for October 1997, was postponed to the end of November by Monsieur COLLORAFI. It notably showed that he had reimbursed himself his current account in SEBOL (350,000 francs) and had SEBOL take out a loan of the same amount. IV.3 - The companies of Monsieur COLLORAFI allowed their fee debts to grow, obliging the company MC DONALD'S to send them a formal notice by letter of 27 November 1997. For failure to pay the said fees, the contracts were terminated by operation of law on 2 January 1998, in accordance with their termination clauses, neither the validity nor the implementation of which was contested. Monsieur COLLORAFI refused to hand over keys, books, staff files, as well as the cash; his three companies continued to operate these businesses which did not belong to them. In response, the company MC DONALD'S summoned in summary proceedings (*référé*) before this Court by deeds of 9 January 1998 Monsieur COLLORAFI and his three companies to obtain their eviction from the three businesses whose lease-management agreements (*location-gérance*) had ended by the effect of the termination clauses. By orders of 14 January 1998, the Court held that there were no grounds for summary proceedings (*référé*) on the pretext of a serious difficulty. These orders were appealed, the appeals becoming moot following the judgment on the merits of 18 May 1998 (infra V). IV.4 - By deed of 30 January 1998, MC DONALD'S opened another proceeding on the merits against its partners. By this deed and by later submissions, it asked the Court to: 1) join the two proceedings. 2) record the termination by operation of law on 2 January 1998 of the lease-management (*location-gérance*) and licence agreements concluded between, on the one hand, MC DONALD'S and, on the other, the opposing parties, 3) order their eviction, as well as that of all occupants through them of the disputed businesses and order each of these companies and Monsieur COLLORAFI to hand over to the owner of the business, MC DONALD'S: - the keys of the restaurants, - the list of staff, the employment contracts as well as the files relating to each of the employees in order to allow the normal continuation of the employment contracts, - the operating accounts up to the day of the abandonment of this operation, on pain of joint penalty payments, 4) appoint a bailiff in order to draw up in the presence of both parties, in each restaurant, the inventory of the stock, operating items, furniture and equipment of the business and the state of the cash. 5 and 6) order them jointly and severally to pay MC DONALD'S, principally a) On the part of SEBOL and Monsieur COLLORAFI the sums of 1,867,247.84 francs as unpaid fees with interest at the statutory rate and 16,000 francs as occupation indemnity per day from 2 January 1998, b) On the part of B&O and Monsieur COLLORAFI the sum of 1,533,548.87 francs as unpaid fees with interest and 24,000 francs as occupation indemnity per day, from 2 January 1998. c) On the part of LES PINS and Monsieur COLLORAFI the sums of 504,474.42 francs as unpaid fees with interest and 16,000 francs as occupation indemnity per day from 2 January 1998 with capitalisation of interest, all sums subject to increase, 7) order Monsieur COLLORAFI and the companies SEBOL, B&O, Les PINS jointly and severally to pay 100,000 francs in damages and interest to MC DONALD'S for abusive proceedings, 8) order provisional enforcement of the decision to be delivered, 9) order Monsieur COLLORAFI and the companies SEBOL, B&O, Les PINS jointly and severally to pay MC DONALD'S the sum of 300,000 francs pursuant to article 700 of the new Code of Civil Procedure. For their part, Monsieur COLLORAFI and his companies asked the Court, principally, to: - hold that MC DONALD'S did not perform its contractual obligations in good faith and that it wrongfully terminated its commitments, - hold that SEBOL, B&O, and LES PINS were entitled to raise the defence of non-performance, - dismiss MC DONALD'S claim for termination, - suspend the operation of the termination clause and grant the claimant companies two years to settle their debts on the basis of a reasonable fee, - set the "bearable" fee at 252,000 francs for SEBOL, 932,000 francs for B&O and 934,000 francs for LES PINS, In the alternative, these parties asked that an expert be appointed to assess them. In the further alternative, in the event that the Court considered that the termination was indeed established, they asked that it be pronounced at the exclusive fault of MC DONALD'S and that it be ordered accordingly to pay SEBOL 9,600,000 francs, B&O 22,200,000 francs and LES PINS 13,250,000 francs, with interest. They further asked that MC DONALD'S be dismissed of all its claims and be ordered to pay Monsieur COLLORAFI the sum of 2,000,000 francs in damages for non-pecuniary harm and to pay each of the companies and Monsieur COLLORAFI the sum of 100,000 francs under article 700 of the new Code of Civil Procedure. Subsequently, Monsieur COLLORAFI and his companies increased the sums claimed. V - By judgment of 18 May 1988, the Commercial Court of PARIS rejected all the claims, recording the termination by operation of law by the effect of the termination clauses, on 2 January 1998, of the lease-management (*location-gérance*) and licence agreements concluded between the company MC DONALD'S and its partners. In consequence, the Court ordered the eviction of the claimants from the businesses, ordering them to hand over to the owner the keys, the list of staff, the employment contracts, the operating accounts, on pain of a joint penalty payment between Monsieur COLLORAFI and his companies. Moreover, the commercial judges declared the company MC DONALD'S creditor of the following sums: - 1,867,247.84 francs as unpaid fees, plus statutory interest, and 16,000 francs as occupation indemnity per day from 2 January 1998 for the company SEBOL and Monsieur COLLORAFI, - 1,533,548.87 francs, plus statutory interest, as well as an occupation indemnity of 24,000 francs per day from the same date, for the company B & O, - 504,474.42 francs, plus interest, and 16,000 francs of occupation indemnity per day for the company LES PINS. Finally, the Court ordered the capitalisation of interest and ordered the claimants jointly to pay to the company MC DONALD'S the sum of 50,000 francs pursuant to article 700 of the new Code of Civil Procedure. In ruling thus, the commercial judges considered, among other things, on the claims of Monsieur COLLORAFI and his companies that: "These contracts contain no clause of territorial exclusivity [our emphasis in the text] for the benefit of the licensee or lessee-manager, that on the contrary, in the six contracts concerned, in different forms and in different articles, they expressly rule out any protection on this score and reserve the right for MC DONALD'S to set up restaurants even in an adjoining zone (article 28 of the licence contracts) and without the lessee-manager being able to plead the harm caused to the business [idem]: exclusivity is moreover not a consubstantial element of franchising. . the contracts contain no commitment by the franchisor as to turnover and operating results [idem]. that the elements invoked by the claimants appear on simple working documents clearly designated as such and constituting mere hypotheses: Monsieur COLLORAFI and his companies cannot therefore invoke a breach of the contractual clauses in support of their claim: they allege (nevertheless) that the contracts were performed in bad faith, which it is for them to demonstrate; (...) the Court notes that the setting up of the second MC DONALD'S restaurant at Antibes-Nord found its justification in the need, for the franchisor, to counter the competition of a Quick which included a drive-through sales service, which was not the case for Antibes-Nord; ... Monsieur COLLORAFI had applied: MC DONALD'S granted him the operation, each party having, in this instance, reacted in accordance with its interests [idem], without bad faith being able to be invoked, that the two other sites, a few kilometres away, fit within the policy of MC DONALD'S of densifying the network, which Monsieur COLLORAFI may criticise and deplore but which he could not claim to be unaware of, the terms of the previously mentioned contracts being on this point sufficiently explicit, that for one of these restaurants (Antibes- Ouest), he was able to reach an agreement with MC DONALD'S with a lighter investment formula for him, that an adjustment of his fees was granted to him, that the franchisor's refusal for the Vallauris site is justified by the fact that Monsieur COLLORAFI already operated three restaurants of the brand and that the financing of the second had posed some problems, that the claimants therefore do not establish that in all these operations MC DONALD'S acted in bad faith: •. its conduct cannot either be considered an abusive exploitation of a state of economic dependence [idem] (...) since it does not aim to distort competition (...) and since it results from the implementation of contractual clauses of which Monsieur COLLORAFI and his companies moreover do not seek nullity: It therefore emerges from the considerations set out above (..) that if the MC DONALD'S siting policy changed the operating conditions of the establishments managed by Monsieur COLLORAFI, he does not demonstrate that it was carried out in bad faith or abusively and that it was the sole cause of the deterioration of results" On the claims of MC DONALD'S, the Court noted that: "it is not disputed by the companies of Monsieur COLLORAFI that they stopped paying the fees regularly since 1997, that formal notices in accordance with the terms of the contracts were sent to them on 27 November 1997, that failing payment on their part the termination occurred by operation of law and that it was notified to them by LRAR of 2 January 1998 and by bailiff" It should be specified from the outset that despite the provisional enforcement attached to this judgment, the debtor companies did not comply with it spontaneously, although MC DONALD'S had immediately provided the bank guarantee provided for by this decision. They applied for a grace period before the Enforcement Judge of the Regional Court (TGI) of GRASSE, who dismissed them by decision of 9 June 1998: it is only on that date that MC DONALD'S regained possession of its businesses. VI - Monsieur COLLORAFI and his 3 companies appealed against this judgment. VI.1 - By judgment of 9 December 1998, the Paris Court of Appeal declared inadmissible the claim of the appellant parties seeking the requalification of the disputed lease-management agreements (*location-gérance*) into commercial leases possibly supplemented by a trademark licence agreement as a sign, as well as the claim seeking the declaration of nullity of the said contracts either for non- application of the law of 20 March 1956, or for fraud, mistake or lack of consideration. Before ruling on the merits, the Court principally appointed Messrs DUMONT and MARTIN, experts, with the task of taking note of the earlier amicable reports and of the documents, and of answering the questions that the Court put to them in the grounds of the judgment concerning both the period prior to 1 July 1997 and the period after it. The experts MARTIN and DUMONT filed their report on 15 October 1999. VI.2 - At the opening of the report, Monsieur COLLORAFI and his three companies filed submissions and asked the Court to find that MC DONALD'S had not performed its contractual obligations, having failed in its obligation of good faith in the performance of its commitments; raising the defence of non-performance by reason of this bad faith, the appellants claimed that their partner could not request the termination of a contract where the non-performance of the debtor's obligation would be the consequence of its own fault. MC DONALD'S would be solely at the origin of the non-payment of the fees in 1997, by reason of its strategic and unilateral decision to open restaurants in the primary catchment area of the company SEBOL, which alone would have caused the collapse of the turnover of this company, then of the company B & O: the franchisor could not rely on this non-payment to trigger the termination clause. The termination would thus be wrongful. The appellants sought compensation for the harm allegedly suffered (about 11 million francs for the company SEBOL, about 25 million for the company B & O, nearly 14 million for the company LES PINS), with interest from the date of termination. In the alternative, they asked for MC DONALD'S to be ordered to pay for the fixed assets at their book value (4,528,333 francs), plus 2 million francs for each of these 4 parties for the additional harm allegedly suffered solely as a result of the forced enforcement carried out by the franchisor at its own risk and peril. Monsieur COLLORAFI claimed in any event 7,740,000 francs "for the material harm caused", 2 million francs for non-pecuniary harm. The appellants likewise claimed various interim payments, of several million each, in the event of the appointment of an expert. VI.3.1 - In its submissions served on 25 September 1998, MC DONALD'S, respondent, showed among other things, after a very detailed recap of the chronology of events, that Monsieur COLLORAFI had enjoyed a situation that was, to say the least, "comfortable" thanks to his contracts with it, that he himself had adhered to an economic policy which he subsequently criticised, and lastly that the contracts had been perfectly complied with by MC DONALD'S. On the evolution of the restaurants in particular, MC DONALD'S recalled that: - until 1993, ANTIBES 1 experienced a significant increase in turnover, before showing a slight decline, - in 1995, the clearer decline was due to the opening in July of a QUICK competitor, as well as to the modification of traffic flows for access to the restaurant (modification of the entrances and car parks at the CARREFOUR store which dried up the customer flow of ANTIBES 1). - in 1996 was added the drop in consumption following the panic due to mad cow disease: for these 2 years these were indeed external causes, unforeseeable for MC DONALD'S, - in 1997, the reaction of MC DONALD'S allowed Monsieur COLLORAFI to obtain a consolidated turnover of 31,556,286 francs for the 3 restaurants ANTIBES 1, ANTIBES NORD, ANTIBES OUEST - it should be noted that at the end of 1997, ANTIBES NORD and ANTIBES OUEST were still in a "launch phase"- The respondent specified that Monsieur COLLORAFI could not claim to be a victim: from August 1987 to the end of 1996, he received within the company SEBOL 5,039,500 francs of gross remuneration (benefits in kind excluded) and, during the same period of 10 financial years, 4,150,000 francs of profit, i.e. an average annual income of 951,117 francs. In the same period, MC DONALD'S invested 3.5 times more, at a minimum, than the lessee-manager: - for the 3 restaurants: 78% of the investment effort (38,363,000 francs from MC DONALD'S, 10,761,000 francs from Monsieur COLLORAFI), - for LES PINS: 96.90% from MC DONALD'S (11,825,000 francs, whereas Monsieur COLLORAFI invested the remaining 3.10% in it, i.e. 387,000 francs). MC DONALD'S vigorously refuted the argument of Monsieur COLLORAFI - taken up even before the Court of Cassation - according to which the creation of the new restaurants would have been profitable only to the grantor, its minimum fees having risen from 150,000 to 495,000 francs (3.3 times more): indeed, the investment of MC DONALD'S had in the same time been multiplied by In reality, it appears that Monsieur COLLORAFI adopted from the end of 1996 a negative and incoherent attitude, no doubt motivated by the refusal to allocate the VALLAURIS restaurant to him. On the contracts, MC DONALD'S recalled that no territorial exclusivity was guaranteed in them (SEBOL lease-management agreement (*location-gérance*), "Non- exclusivity", 7.0 and 7.2 - B&O and LES PINS contracts, art. VII - "Non-exclusivity": VII.1 and 2). Likewise, "the grantor made no declaration, promise or guarantee as to the future profitability of the restaurant" (SEBOL, B&O and LES PINS licence contract, clause 28.c.d.e.). Finally, the termination of the contracts occurred by operation of law on 2 January 1998, in application of the clear and precise clauses of the agreements (SEBOL contract, art. 11.b - B&O and LES PINS contracts, art. XI.2.2). The respondent company concluded that the Court had quite logically recorded the termination by application of the termination clause contained in the contracts, as well as the payment of the arrears of fees and the recovery of the businesses by their owner, MC DONALD'S. The occupation indemnity was also due, for the amounts retained by the commercial judges, the companies of Monsieur COLLORAFI having remained in the premises. VI.3.2 - In later pleadings (reply submissions served on 26 November 1999), MC DONALD'S recalled the grounds set out above. In particular, the franchisor there: - detailed the salaries that Monsieur COLLORAFI had granted himself, as well as his wife (more than one million per year, 11.5 million in total) (nos. 17 and 18), - stressed that the reduction of salaries and dividends would have allowed the companies to reach break-even point (no. 21). - analysed the experts' reports, at length cited, from which it follows that the deterioration of the companies' resources was due in equal parts to Monsieur COLLORAFI's policy of massive distributions and to the fall in results. VII - By judgment dated 8 March 2000, the Paris Court of Appeal reversed the judgment under appeal except in its principle of ordering the appellants and Monsieur COLLORAFI to pay the fees due before 2 January 1998. Ruling anew, the Court of Appeal thought it could hold that the termination of the leases binding the parties was wrongful: it should only have occurred at the end of a period of 18 months from 1 July 1997, in the event of failure of the measures that the company MC DONALD'S was under an obligation to implement in order to move towards a return to a profitable situation of the restaurants "in keeping with the economic spirit of the lease-management agreements (*location-gérance*)". Thus, the appeal judges considered that the contracts had continued to be valid until 30 December 1998. The Court of Appeal then held that for the period from 2 January to 10 June 1998, the date of departure from the premises, the lease-management agreements (*location-gérance*) continued to produce their full effects, and consequently ordered jointly and severally: - the company SEBOL and Monsieur COLLORAFI to pay to the company MC DONALD'S the sums of 1,867,244.84 francs as unpaid fees prior to 2 January 1998 plus statutory 16 interest, and 1,272,000 francs as fees from 2 January 1998 to 9 June 1998. - the company B & O and Monsieur COLLORAFI to pay to the company MC DONALD'S the sums of 1,533,548.87 francs as fees unpaid at 2 January 1998 plus late-payment interest at the bank base rate increased by 3 points per instalment and 1,113,000 francs as fees from 2 January to 9 June - the company LES PINS and Monsieur COLLORAFI to pay to the company MC DONALD'S the sums of 504,474.42 francs as fees unpaid at 2 January 1998 plus late-payment interest at the bank base rate increased by 3 points and 1,272,000 francs for the period from 2 January to 9 June 1998. For the period from 10 June to 31 December 1998, the judgment then held that: - no fee was owed by the appellants, the latter having been evicted from the premises, - the companies of Monsieur COLLORAFI showing very substantial losses on 10 June 1998, they cannot claim to invoke harm arising from the loss of the chance to make profits had they operated during that period. The Court of Appeal ordered the company MC DONALD'S to pay to Monsieur COLLORAFI the sum of 240,330 francs as damages and interest in compensation for his loss of the chance of a salaried income between 10 June and 31 December 1998. It ordered the capitalisation of interest and, as regards tangible fixed assets, ordered the company MC DONALD'S to pay the appellants the sum of 4,528,333 francs plus statutory interest from 13 December 1999. Finally, the Court ordered the company MC DONALD'S to pay Monsieur COLLORAFI the sum of 100,000 francs in compensation for his non-pecuniary harm. This is the judgment under appeal which the respondent company comes to defend. DISCUSSION ON THE FIRST GROUND OF CASSATION VIII - The first ground criticises the judgment for having ordered Monsieur COLLORAFI, the companies SEBOL, B & O and LES PINS to pay various sums to the company MC DONALD'S, for having held that they had not suffered any harm for the period after 9 June 1998, and for having limited the harm of Monsieur COLLORAFI to the sum of 240,330 francs. Firstly, the appellants in the appeal contend that, before the Court of Appeal, they invoked the fault of the company MC DONALD'S in the wrongful termination of the contracts and argued that Monsieur COLLORAFI and his companies lost their investments valued at 11 million francs, that they must repay the bank loan of 3 million francs, bear the losses suffered for the sum of 5,210,000 francs, lost the return on investments for the company SEBOL valued at 9,576,354 francs, for the company B &: O at 22,198,563 francs and for the company LES PINS at the sum of 13,244,734 francs, that in holding that Monsieur COLLORAFI cannot invoke the loss of the chance to operate his companies profitably until their term since the measures which the company MC DONALD'S should have proposed appear with hindsight ineffective, the Court of Appeal did not rule on the claims for compensation of the harm of the appellant companies, in violation of article 455 of the new Code of Civil Procedure (first limb). The appellants in the appeal then argue that before the Court of Appeal, they had sought compensation for the harm constituted notably by the losses suffered during the years 1996 and 1998 respectively for each of the companies. In stating that Monsieur COLLORAFI lost no chance of seeing his companies become profitable again within the 18 months following 1 July 1997, without explaining itself on the harm relating to the losses suffered by each of the companies, the Court of Appeal deprived its decision of a legal basis with regard to article 1147 of the Civil Code (second limb). After recalling that, before the Court of Appeal, the appellants had sought compensation for the harm constituted by the investments made (11 MF), by the repayment of the bank loan (3 million francs) and by the impossibility of benefiting from the return on investment, the appellants in the appeal criticise the Court of Appeal for having asserted the absence of harm on the ground that the measures that should have been taken prove with hindsight ineffective, without indicating in what way these measures, which would have allowed a "clear improvement of the situation as it noted", were ineffective. In doing so, the Court would not have justified its decision with regard to articles 1147 et seq. of the Civil Code (third limb). After recalling that Monsieur COLLORAFI asserted before the Court of Appeal that the fault allegedly committed by MC DONALD'S was at the origin of the loss of his salary of 480,000 francs, plus charges over 19 remaining years of the contracts (i.e. more than 11 million francs), the appellant in the appeal criticises the judgment for having held that the harm invoked was very limited, that the appellant could not invoke the loss of the chance to operate his companies until its term. By being content to compensate him for the loss of his salary from 10 June to 31 December 1998, without specifying in what way these elements allowed it to hold that Monsieur COLLORAFI would not have continued to receive his salary had he not been evicted after the termination of the contracts by MC DONALD'S, the Court of Appeal would not have justified its decision with regard to articles 1147 et seq. of the Civil Code (fourth limb). The appellant in the appeal finally criticises the judgment for not having ruled on the ground seeking to compensate the loss of salary of the wife of Monsieur COLLORAFI as a result of the fault allegedly committed by MC DONALD'S. In doing so, the Court of Appeal would have violated article 455 of the new Code of Civil Procedure (fifth and last limb). In all respects, these criticisms cannot succeed. IX - As a preliminary point, it will be noted that the appellants in the appeal do not criticise the validity of the disputed agreements. In particular, they do not call into question the implementation by MC DONALD'S of the statutory pre-contractual information obligation, applying to the last two agreements (9 October 1996 and 18 June 1997) - whether before the trial judges or before the Court of Cassation -. Indeed, this obligation having been satisfied, the debate should have been closed: the contractual information was therefore complete and Monsieur COLLORAFI, a business owner, could not make anyone else bear the collapse of his companies. IX.1 - Since law no. 89-1008 of 31 December 1989 (known as the loi DOUBIN) there has existed a heavy contractual obligation of disclosure. Its article 1 provides that: "any person who makes available to another person a trade name, a trademark or a sign, requiring from them a commitment of exclusivity or quasi-exclusivity for the exercise of their activity, is required, prior to the signature of any contract concluded in the common interest of both parties, to provide the other party with a document giving sincere information, which enables them to commit themselves in full knowledge of the facts. "this document, the content of which is set by decree, specifies in particular the seniority and experience of the enterprise, the state and prospects of development of the market concerned, the size of the network of operators, the duration, the conditions of renewal, termination and assignment of the contract as well as the scope of exclusivities" The implementing decree no. 91-337 of 4 April 1991 sets out in detail the information that must be provided. It mainly provides for the delivery of the following information: identification of the grantor, history of the enterprise, presentation of the market both local and national, presentation of the distribution network, finally the essential elements of the contract (payment of sums in advance, notably to obtain the reservation of an area, consequences of withdrawal ...). It is undisputed that in the present case, these texts, the application of which indicates compliance with the obligation of good faith in the formation of contracts and the protection of the consent of the contracting party, were scrupulously complied with by MC DONALD'S. Thus, Monsieur COLLORAFI, a former bank manager moreover, was able to appreciate objectively the economic framework of his restaurants and committed himself in full knowledge of the facts. Moreover, he necessarily benefited from the 20-day reflection period provided for by paragraph 3 of article 1 of the law: "The document provided for in the first paragraph as well as the draft contract are communicated at least twenty days before the signature of the contract or, where applicable, before the payment of the sum mentioned in the preceding paragraph (entry fee)." It follows from the foregoing that Monsieur COLLORAFI and his companies can in no way allege any reticence in the information given by MC DONALD'S, in particular as to the extension of its network and, consequently, the opening of new restaurants. The trial judges did not accept it either. Moreover, the appellants in the appeal cannot rely on alleged failures by MC DONALD'S in contractual information, without drawing any legal consequence from them. To be quite precise, it will be noted that their pleadings before the trial judges, while they sometimes allude to the DOUBIN Law, cite then only the partnership framed and reinforced by the text (final submissions served on 13 December 1999, p. 62, para. 1). IX.2 - Once the lessee-manager is sufficiently informed, he must therefore bear the vagaries of his enterprises. Case law indeed considers, quite rightly, that the beneficiary of the DOUBIN law, who is a professional just like his contracting partner, is not the creditor of an obligation of result which would guarantee him the profitability of his enterprise. Thus for example, the dealer (a car dealer in the present case) cannot hold the grantor liable where the latter, who was not in a position to guarantee the profitability of the activity, provided all the indications it was in a position to give (Com., 3 October 1989 cited above, D.1990.Somm.366, delivered on facts prior to the DOUBIN law - this decision, by its reasoning, remains topical). Likewise, the Court of Cassation has had the opportunity to specify that a distributor was not bound by an obligation of result in the drawing up of figure forecasts (Com., 19 May 1992, JCP.E. 1993.II.387, Contrats, conc. et consom. 1992, 153): it is not liable if the forecasts are not achieved. Indeed, the trial judges consider that the dealer must bear the vagaries of economic life, that the grantor does not guarantee to its partner the success of the business it proposes (SELINSKI, Les sanctions de l'article 1er, Cah. dr. entr. 1990/4, p.24). And, if a fault of the franchisor is established, the latter may only be ordered to pay damages if this fault was decisive in the distributor's decision to join and, consequently, in his harm (Com., 30 January 1996, RIDA. 1996 no. 776: Com., 1 March 1995, RJDA 7/95 no. 836). In other words, the causal link must be established (e.g.: Com., 24 February 1998, RIDA. no. no. p. p. 616: the franchisor had knowingly disregarded its pre-contractual information obligation by supplying a study containing fanciful results and inaccuracies, concealing moreover the foreseeable extension of neighbouring large stores; nevertheless, the causal link was expressly noted: "This fault (had) called into question the general economy of the contract). Indeed, compensation for loss of earnings can be granted only if the professional activity is not subject to uncertainty (e.g. a contrario: Com., 14 February 1984, D.1985.IR.80: Civ.2, 28 April 1965, D.1965.777: Civ.2, 11 July 1963, D.1964.somm.26). By judgment of 4 December 1990 (JCP.1991.II.21725 - delivered for facts prior to the entry into force of the law, but the method of reasoning remains topical), the Court of Cassation notes that the franchisee had himself committed no fault, having essentially followed the recommendations of the franchisor. This assessment of the franchisee's conduct (which follows, as seen, an assessment of the franchisor's fault by its conduct, in break with earlier case law) amounts to seeking in a balanced manner the causes of the failure of the agreement. It is relevant: "The franchisee or other distributor must not seek to escape the vagaries of commercial life by obtaining overly easy compensation" (G. VIRASSAMY, in JCP.1991.II.21725). It follows from the foregoing that a finding of contractual liability (understood in the broad sense: damages, termination) requires establishing both: 1) a faulty conduct of the producer, 2) the causal link with the economic harm suffered by the distributor. These conditions are not met in the present case, where the appellant parties have moreover never demonstrated the existence of a causal link between the fault of MC DONALD'S and the harm allegedly suffered: their appeal pleadings are much more prolix on the fault allegedly committed by their contracting partner (e.g.: final submissions of 13 December 1999, p. 59) than on any causal link with the alleged harm. In fact, this causal link does not exist since the franchisee is himself responsible for his enterprise, since he received the statutory information from the franchisor, and acted in full awareness (investment in the new restaurants for example). The court-appointed experts named by the Paris Court of Appeal rightly "recalled that both MC DONALD'S and a franchisee are independent entrepreneurs who must manage the economic risk linked to the operation of his restaurant". As for Monsieur COLLORAFI, he opportunely recalls that he is an "independent trader" (his submissions p. 76, cited in the supplementary brief p. 22 5 3 in fine). This is precisely what the appellants in the appeal are trying to escape, whose grievances all amount to obtaining before the Court of Cassation a genuine guarantee of income, based on a postulate of profitability of the 3 restaurants for the whole remaining term of the lease-management agreements (*location-gérance*). In other words, the appeal calls into question the nevertheless clear principles of freedom of contract, of the uncertain nature of contracts in business law and of freedom of trade. On this count already, it is doomed to fail. X - In any event, the criticisms of the first ground, all drawn from alleged defects of reasoning, cannot succeed, the Court having reached its decision at the end of a most complete reasoning: "II - On the harm arising from the wrongful nature of the terminations Considering that the only obligation in the performance of which the company MC DONALD'S failed, consisting in presenting to Monsieur COLLORAFI an eighteen-month plan with "sacrifice" on both sides, did not entail a guarantee of the restoration of the profitable situation of the companies but had the purpose of loyally leaving a chance to Monsieur COLLORAFI and his companies to move towards that goal; Considering that the harm that Monsieur COLLORAFI suffered as a result of this absence of an "observation period" is very limited; That he cannot invoke the loss of the chance to operate his companies profitably until their term since the measures which the company MC DONALD'S should have proposed appear with hindsight ineffective: That indeed the three companies of Monsieur COLLORAFI have been, from his forced departure from the premises on 10 June 1998, managed by a 100% subsidiary of the company MC DONALD'S FRANCE: that at 31 December 1998, i.e. at the end of the eighteen-month period of the plan which the company MC DONALD'S FRANCE should have proposed, despite drastic savings in administrative costs and reduction in the number of "managerial" salaries, which the "plan" would not have failed to provide for, the company SEBOL still shows a loss-making result of 132,042 francs, the company B&O that of 412,107 francs (an increase of 136% compared with the result of the 2nd quarter of 1997) and the company LES PINS (ANTIBES OUEST) is profitable by only 129,728 francs; that in total the result before tax of the three companies is a deficit of 414,421 francs instead of 549,950 francs at 31 December 1998; That Monsieur COLLORAFI therefore lost no chance of seeing within the eighteen months following 1 July 1997 his companies become profitable again: That, on the other hand, Monsieur COLLORAFI unduly lost his salary from 10 June to 31 December 1998, which was, after tax, 430,000 francs per year 430,000 x 204 = 240,328.77 sum rounded to 240,330 francs: that the company MC DONALD'S FRANCE will therefore be ordered to pay him this sum as damages: Considering that moreover as regards the tangible fixed assets appearing in the balance sheets of the companies SEBOL, B&O and LES PINS and of the GIE SODEVA for a net book value of 4,528,333 francs and which the company MC DONALD'S "recovered", the latter owes payment for them to Monsieur COLLORAFI and his companies; That in total, the company MC DONALD'S FRANCE will be ordered to pay Monsieur COLLORAFI the sum of 4,768,663 francs". These grounds, purely of fact, in themselves justify the decision delivered by the Paris Court of Appeal, the trial judges having rightly held that Monsieur COLLORAFI could not invoke a loss of chance to operate his businesses profitably, at the end of a precise analysis of the economic situation. X.1 - The first ground can succeed all the less since it attempts ultimately to call into question the judges' finding of the absence of loss of chance for Monsieur COLLORAFI of continuing to have profitable financial years. The aforementioned circumstance (supra IX.2) that Monsieur COLLORAFI does not establish a causal link between the conduct of MC DONALD'S and the failure of his enterprises precisely prevents this loss of chance from being found. It is indeed known that the judge must find, for the loss of chance to give rise to compensation of the harm, firstly that the vanished chance be "real and serious" (e.g.: AP, 3 June 1988, RTDCiv.1989.81; Civ.2, 8 June 1983, Bull. Civ. II, no. 124 p. 87; Crim., 9 January 1979, JCP.1980.II.19272; Civ.2, 3 November 1971, D.1972.667), and secondly that there be a causal link between the event giving rise to liability and the said loss of chance (e.g.: Civ.1st, 10 January 1990, Bull. Civ. I, no. 10). These elements have not been established by the appellants in the appeal, on whom the burden of proving them rests. In any event, the amount of the compensation for the loss of a chance can in no case equal the totality of the hoped-for gain, as the appellants asked (e.g.: Civ.1st, 10 June 1986, Bull. Civ. I, no. 163, JCP.1986.IV.245). The principle is absolutely settled. Moreover, one must remain very cautious in compensating the loss of a future gain where this gain would result from the conduct of the claimant: "the loss of a chance can depend only on a future and uncertain event the occurrence of which cannot result from the attitude of the victim" (Civ.1st, 2 October 1984, Bull. Civ. I, no. 245). On this point, one must distinguish, for example, between the employee and the business owner: the guarantee of their income is not the same. And the calculation of the compensation, directly called into question by the supplementary brief, falls, however, consistently within the sovereign power of the trial judges, except for contradiction of grounds (e.g.: Civ.2, 8 June 1983, Bull. Civ. II, no. 124 p. 87: Civ.2, 26 January 1977, GP.1977.1.somm.84; Civ.2, 18 December 1963, Bull. Civ. II, no. 635). On this count too, the first ground cannot be received. It will finally be noted that in most cases the compensation for the disappearance of a chance involves, in its assessment, a certain divination, the limitation of the harm or the amount of the hoped-for gain being totally uncertain. Such is the case, for example, of a sudden withdrawal of credit by a bank, which deprives a trader of a chance to turn his activities around (Com., 22 April 1980, Bull. Civ. IV, no. 163): in this case, the judge can only rely on a probability of return to solvency (notion of "real and serious chance") to assess the loss of chance. In the present case, the uncertainty was much lower: the trial judges were able to verify the fate of the restaurants which continued to operate after the termination of the lease-management agreements (*location-gérance*). In other words, the judge was able to consider objective elements to refuse to award damages to Monsieur COLLORAFI. The appeal's criticism is all the more difficult as a result. On the other hand, the Court of Appeal did award 240,330 francs as damages in compensation for the loss of a chance for Monsieur COLLORAFI of having a salaried income during that period: the trial judges recognised there the absence of uncertainty. The same applies to the loss of the net book value of the tangible fixed assets (more than 4.5 million francs). It follows from the foregoing that the judgment carried out a measured assessment of the future gains of Monsieur COLLORAFI and his companies. X.2 - More generally, the supplementary brief ultimately attempts to call into question the amount of the compensation awarded to the appellants in the appeal. It disregards the fact that the trial judges enjoy a sovereign power to assess the amount of the damages they award in compensation for harm, and to assess its existence (e.g.: Com., 3 May 2000, Abeille Vie v. CRCAM, judgment no. 979 D; Soc., 27 October 1964, Bull. Civ. IV, no. 713 p. 586). X.3 - The appellants in the appeal can all the less criticise the trial judges for not having ordered MC DONALD'S to pay them the entirety of the compensation claimed since the judgment very clearly brought to light that the collapse of the companies of Monsieur COLLORAFI was not exclusively attributable to the franchisor. The Paris Court of Appeal noted indeed that the opening of the new restaurants, the exclusive origin, according to the appellants themselves, of their collapse, was in reality not attributable to MC DONALD'S: "the construction by the company MC DONALD'S of a second restaurant (_) solely for the purpose of containing the competition of a QUICK restaurant which had opened its doors in July 1995, located opposite, and of avoiding the foreseeable effects of a loss of customers for the restaurant (ANTIBES 1)" (p.13, last para.) (..) the company MC DONALD'S FRANCE cannot therefore be reproached with having decided in its sole interest to set up the second restaurant (..)" (p.14, para. 2). It admitted, implicitly but necessarily, that the responsibility for the financial failure of the restaurants was shared: "the only obligation in the performance of which the company MC DONALD'S failed consist(s) in presenting to Monsieur COLLORAFI an eighteen-month plan with sacrifice on both sides". In its judgment of 9 December 1998, the Court had also found that: "Contrary to what Monsieur COLLORAFI never ceases to maintain, the opening of this second restaurant, the management of which was entrusted to him, - 500 metres from the first, is not due to a decision of the company MC DONALD'S FRANCE dictated by its sole interest and taken at the risk of endangering the first restaurant: that indeed, in order to fight the formidable competition of a QUICK restaurant, including service in vehicles (so-called "drive" service) which set up in July 1995 a few weeks of metres from the restaurant, MC DONALD'S found itself compelled to open an establishment opposite it: that the figures show that it was right to take this decision, otherwise the SEBOL restaurant would have run the greatest risks of closure". (P. 18) The submissions of MC DONALD'S were just as clear. They cited at length the court-ordered expert report, which brought out the share of responsibility of each of the parties: "27. The policy of personal withdrawals of Monsieur COLLORAFI led him not to respect his commitments. The deterioration of the resources of the companies is due "in equal parts", say the experts p. 49, to the policy of Monsieur COLLORAFI and to the fall in results. But it is established (see nos. 21 and 22) that the policy of Monsieur COLLORAFI was to knowingly stop paying the fees. The experts state on p. 49: "It appears that Monsieur COLLORAFI pursued a policy of massive distribution from 1995, which, by drying up own resources, deprives the companies of resources available to invest and ensure their development, notably in a very competitive environment In 1995, Monsieur COLLORAFI distributed 1.8 MF of dividends whereas a Quick restaurant was about to open 500 metres from his restaurant (the opening of the Quick took place in July 1995). In June 1996, Monsieur COLLORAFI distributed 1 MF of dividends whereas the opening of the Quick had caused a fall in the activity of the "Carrefour shopping centre" (cf. appendix 54 of the statement of Me Lefond, of 08/0899) and a second MC DONALD'S restaurant (Antibes Nord) was to open 4 months later opposite the Quick". 28. The experts note perfectly on p. 64 of their report: "Whereas the overall net result of the restaurants stood in 1997 at - 2.7 MF, it is - 1.4 MF in 1998. Consequently, this analysis highlights the fact that in a context of improving profitability of the restaurants, efforts on the part of the parties (adjustment of the fees and financial advice from MC DONALD'S to better control fixed costs, awaiting an improvement of the situation of these restaurants with acceptance of a loss of temporary remuneration on the part of Monsieur COLLORAFI) could have enabled the companies to get through the "difficult patch" caused by the opening of a Quick restaurant in July 95, and by the strategic reply of MC DONALD'S (opening of Antibes Nord in October 1996) (..)". MC DONALD'S could also have cited these same experts who, after having indeed relatively downplayed the harmful effects of the remuneration policy of Monsieur COLLORAFI, noted that one may nevertheless be surprised by the decision of Monsieur COLLORAFI to distribute so many dividends, notably in 1996, at a time when the financial situation of the restaurants was beginning to deteriorate. (..) It appears that the economic context and the structure of the restaurants of Monsieur COLLORAFI contribute more to explaining the financial situation observed", from which it follows that the economic difficulties are not the consequence of any fault of MC DONALD'S - of its economic policy in particular, which the appeal pleadings of Monsieur COLLORAFI present as the sole cause of his financial difficulties -. Ultimately, as previously set out (supra IX), the trial judges considered that part of the economic risks remained the responsibility of the lessee-managers. The submissions of MC DONALD'S were on this point most clear, bringing out, on the other hand, the very high gains of Monsieur COLLORAFI over ten years: "17) Monsieur COLLORAFI obtained a particularly high return on investment (for the Antibes 1 restaurant). # One has only to draw up the table of the situation of Monsieur COLLORAFI over the life of the contracts from 1987 to 1997, in relation to his initial investment. Monsieur COLLORAFI contributed in 1987 62,500 francs, only partially paying up the capital of SEBOL. Subsequently, he took from the profits to reinvest, moreover modestly: 856,000 francs. According to his own exhibits 133, 134 and 135, he received with his wife from 1987 to Year 5 months 1987 Total Salary BC Wife Dividends 85,000 490,000 75/.62T Total That is, in 10 years and 5 months = 11,455,160 or per year: 11,455,160 = 1,099,765 francs. When one knows that Monsieur COLLORAFI: - reinvested only 856,000 francs (see expert report table p. 48 and 49, last line). - and emptied all his current accounts (see expert report, p. 65, 1st line) It appears that his situation is not that described in his submissions. The account of 10 years and 5 months of collaboration with MC DONALD'S therefore stands as follows: • sums received 17,455,160 francs • initial contribution to SEBOL: 62,500 later supplemented to 250,000 for full payment of the capital: - 250,000 francs • reinvestments (see report p. 48 table and last line p. 49) - 850,000 francs • current account recovered (p. 62 of the report, antepenultimate paragraph) + 584,919 francs spir (reply submissions of 26 November 1999, p. 13 to 15) In the judgment of 9 December 1998, the Paris Court of Appeal had already observed that while the franchisor had to provide "help in the decisions to be taken by the franchisee for the proper running of his catering business", the franchisee "retain(ed) his freedom of financial choice for setting his remuneration and that of his wife at an amount which the company MC DONALD'S FRANCE has never ceased to criticise". It is therefore only for the needs of the discussion that it is necessary to respond to the criticisms levelled by the ground at the judgment. On the first limb of the first ground of cassation. XI - In all respects, the first grievance of the first ground is unfounded. The appellants in the appeal cannot claim that the Court did not examine whether the companies of Monsieur Bernard COLLORAFI could rely on harm, nor reproach the Court, in other words, with having "ruled with regard to Monsieur COLLORAFI alone" (supplementary brief, p. 14, para. 5). Nor did the Court of Appeal disregard the principle, contrary to the assertions of the appeal, according to which the contracting party who is the victim of a wrongful termination may obtain compensation for his harm. On the contrary, it set about analysing the extent of the harm suffered by the four appellant parties, whether Monsieur COLLORAFI or his three companies. Firstly, it is indeed undisputed that the fate of the appellant parties (Monsieur COLLORAFI on the one hand, the companies SEBOL, B & O, LES PINS on the other) is linked, the former being the almost sole shareholder (holder of almost all the shares: 2,494 out of 2,500 for one), if not sole (100% of the shares for the two others) of the three companies in dispute. As manager of the three companies, he is their sole representative. In this capacity, Monsieur COLLORAFI has always acted (as a business owner) and filed submissions (as a party to the dispute) "in his own name and in the name of his three companies SEBOL, B & O and LES PINS", as he himself acknowledges (e.g.: submissions of 13 December 1999, p. 26, no. 52, para. 1). In reality, the appellants in the appeal attempt to take advantage of the wording of the judgment ("Monsieur COLLORAFI" meaning just as well, except in the cases where only he in his capacity as a natural person is in question, "Monsieur COLLORAFI and his three companies" * as is the case in very numerous pleadings in this dispute and, very often, in the expert reports) to claim, wrongly, that the trial judges only took into account the situation of Monsieur COLLORAFI, without examining whether his three companies could rely on harm. Yet this is not so (see next para.). Secondly, there can be no question of reproaching the Court of Appeal with having ruled on the harm allegedly suffered by the parties by considering only the harm suffered by Monsieur COLLORAFI, since their fate is linked. The Court constantly noted it, while distinguishing between each party: "He cannot invoke the loss of the chance to operate his companies ... (p. 18, para. 3), indeed, the three companies of Monsieur COLLORAFI have been from his forced departure from the premises (...): (ibid., para. 4). "the company SEBOL still shows a loss-making result of 132,042 francs, the company B&O that of 412,107 francs (an increase of 136% compared with the result of the 2nd quarter 1997) and the company LES PINS (ANTIBES OUEST) is profitable by only 129,728 francs: that in total the result before tax of the three companies is a deficit of 414,421 francs instead of 549,950 francs at 31 December 1998 (ibid.): "Monsieur COLLORAFI therefore lost no chance of seeing within the eighteen months following 1 July 1997 his companies become profitable again" (ibid., para. 5). Previously, the Court naturally noted the links between Monsieur COLLORAFI and his companies. "Considering that the first of these contracts was concluded on 5 August 1987 and gives to the company SEBOL, of which Monsieur COLLORAFI holds the entire capital, the lease-management (*location-gérance*) of a fast-food business located in the Carrefour shopping centre in ANTIBES according to the following financial terms" (judgment p. 12). "A third lease-management agreement (*location-gérance*) will be signed on 18 June 1997 (..) it will relate to a restaurant which will open on 1 May 1997 in ANTIBES, its management being ensured by the company LES PINS of which Monsieur COLLORAFI holds almost all the shares". And, after having sovereignly assessed the financial evolution of the three companies, the Court of Appeal did rule on each party, Monsieur COLLORAFI on the one hand: "on the other hand, Monsieur COLLORAFI unduly lost his salary from 10 June to 31 December 1998 (-) sum rounded to 240,330 francs (.)"! his companies on the other: "moreover as regards the tangible fixed assets appearing in the balance sheets of the companies SEBOL, B&O and LES PINS and of the GIE SODEVA for a net book value of 4,528,333 francs and which the company MC DONALD'S "recovered", the latter owes payment for them to Monsieur COLLORAFI and his companies". In any event, assuming for the needs of the discussion alone that the trial judges did not distinguish between the manager and his enterprises, the criticisms of the appellants in the appeal would be vain. Since indeed Monsieur COLLORAFI "cannot invoke the loss of the chance to operate his companies", it necessarily follows that the said companies, which had no future, cannot any more rely on a loss of future gains. In all respects, the first criticism cannot succeed. On the second limb of the first ground of cassation. XII - This second grievance takes up, in another form, the first criticism: its chances of success are equally slim. Indeed the appellants in the appeal, once again, artificially distinguish between the parties, Monsieur COLLORAFI on the one hand, his three companies on the other. For the reasons previously set out in response to the first limb of the ground, the trial judges ruled both on the losses suffered by Monsieur COLLORAFI and on those inflicted on his three companies. In any event, the Court did "explain itself on the harm relating to the losses suffered by each of the appellant companies": • by considering on grounds not directly criticised by the appeal that a restructuring plan - it being understood that "the only obligation in the performance of which the company MC DONALD'S failed consist(s) in presenting to Monsieur COLLORAFI an eighteen-month plan with sacrifice on both sides" (judgment p. 18, para. 1), according to another ground not called into question by the appeal - would not have prevented the losses. It necessarily follows that the contractual liability of the franchisor cannot be upheld, the causal link being lacking. In other words, the trial judges found that in the event of full compliance by MC DONALD'S with its obligations, the companies of Monsieur COLLORAFI would nonetheless have suffered harm and, consequently, the termination of the contracts binding them to the MC DONALD'S network. This second criticism is consequently unfounded. On the third limb of the first ground of cassation. XIII - This grievance, which in reality takes up a purely factual debate, cannot succeed. The Court of Appeal did explain itself on the point allegedly omitted. At the end of a sovereign reasoning, it clearly indicated in what way the measures taken proved ineffective, as a simple reading of the judgment shows: .. the measures which the company MC DONALD'S should have proposed appear with hindsight ineffective: Indeed the three companies of Monsieur COLLORAFI have been, from his forced departure from the premises on 10 June 1998, managed by a 100% subsidiary of the company MC DONALD'S FRANCE: at 31 December 1998, i.e. at the end of the eighteen-month period of the plan which the company MC DONALD'S FRANCE should have proposed, despite drastic savings in administrative costs and reduction in the number of "managerial" salaries", which the "plan" would not have failed to provide for, the company SEBOL still shows a loss-making result of 132,042 francs, the company B&O that of 412,107 francs (an increase of 136% compared with the result of the 2nd quarter 1997) and the company LES PINS (ANTIBES OUEST) is profitable by only 129,728 francs: in total the result before tax of the three companies is a deficit of 414,421 francs instead of 549,950 francs at 31 December 1998": In other words, the measures that the plan would not have failed to provide for were indeed put in place, but did not allow the companies to return to solvency: their ineffectiveness follows naturally, without any need for further explanation. By holding that the measures that MC DONALD'S could have taken were ineffective - in other words, the persistence of the deficits - the trial judges adopt a finding which, paradoxically, is common to the parties. In their appeal submissions indeed (final submissions of 13 December 1999), Monsieur COLLORAFI and his companies had highlighted the durably loss-making nature of the restaurants, moreover often citing the experts: - by admitting the collapse of the company SEBOL (e.g.: ... "it can also be noted that a total elimination of the salary of Monsieur COLLORAFI in 1997 would not have allowed SEBOL to reach break-even point at 30 June 1997", p. 28, para. 3). - by likewise stressing that the amendment of 10 June 1997 was insufficient to make up for the losses of the company B & O (p. 33, no. 3- 2), - above all, by admitting the continuation of losses for MCC after the departure of Monsieur COLLORAFI: * …"the company MCC, when it took over the restaurants of Monsieur COLLORAFI and had them managed by the company MAR, found itself facing the same difficulties: insufficient turnover and weak progression." (p. 47, para. 2) * "Operation by the company MCC remains loss-making, even if with time it is improving" (p. 49, para. 6) * "the wise course would have been for MCC - and above all for Monsieur COLLORAFI - to open neither ANTIBES OUEST nor VALLAURIS and to postpone to later this disastrous operation (which remains so also for Monsieur COLLORAFI but also for the company MCC which will continue to make losses in these two restaurants, directly or indirectly)" (p. 39 in fine) * "Neither ANTIBES OUEST nor VALLAURIS will be profitable in themselves for years and they should not have been opened, except to occupy the ground and counter the competition. " (p. 40, para. 4) The appellants' submissions before the Court consequently affirm the inevitable collapse of the restaurants, despite the drop in the income of Monsieur COLLORAFI, the adjustment of a lease-management agreement (*location-gérance*) and, finally, despite the direct taking over of the three establishments by MC DONALD'S. Consequently, the appellants in the appeal are ill-placed to reproach the trial judges with not having specified in what way the measures were ineffective ... after having themselves admitted this state of affairs in the pleadings which they addressed to them. Without entering again into a debate on the merits, it will be noted that the "clear improvement" invoked by the appeal turns out ultimately to be ... the persistence of a totally loss-making situation. The ineffectiveness of the measures followed necessarily from this, the efficiency of an enterprise being measured exclusively by its capacity to create profits, not by that of limiting its losses. Contrary to what the supplementary brief asserts (p. 16, para. 1), there is no contradiction between the finding of an improvement and that of the absence, despite this improvement, of viability of an enterprise. In all respects, this third grievance is doomed to fail. On the fourth limb of the first ground of cassation. XIV - The appellant in the appeal cannot seriously reproach the judgment with not having specified in what way the ineffectiveness of the measures allowed it to hold that Monsieur COLLORAFI, as an employee, would not have continued to receive his salary had his employer and he himself not been evicted after the termination of the contracts. Having sovereignly found that the measures that MC DONALD'S should have proposed proved ineffective, the loss-making situation persisting for all three restaurants, the Court implicitly but necessarily noted that the fees would no longer have been paid. Consequently, in application of the agreements, the terminations would have occurred by operation of law 1 and, with it, the termination of the employment contracts. In other words, the trial judges carried out the research allegedly omitted, having demonstrated that the losses were inevitable: it necessarily follows that the employment of Monsieur COLLORAFI could not have continued ... over 19 years, the absence of termination having been ruled out. In fact, it is undisputed that the impossibility of paying the fees because of the results of the restaurants was the permanent justification of Monsieur COLLORAFI and his companies. The appellants in the appeal are therefore ill-placed to reproach the Court with not having characterised in what way the persistent deficit of the restaurants, despite the measures taken, would have prevented the continuation of the contractual relations and, all the more so, a return on investment: they have always admitted the link between the financial difficulties and the non-payment of the fees. The appellants in the appeal pretend to confuse two distinct elements (see in particular supplementary brief, p. 16, para. 2.1.4, paras. 4 and 5): - the pronouncement by the judge of the wrongful termination of the leases through the operation of the termination clause (on the one hand). - his finding that the perpetuation of the said contracts, had they not been terminated, was not possible beyond a certain period (on the other hand). ' It will be recalled that the automatic nature of the terminations (terminations by operation of law) was not contested by the parties - this is the application of the agreements; e.g. SEBOL lease-management agreement (*location-gérance*), art. 11.b: "At the initiative of the lessor company, and without any judicial formality, one month after a simple formal notice to pay any sum or to perform any obligation which has remained without effect and indicating the lessor company's intention to invoke the benefit of this clause in the event of non-compliance by the lessee-manager with any stipulation whatsoever of this contract and, notably, failure to pay the fees on the due dates"- Yet these two circumstances are not contradictory, since a non-precipitate termination (in other words the presentation of a support plan) would not, in the end, have brought about any economic improvement and, consequently, would have entailed an impossibility of continuing the profitable activities linked to it. Ultimately, the criticism developed here by the appellants in the appeal gives the measure of the unrealism of Monsieur COLLORAFI, who claims to be able to draw from his enterprises gains (salaries or dividends) over 19 years, despite the persistence of their overall losses, sovereignly noted by the trial judges. Once again, the appeal denies the vagaries of economic life, following a reasoning according to which the situation of the lessee-managers would become that of holders of a fixed-term employment contract wrongly terminated before term by the employer. No more than the preceding ones can this argument succeed. On the fifth limb of the first ground of cassation. XV - No more than the preceding ones can this grievance succeed. One would search in vain in the pleadings of Monsieur Bernard COLLORAFI, of the companies SEBOL, B &O and LES PINS (final submissions served on 13 December 1999), for any trace of the fact that they were "asserting that the fault committed by the company MC DONALD'S had also caused the loss of the salary of the wife of Monsieur COLLORAFI, i.e. the sum of 250,000 francs including charges, i.e. harm of 4,500 francs over the 19 remaining years of the contracts": Some allusions to this person aside (e.g.: "it should be recalled that salary is the fair remuneration of work, and that thus the modest salary of Madame COLLORAFI (about 15,000 F per month) does not have to be taken into account", op. cit., p. 81, 6-4), the submissions are silent on this point (see in particular their operative part, p. 87). The supplementary brief (p. 17, 2.1.5) moreover provides no proof that such a claim was made before the trial judges. Consequently, no serious complaint can be made to the Court of Appeal for not having ruled on this ground, which proves to be new before the Court of Cassation. In any event, it will be recalled that “no one pleads by proxy u and that Mr Berard COLLORAFI therefore cannot claim compensation for his wife, at any stage of the proceedings. In all respects, this final criticism of the first ground cannot succeed. ON THE SECOND GROUND OF APPEAL XVI - The applicants for appeal criticise the judgment for having held that the company MC DONALD'S had committed no fault in carrying out enforcement of the judgment, whereas, according to the appeal, even if provisionally authorised, the enforcement of a decision under appeal takes place only at the risk and peril of the person pursuing it, who is liable, if the decision is reversed, to make good the damage caused even without having committed any fault. Having found that the termination was exclusively attributable to the company MC DONALD'S, which had benefited from a judgment accompanied by provisional enforcement, whose enforcement it pursued by evicting its contracting parties, the Court could not merely note that MC DONALD'S had committed no fault in carrying out that enforcement in order to dismiss the claims seeking compensation for the damage suffered as a result of the enforcement of the said judgment; in so doing, the Court is said to have left its decision without legal basis with regard to articles 514 et seq. of the Civil Code. This complaint cannot succeed, the Court having lawfully justified its decision concerning the claim for compensation for the additional damage allegedly suffered by the three companies as a result of the forced enforcement on the grounds that: "Considering that the appellant companies criticise the company MC DONALD'S for having proceeded with their forced eviction even though it was aware of the introduction of the summary proceedings brought before the First President of the Court of Appeal for the purpose of suspending the éreention provisoire; that "this eviction carried out in totally unlawful conditions caused very great harm, both to the three companies and to Mr Bernard COLLORAFT"; that the four appellants estimate their loss at 2,000,000 francs each: That the appellants maintain that the company MC DONALD'S thereby made itself guilty of violating article 3J of the decree of 31 juiller 1992, which prescribes the suspension of proceedings until the summary-proceedings order is delivered: But considering that this text covers only the referral to the First President for the purpose of staying the evécution of the measures ordered by the enforcement judge; that the enforcement judge of the Regional Court of GRASSE, by order of 9 June 1998, rejected the request for a period of grace: that no appeal was lodged against that decision; that the fact that the First President of the Court of Appeal had been seised, on the basis of article 524 of the new Code of Civil Procedure, of a stay of the provisional enforcement of the heads of the judgment appealed against before the eviction, even though the date of the referral is not mentioned in the order itself, was not a legal obstacle to the implementation of the eviction measures: that it follows that, given the respective legal situation of the parties at the time, the company MC DONALD'S did not commit the fault alleged against it; That the appellants will therefore be dismissed from their claim under this head". It is admittedly traditionally considered that the provisional enforcement of a court decision takes place at the risk and peril of the enforcing party, from which it follows that, if this decision is reversed, the enforcing party must make good the damage caused by this non-enforcement, without it even being necessary to demonstrate any fault in the enforcement of the decision (e.g.: Civ. 1st, 6 June 1990, Bull. Civ. I, no. 140). Nevertheless, proof of damage on the one hand, and of a causal link between the enforcement and that damage on the other, must be provided by the party that lost at first instance. That is not the case here. It must be noted that Mr COLLORAFI did not submit to the trial courts this twofold demonstration, which is nevertheless necessary, of damage and of a causal link with the conduct of the alleged debtor. On the "Additional damage suffered by the three companies as a result of forced enforcement" (final written submissions of 13 December 1999, p. 75, 5- 7). the appellants merely stated that: "The company MC DONALD'S took the risk of enforcing the judgment by having the three companies evicted from the restaurants that they managed, the company SEBOL for eleven years, the company B er 0 for vingr mois, er the company LES PINS for fourteen months. Yet the company MC DONALD'S was perfectly aware not only of the appeal lodged, but of the summary proceedings brought by the applicants to obtain the suspension of provisional enforcement. It carried out this eviction dam totally unlawful conditions and caused very serious harm, both to the three companies and to monsienr Bernard COLLORAFI Consequently, the company MC DONALD'S should be ordered on these grounds to pay: - to the company SEBOL the sum of 2,000,000 franes, - to the company B er 0 the sum of 2,000,000 franes. - to the company LES PINS the sum of 2,000,000 francs. - to Mr Bernard COLLORAFI the sum of 2,000,000 francs" It follows that the appellants themselves established, implicitly but necessarily, a link between the alleged unlawfulness of the enforcement and the damage suffered: in other words, the damage suffered by Mr COLLORAFI's companies would, according to them, be merely the result of the unlawfulness of the enforcement of the judgment. From this point of view, the ground of appeal is contrary to the argument put forward by the appellant parties before the Court of Appeal: it is on that account inadmissible, if not incompatible with the case argued before the trial courts. Consequently, in view of the dispute submitted to them, the trial courts were led to stress that the company MC DONALD'S had committed no fault in the enforcement of a judgment accompanied by provisional enforcement since, at the risk of repetition, the appellants considered that the damage they suffered was the unlawfulness of the enforcement. Previously, the judgment moreover expressly repeated the aforementioned wording of the parties' written submissions, to which it directly replied. In other words, the Court implicitly (and the supplementary brief takes advantage of the lack of express character of this reasoning) but necessarily considered that Mr COLLORAFI and his companies had suffered no damage. • In its operative part, as regards the period from 10 June 1998 to 31 December 1998 (judgment p. 23, II), the Court did state that "no fees are due by the companies SEBOL. B & O and LES PINS for this period, they having been evicted from the premises. that the companies concerned, showing very substantial losses as of 10 June 1998, cannot claim to invoke damage arising from the loss of an opportunity to make profits had they operated during that period*. It is to be deduced from this, a contrario, that the enforcement so much criticised by Mr COLLORAFI (enforcement of the eviction) even prevented him from losing more. It will be noted that the supplementary brief, just as it does not allege any unlawfulness in the enforcement of the judgment while criticising the judgment on this point, remains silent on the existence of any damage, assessed by Mr COLLORAFI quite arbitrarily at 2 million francs for each of the appellant parties. It follows from the foregoing that the judgment lawfully justified its refusal to compensate non-existent damage, which would have resulted from the non-wrongful forced enforcement of the judgment under appeal. The second ground is therefore inadmissible, if not incompatible with the one developed in the appeal proceedings, and in any event unfounded. ON THE THIRD GROUND OF APPEAL XVII - The applicants for appeal finally criticise the Court of Appeal for having awarded Mr COLLORAFI the sum of 100,000 francs by way of damages in compensation for his non-material loss, without examining whether the publication in the network of a circular disparaging this manager did not constitute a distinct loss, he claiming to have lost as a result any chance of professional success. In ruling thus, the Court is said to have left its decision without legal basis with regard to articles 1382 et seq. of the Civil Code. Cour ayant souverains que lespied enser 000 Francs peut proparer in of the non-material loss suffered by Mr COLLORAFI on sufficient grounds that: "TV - On Mr COLLORAFI's personal loss Mr COLLORAFI maintains that he suffered a material loss of his own on the ground that he was driven out in odious conditions from these restaurants after devoting eleven years of his life to them; that this "notion" is in no way "foreign to business relations" as the company MC DONALD'S maintains FRANCE: ... that being so, the Court sanctioned the abusive conduct of the company MC DONALD'S FRANCE in its implementation of the termination clause: that it drew the consequences from this notably by awarding damages as compensation for the temporary loss of his salary: that Mr COLLORAFI does not establish any other specific material loss: ... on the other hand he rightly invokes a non-material loss: that the business relations that existed between the parties do not in any way exclude that, beyond the admissible differing assessments of the parties on the financial aspects of the problems, Mr COLLORAFI felt very badly the fact that, after having been congratulated for years for his professional qualities, which were such that his restaurant was a showcase establishment, the company MC DONALD'S brutally set against him the "letter" of the lease-management agreement (*location-gérance*) rather than its "spirit" - which the familiar form of address (tutoiement) used in the letters sent to him at that time makes even more surreal". Thus, the trial courts drew from a strict application of the agreements and of the familiar form of address used in the correspondence - on which it will be noted that it was reciprocal - the existence of a non-material loss, following a relatively severe assessment. The applicant for appeal cannot criticise it for not having done more. It is known that the judge, who determines the assessment of compensation at his sole discretion, does not have to distinguish between the various components of the alleged loss: he does not have to disclose the elements on which he based himself (e.g.: Com. 3 January 1964, Bull. Civ. III, no. 4), nor to quantify separately the various elements of the loss (e.g.: Civ. 2nd, 16 December 1963, Bull. Civ. II, no. 830; Civ. 2nd, 17 July 1962, Bull. Civ. II, no. 598). Consequently, Mr COLLORAFI cannot criticise the Court for not having distinguished according to the various components of his non-material loss. In any event, the applicant for appeal cannot criticise the Court for not having carried out the examination described in the ground, since in his own pleadings he had not himself distinguished, concerning the compensation for the "Loss suffered personally by Mr Bernard COLLORAFT" (final written submissions p. 75 and 76, 5-8), between the different causes of his non-material loss. After recalling that he had been a pioneer and had been showered with praise before being served with formal notice to pay his fees, the manager merely maintained that: "Without allowing him the respite of the "confectioners' truce", the company MC DONALD'S terminates the agreement one month and three working days after the formal notice. The company MC DONALD'S does not hesitate, although it has not filed submissions before the Tribunal, and has not yet asked the competent Judge for termination of the agreement, to sign with one of its subsidiaries a lease-management agreement and to publish it in a legal notices newspaper, together with the notice of the termination, which has not yet been pronounced by the Tribunal! To complete the strategy of ousting and disparaging Mr COLLORAFI, he is pointed at before the entire network by a circular dated 14 jonvier 1998, whereas the next day, the Summary Proceedings Judge refuses to endorse the high-handed action of MC DONALD'S and very legitimately refers the matter to the trial Judge An independent trader who has punctually paid for ten years his fees amounting to 42,276,000 _francs cannot be treated in this way. The material loss of Bernard COLLORAFI corresponds to the amount of the salaries he would have received if the agreements had been FOR THESE REASONS, and all others to be produced, deduced, or supplied of its own motion if necessary, the respondent concludes that the appeal should be dismissed, and asks the Court of Cassation to order jointly and severally Mr Bernard COLLORAFI, the SA. SEBOL. the SAR.L. B & O and the SAR.L. LES PINS to pay it jointly and severally the sum of 25,000 franes under article 700 of the new Code of Civil Procedure. J. unte V. DELAPORTE & Y.-H. BRIARD Société Civile Professionnelle Avocat au Conseil d'Etat et à la Cour de cassation