A foreign company can build its French market around one shop, office open to customers, workshop or logistics site, then receive a landlord’s refusal to renew its commercial lease. The immediate temptation is to treat the letter as a business decision and start looking for replacement premises. That can be costly. Under the French commercial lease regime, a refusal may create a right to an indemnité d’éviction, meaning eviction compensation, while the company remains exposed to a strict two-year time limit for bringing its claim.

The practical questions are more precise than “can the landlord say no?” They are: was the notice served in the legally required form; does the tenant own and operate a qualifying fonds de commerce, meaning the business goodwill operated from the premises; is the refusal based on a serious and legitimate breach; what losses will be compensated; and what should a foreign parent, subsidiary or branch do before the deadline expires? A landlord’s offer to pay compensation does not remove the need to protect the claim.

This article addresses the operating business and its French premises. It does not replace advice on a founder’s personal move to France or on purchasing property. For the wider business-setup context, see the firm’s Doing business in France resource. A separate article explains the different issue of signing a French commercial lease before company registration. Here, the focus is the later and urgent problem: the lease has been refused for renewal, and the foreign company must preserve its premises, its evidence and its compensation claim.

I. What a foreign company must verify after a French commercial lease renewal is refused

A. Does the landlord’s refusal trigger eviction compensation?

A French commercial lease is not an ordinary short-term occupation agreement. The statutory regime usually protects the business that is operated from the premises, provided the legal conditions are met. The default contractual duration is nine years under article L. 145-4 of the French Commercial Code. The tenant can generally give notice at three-year intervals with six months’ notice, subject to the rules applicable to the particular lease. At the end of the term, the landlord may refuse renewal, but the refusal normally has a financial consequence.

The official English-language explanation from Service-Public states:

“The eviction allowance is a financial compensation paid by the lessor (landlord) who refuses the renewal of the commercial lease.”

This is the function of the indemnité d’éviction. It is not an automatic penalty and it is not calculated by applying a universal multiple to the rent. It is compensation for the loss caused by the non-renewal. The controlling provision is article L. 145-14 of the French Commercial Code, which makes the landlord liable in principle for the damage caused by refusing renewal, subject to statutory exceptions.

Service-Public describes the scope of the compensation in these terms:

“This compensation must cover all the damage caused to the lessee by the non-renewal of the lease. This includes the market value of the goodwill, moving expenses, relocation expenses, transfer duty to be paid for a fund of the same value.”

The quoted reference to goodwill matters for a foreign company because the value may sit in several places at once: a customer base developed in France, a retail location, a local authorisation, a trained team, a distribution network, a workshop layout or a reputation attached to the address. The company should not assume that the value is limited to furniture or fit-out costs. It should also avoid assuming that a group’s international turnover automatically proves the value of the French business. The evidence must connect the loss to the French operation and to the premises.

The right to renewal and the right to compensation are connected to the statutory conditions. Under article L. 145-8 of the French Commercial Code, the right to renewal may be invoked by the owner of the business goodwill operated from the premises, after the required period of effective operation. The company should therefore check who is named in the lease, who invoices customers, who employs the staff, who holds the business registrations and who actually operates the activity. A foreign parent that signed the lease while a French subsidiary later ran the business cannot leave that mismatch unexplained.

The landlord may refuse without paying eviction compensation in limited situations. The most important is a serious and legitimate reason against the departing tenant. Article L. 145-17 of the French Commercial Code addresses that exception, including certain continuing or repeated breaches after a formal notice. Typical disputes concern unpaid rent, unauthorised changes to the premises, a prohibited activity, failure to operate the business or a breach of the destination clause. The label used in the landlord’s letter is not decisive. The company should test the underlying facts, cure any remediable breach and challenge an unsupported refusal before the deadline.

There are other statutory scenarios, including some rebuilding or demolition operations. Article L. 145-18 deals with a landlord who refuses renewal to rebuild or carry out qualifying work and sets out the consequences for compensation or an equivalent premises. The company should ask whether the landlord has a real, documented project, whether the legal conditions are met and whether the refusal is being used to obtain vacant possession for a different commercial purpose.

A refusal letter therefore starts an analysis; it does not answer it. The first document review should compare the lease, its amendments, the notice, the company’s registration position, the business actually conducted and the landlord’s stated reason. If the statutory protection applies and no exception is proved, the default position is a compensation claim even if the company ultimately decides to relocate.

B. Was the notice valid, and when does the two-year clock start?

The date and form of the notice control the litigation calendar. Under article L. 145-9 of the French Commercial Code, a commercial lease subject to the statutory regime ends through a notice served at least six months in advance or through a renewal request. A written lease can continue by tacit extension after its contractual term if neither side takes the required step. A landlord’s notice must be served by an acte extrajudiciaire, meaning formal service by a French commissaire de justice, the profession that replaced the former huissier de justice terminology. The notice must state its reasons and tell the tenant that it must bring proceedings within two years if it wishes to challenge the refusal or claim eviction compensation.

If the landlord has not served a notice, the tenant may request renewal. Article L. 145-10 allows the request during the six months before expiry or at any time during a tacit extension. The request can be served formally or sent by LRAR, meaning a registered letter with acknowledgement of receipt, when the statutory conditions for that method are satisfied. The landlord generally has three months to refuse. Silence can produce acceptance under the statutory mechanism, so the tenant should preserve proof of receipt and calculate the response date rather than relying on an informal email exchange.

The limitation period is two years. Article L. 145-60 of the French Commercial Code states that actions under this chapter are time-barred after two years. In practice, a foreign company should record at least four dates separately: the date the notice was received, the effective date stated in the notice, the date of any renewal request and the date of any later settlement or expert discussion. The date the parent company’s directors first instructed French counsel is not the legal starting point.

The recent decision of the Third Civil Chamber of the Cour de cassation, 12 February 2026, no. 24-10.578, published in the Bulletin and available on the official Cour de cassation decision page, is particularly important. The Court held that the landlord’s notice with refusal and an offer of eviction compensation ends the lease and that the tenant’s action for payment must be brought within two years from the effective date of the notice. The landlord’s bad faith does not, by itself, suspend or interrupt that period. The same decision warns that, once the claim is time-barred, the tenant loses its right to remain in the premises and an occupation without right or title can become a manifestly unlawful disturbance under article 835 of the French Code of Civil Procedure.

The result is practical: a settlement conversation does not automatically protect the claim. A foreign parent may believe that its French lawyer, accountant or valuation expert is still negotiating and that the deadline will wait. Unless a legally effective event interrupts or suspends the limitation period, that assumption can destroy the compensation claim. A negotiation protocol should therefore address the deadline expressly, and proceedings should be issued in time when the position has not been secured.

A second decision delivered on 12 February 2026, no. 24-18.382, also published in the Bulletin, gives a further warning. The official Cour de cassation decision page explains that a landlord’s application for a judicial expert assessment under article 145 of the Code of Civil Procedure does not automatically protect the tenant’s compensation claim. The tenant benefits from the suspensive effect connected with that evidentiary measure only if it expressly joins the application or presents a request, even in the alternative, to complete or modify the expert’s mission. A foreign company should not assume that the landlord’s request to value the indemnité d’éviction is being made on its behalf.

Before deciding whether to litigate, the company should make a one-page chronology containing:

1. the lease signature date, renewal term and any break clauses;
2. the date and method of service of the landlord’s notice;
3. the effective date of the refusal and the reason stated;
4. the date of the company’s renewal request, if any;
5. all payments, defaults, formal notices and cures;
6. any expert appointment, settlement proposal or mediation meeting; and
7. the last date on which a French court action can safely be issued, calculated from the legally relevant event.

The chronology should be reviewed alongside the original service certificate, not just a scanned copy of the letter forwarded by a director. A notice can contain a serious procedural defect, but the company should not let a potential defect become an excuse for missing the limitation period. The safest approach is to plead the procedural and substantive points together when necessary.

II. How to protect the premises, evidence and compensation

A. How is the eviction allowance calculated, and can the company stay?

The central valuation question is whether the business can move without losing its commercial identity. If the location is replaceable and customers can follow, the claim may be based on transfer costs and the financial damage of moving. If the address is integral to the goodwill, relocation would destroy or seriously reduce the customer base, or an equivalent location cannot realistically be found, the principal loss may be the value of the goodwill itself. The assessment is fact-sensitive. There is no safe rule that the indemnity equals one, two or three years of rent.

The official Service-Public guidance confirms that, when the parties cannot agree, the court determines the amount and often uses an expert to assess it. Its English guidance also separates the principal loss from related costs: the market value of the goodwill or the tenant’s leasehold interest, moving and relocation expenses, transfer duties and other costs caused by the refusal. The company should use that framework to build a quantified claim, rather than sending the landlord a round number unsupported by accounts.

A working file should include the French operation’s accounts for at least the last three financial years, monthly sales, gross margin, operating profit, customer concentration, repeat-customer data, online and local search data, licences, permits, staff numbers, stock, fit-out invoices, rent and service-charge history. It should identify what is transferable and what is tied to the address. A restaurant may lose value through a location-specific customer flow and licence; a warehouse may have a more transferable customer base but high relocation and interruption costs; a showroom may depend on visibility, parking and access rather than only on its equipment.

The foreign group should separate the French entity’s evidence from consolidated group figures. Consolidated revenue can help explain investment and brand reach, but it can also obscure the part generated by the French premises. Prepare a bridge from group figures to local turnover, local gross margin, local payroll and local customers. If the business is operated by a French subsidiary for a foreign parent, document intercompany charges and confirm which entity owns the goodwill and is the named tenant. If the lease was transferred, amended or guaranteed by the parent, those instruments may affect standing and valuation.

The right to stay is a major negotiating lever. Under article L. 145-28 of the French Commercial Code, a tenant who can claim eviction compensation cannot normally be forced to leave before receiving it and may remain under the conditions of the expired lease until payment. That does not mean free occupation. The tenant must continue to respect the lease, maintain the premises, pay the agreed sums or the applicable occupancy indemnity, keep insurance in force and avoid worsening the landlord’s position.

Once the compensation has been paid, article L. 145-29 provides a three-month period for handing the premises back in an eviction situation. The precise calculation can depend on the payment and the parties’ procedural position, so the handover date should be written into any agreement. A foreign company should also plan for stock removal, employee consultation, data and equipment relocation, customer notices, insurance transfer, licences and the closing of local registrations. A rushed handover can create a second dispute about damage, keys, rent or occupation compensation.

The Cour de cassation’s 25 January 2023 decision, Third Civil Chamber, no. 21-19.089, available on the official decision page, confirms the protective logic of continued occupation. The Court recognised that, until payment of the eviction compensation, the loss of the ability to continue the commercial activity in the premises can itself cause compensable harm. This does not give the tenant permission to misuse the site, but it supports a careful argument when the landlord seeks immediate departure without paying first.

Rebuilding or major works require a separate valuation. If the landlord offers an equivalent premises, compare the location, surface, access, visibility, permitted activity, technical capacity, rent, service charges, works period and customer disruption. Article L. 145-18 can reduce the consequences where a qualifying replacement is genuinely available, but an “equivalent” site is not established by the landlord’s description alone. A foreign company should inspect it, obtain plans and calculate the operational difference.

A simple hypothetical illustrates the method. Assume a French subsidiary operates a profitable showroom with a local goodwill value assessed at €420,000. A move is possible but would require €35,000 for transport and refit, €18,000 for temporary double occupancy and €12,000 for customer reactivation and other documented costs. The claim cannot simply add every group cost. The valuation must explain whether the €420,000 goodwill is lost or preserved through relocation, and whether the €65,000 of additional costs is caused by the refusal and supported by evidence. The numbers must be tested by a valuation professional and pleaded within the deadline.

The company should also ask whether it wants continued occupation or a negotiated exit. Continued occupation preserves leverage but creates ongoing rent, insurance and maintenance obligations. A negotiated exit may be commercially better if a suitable site is available, but the agreement should cover the amount, payment date, tax treatment, handover, release of claims, expert costs and treatment of guarantees. A settlement that says “full and final” without identifying the entity receiving payment can be dangerous for a cross-border group.

B. What should a foreign founder file, negotiate and prove?

The first evidence package should allow a French court, landlord or court-appointed expert to understand the company without relying on an informal explanation from a founder. Put the documents in a numbered index and provide clear English working translations, with French versions or certified translations when the recipient or court requires them.

The corporate section should contain the foreign company’s current certificate of incorporation, articles, directors’ authority, the French subsidiary’s registration extract, the lease and all amendments, guarantees, assignments, powers of attorney and board approvals. A Kbis is the traditional official extract showing a company’s registration information; the company should check whether its current extract comes from the RCS, the Commercial and Companies Register, or from the newer RNE, the National Business Register. The greffe is the court registry that historically issued many commercial registration documents. The INPI one-stop portal is the online filing platform operated through the French National Institute of Industrial Property for business formalities, including registration and changes. These labels should be explained in the file so that foreign directors, accountants and insurers are working from the same document.

The operating section should contain invoices issued from the premises, bank statements matching local sales, payroll, employment records, supplier contracts, delivery records, customer lists where lawful, photographs, plans, signage, permits, maintenance records, insurance, utility bills and evidence of the activity’s continuity. Explain the address consistently across the lease, registration records, website, invoices and tax returns. If the company changed its legal form or moved the activity between a parent and a subsidiary, provide the chronology and the instrument that transferred the business.

The public-record section can include extracts from the BODACC, the Official Bulletin of Civil and Commercial Announcements, when an insolvency, sale, transfer or formal notice is relevant. If social-security records matter, explain that URSSAF is the French body that collects social-security contributions and that an URSSAF certificate is not, by itself, proof of ownership of the goodwill. If tax records are relevant to turnover or local operations, use the company’s filings and the official impots.gouv.fr professional portal, the French tax administration website, rather than an unexplained spreadsheet. A SIREN, if included, should be identified as the company’s nine-digit French registration identifier.

Keep the legal roles separate. The bailleur is the landlord; the preneur or tenant is the company occupying the premises; the fonds de commerce is the operating business goodwill, which can include customers, name, lease rights and equipment; the indemnité d’éviction is the compensation for losing the protected commercial premises. A parent company, guarantor, landlord, property company and operating subsidiary may all appear in the documents without having the same right to sue or receive payment. The claimant should be identified before any formal demand is sent.

Negotiation should run in parallel with deadline protection. A useful letter can acknowledge receipt, reserve all rights, challenge the stated reason, request the landlord’s project documents, ask for access for an expert, set out the evidence of goodwill and propose a confidential valuation process. It should not concede that the company has no right to renewal, that the refusal is valid or that the compensation is limited to moving expenses. Avoid accepting keys, signing a release or stopping operation without understanding the effect on the claim.

The owner may also change course after a judgment. Under article L. 145-58 of the French Commercial Code, the landlord may, within fifteen days after the decision has become final, withdraw from paying the compensation and consent to renewal, subject to the statutory conditions and procedural costs. This is known as the landlord’s right of repentance. The company should therefore check whether it still occupies the premises, whether a replacement lease has been signed and whether the judgment is final before treating a compensation award as irreversible.

A transfer of the French business also needs care. In its Third Civil Chamber decision of 17 February 2010, no. 08-19.357, the Cour de cassation held, subject to the wording of the transfer deed, that a sale of the business goodwill can transfer the assignor’s eviction-compensation claim and the right to remain until payment. The official decision page should be reviewed with the actual lease and transfer instrument. A group reorganisation is not a reason to assume that the compensation claim follows automatically; the deed must identify the claim, the party entitled to payment and any contractual restriction.

When the parties need evidence before trial, a French court may appoint an expert. The expert’s mission should answer the real commercial questions: is the business transferable; what is the value of the goodwill; what relocation sites are comparable; what costs are directly caused by the refusal; and what losses are already incurred or likely? The company should read the draft mission, respond in writing and request additions where the landlord’s version is too narrow. The 12 February 2026 decision no. 24-18.382 makes clear that merely allowing the landlord to seek an expert valuation is not the same as protecting the tenant’s limitation period.

The filing strategy depends on the lease, the notice, the location and any parallel proceedings. A claim may require the court with jurisdiction over commercial lease disputes and, where appropriate, an urgent application for evidence or protective measures. The company should verify the correct court, the claimant, the landlord’s legal entity, service addresses, language requirements, translation needs and any arbitration or jurisdiction clause. A foreign director should sign a precise power of attorney; a vague email authority may create avoidable questions about representation.

Use this operational checklist during the first week after receiving the refusal:

1. Save the envelope, service certificate, original notice and every attachment in an immutable folder.
2. Identify the effective date and calculate the two-year period under article L. 145-60, with an independent calendar reminder.
3. Check the tenant named in the lease against the entity operating the goodwill and the entity claiming compensation.
4. List every alleged breach and gather proof of payment, cure, authorisation or continued compliance.
5. Freeze evidence of the premises: photographs, plans, customer flow, equipment, signage, stock, access and condition.
6. Instruct a valuation professional to distinguish replacement, transfer, goodwill and incidental costs.
7. Ask whether the landlord’s refusal is based on a redevelopment project, a serious breach, a registration issue or another statutory ground.
8. Choose whether to seek renewal, negotiate a paid exit, request an expert measure or issue a claim while negotiations continue.

This process is especially important for a foreign founder who is not physically present in France. A local manager may receive the notice, an accountant may receive tax correspondence and a parent-company director may receive the landlord’s settlement proposal. Establish one authorised contact, one document repository and one deadline owner. Translate only after preserving the original French notice, because the legal wording and service details can matter.

The company should also avoid conflating the lease dispute with unrelated market-entry questions. The validity of a commercial lease refusal is not decided by whether the founder has a French residence permit, whether the parent has a French bank account or whether the group plans to hire staff later. Those issues can affect operations and evidence, but the compensation claim turns on the commercial lease regime, the operating goodwill, the notice, the landlord’s legal ground and the procedural deadline.

Conclusion

A landlord’s refusal to renew a French commercial lease can end a location, but it does not necessarily end the foreign company’s economic rights. The starting position under article L. 145-14 is an eviction-compensation claim for the damage caused by non-renewal, unless a statutory exception such as a proven serious and legitimate reason applies. The company must still prove that it owns and operates the qualifying goodwill and that the lease falls within the protected regime.

The deadline is the most dangerous point. The notice, its effective date, the service method and the two-year limitation period must be checked immediately. A landlord’s offer of compensation, a valuation discussion or an expert application may not protect the tenant’s claim. The recent decisions nos. 24-10.578 and 24-18.382 make that risk concrete.

The best file combines legal analysis with operational evidence: the lease and notice, corporate authority, Kbis or RNE records, registration and tax documents, local accounts, customer evidence, relocation analysis, expert questions and a clear handover plan. Until compensation is paid, article L. 145-28 can protect continued occupation, subject to the tenant’s continuing obligations. A foreign company that preserves the premises, evidence and deadline from the first day will negotiate from a much stronger position.

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