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Starting a Business in France

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Why Start a Business in France?

There isn't much to say about France that hasn't been said before. Everyone has an opinion. It is a country which is defined by what other countries are not. Namely civilised, distinguished and refined. There are no scuffs on its shoes, no creases in its clothes, no food round its mouth. It is the type of place that gets ridiculed for not entering the war, which says more about the rest of the world than it does France.

France is its own person, confident and bold. It can't be bothered to trade the metric system for the imperial, it employs commas to notate decimals, and uses the word billion for a figurative trillion. France does what France wants.

It is also the only place on the planet where food is an art rather than necessity. France's cultural gift to the world is gourmet, a la carte and soup de jour, and nothing is as inherently funny as an English person trying to order from that menu. It's phonetic minefield, but it will take more than a sniggering waiter to put us off, hey?

The amount of domestic industry and foreign investment in France is overwhelming, and if it is good enough for Mickey Mouse, it is good enough for the rest of us. Chances are, you probably already drive French (Renault, Citroen, Peugeot), smell of French (Chanel, Gaultier) and dress French (Dior, Cardin). France consistently ranks as the sixth largest industrialised economy in the world and is evidently the most aesthetic tourist attraction with over 75 million Eiffel-eyed visitors each year. We just can't get enough of it.

Franco-Anglo relations have never been better, either. Long gone are the days of aristocratic acrimony and name-calling. France is our closest neighbour, nearest ally and south-eastern promise. Things got so comfortable we even built a tunnel between our houses. Thirty miles of water certainly wasn't going to keep us apart and 20 billion a year in export makes for exceptionally good bedfellows.

Business prospects for Brits in France are outrageously good. The entrepreneurial, economic, social and cultural advantages read longer than Stendhal, but are far more entertaining.

So, if setting-up a business abroad is your order de jour, then let France serve you with a knowing wink and welcoming smile.

What's the population ?

The population of France is 64.1 million

Economic overview

France's economy hybridises extensive private enterprise with considerable (though declining) government involvement. The government has a big influence over important areas of infrastructure, with majority ownership of railway, electricity, aircraft, and telecommunication companies. However, the government has increasingly been relaxing its dominance in these areas since the early '90s. They are also gradually selling off holdings in France Telcom, Air France, as well as the insurance, banking, and defence industries.

France is ranked as the sixth largest economy in the world behind the United States, Japan, Germany, China and the United Kingdom. It joined eleven other EU nations and introduced the Euro.

France welcomed over 75 million foreign tourists, and is ranked as the top tourist destination in the world, ahead of Spain and the United States. It is home to cities and towns of high cultural interest, beaches and seaside resorts, ski resorts, and rural regions that many enjoy for their aestheticism and isolation.

France also boasts huge tracts of fertile land. Together with contemporary technologies and EU subsidies, the three have worked synergistically to make France the leading agricultural producer and exporter on the continent. Wheat, poultry, dairy, beef and pork - a world renowned food and wine industry - are the top French agricultural exports.

Machinery, chemicals, automobiles, metallurgy, aircraft, electronics, textiles, food processing, and tourism are the main industries of Fr ance.

Funding

Comprehensive planning is essential for the success of any business in France. Raising adequate external funds can occasionally prove problematic. Smaller businesses could find securing appropriate and affordable funding both confusing and time consuming. Although sources of finance may seem scarce and unachievable, obtaining adequate funding for an initial investment should not prove difficult with the help of professional advice and guidance. It all really depends on the size of your business and the amount of funding needed.

Some of the options include:

Business Angels: Wealthy individuals, known as Business Angels, may provide the best source of finance. For a low level of equity, they will help fund you. The level of involvement they seek in the day-to-day running will vary, although some will not want any at all.

Private Equity: For higher levels of investment, venture capitalists provide a common source of equity funding. Currently, the amount of finance potentially available is significant, but success in securing such funding may not be so easy.

Overdraft: Borrowing from a bank remains the easiest method of external funding. But remember, an overdraft can be called in at short notice, so its use should generally be restricted to short-term cash flow funding, with longer term needs met by more secure loans. French Banks are generally quite reluctant to put in place an overdraft facility, especially if you are not able to provide a business plan for the three coming years, or at least financial statements for the two past years issued by a French Chartered Accountant. As well, you need to be able to show your involvement in the equity of your own company , and need to be able to provide details about your assets, that the bank may consider as a security towards the risk it may takes.

Fixed-term loans: These may provide a better solution to fund start-up costs, since repayment schedules and interest rates can be agreed and budgeted for from the outset. Such loans are usually by personal guarantee or by a fixed charge. For smaller companies, the lender may also require personal guarantees from the directors or controlling shareholders. Fixed or variable interest rates may be available with more complex arrangements available for larger loans. These restrict the interest chargeable.

Labour

Finding Staff

The French equivalent to Job centre Plus is the Ple emploi. Ple emploi is a new born national structure gathering together the formerly ANPE ( job adverts & educational programs ) & ASSEDIC ( unemployment benefits). Like the UK, there are many newspapers, websites, recruitment agencies that you can use to find staff. For higher level representatives, do not hesitate to contact Head Hunters or to use business networks.

Ple emploi : only available in French language for the moment www.pole-emploi.fr

www.service-public.fr/etranger/english.html : for the english version ; summarizing in English the existing national organizations providing services to the public.

Employing Staff

Before employing any staff it is a good idea to seek legal advice as Employment law is complicated in France. The employment contract of your future employee(s) may impose the former registration of a company in France. So, please check with a company agent or a tax adviser, what type of legal structure is required before you recruit anybody in France. Once this is done, and the employment contract agreed & signed, please note that you must declare to the URSSAF any new employment at least 24 Hours before your new employee starts. If you do not advise the URSSAF, your employment may be considered as unregular and you may have to pay penalties for not following up the Law.

Once recruited,your new organization IN France will have to register with its local medical centre ( Médecine du Travail ) and all your employees will have to visit this medical centre before the end of their trial period. This is a condition of employment. Then, a visit will have to be planed every two years , or every year depending if the job duties are dangerous or sensitive towards Health.

As their employer, you must inform prepare also all relevant registration towards complementary company schemes : pension ARRCO & AGIRC + Life insurance (prévoyance) as soon as they are registered, even if they do not stay with you further to an unsuccessfull trial period. If your employees do not have either a French NI registration number, it will be up to you to apply for it, once they will get their first French payslip.

Your employees will have to contribute approximately 20% of their gross salary towards mandatory social charges, which cover pensions, health cover, family benefits, life insurance but NOT THE INCOME TAX. As an employer, you will have to contribute approximately 40% of your gross salary depending upon additional non compulsory company schemes or benefits in kind.

Types of Employment Contract

There are four main types of contract:

  • Contrat a duree indeterminee CDI - for an indefinate period may be full time or part time
  • Contrat a duree determinee CDD - for a fixed period may be full time or part time.
  • Contrat apprentissage - Relates to an apprentice. signed generally with a school, university or a duly recognized educational organization. Specific contributions rates apply !
  • Contrat Jeune en Entreprise CJE - employing staff between the ages of 16 and 25 years.

How many hours are in the working week?

The standard French working week is currently 35 hours but there are exceptions to the rules and strict employment codes apply (Code du Travail & Union trade agreements by sector of activity). From the 36th to the 39th hours of work per week, the hourly rate has to be increased by 25%. Over it, as per quotas of overtime agreed by Law, the hourly rate has to be increased by 50%. Income earned based on overtime is not submitted to income tax ref Law TEPA.

What are employees' Holiday entitlements?

The usual paid holiday entitlement is 5 weeks. All employees are accruing rights to paid leave month by month. The period to be considered is from May year 1 to April year 2. The usual policy in big companies is not to allow employees to take their holidays before they have accrued enough holiday rights. Employees can only take holidays from the month of May year 2 for the days accrued between May year 1 and April year 2. When an employee leaves a company, for any reason except grave fault, the employer has to pay the remaining paid leave accrued and not taken.

What happens if an employee is ill or falls pregnant?

Paid sick leave (absence Maladie) applies in France. First three days of sickness, justified by a medical certificate, are not due to be paid by the employer, and are not paid either by the French NHS, called Sécurité Sociale. From the 4th day ( 7th day for Commerce de gros), the employer is obliged to maintain the salary of all employees being with the company for more than 1 year. By completing a specific form and sending it to the CPAM ( Caisse Primaire dAssurance Maladie), the employer can get most of all sickness allowances reimbursed by the French NHS. In some cases, the French NHS even transfer the salary directly to the employee instead of the employer advancing it.

Maternity Leave (congés de maternité) can start when the pregnancy is into the seventh month even earlier if the pregnancy is sensitive. The duration of the leave depends on the number of children the mother has minimum 16 weeks. Again, it is best to seek advice.

Do I have to pay staff extra salary for working a bank holiday?

There are eleven bank holidays in France. They are fixed dates except Easter. Again, it depends on the activity but some activities receive double pay, others receive a day off to the replace the BH worked and other activities receive additional pay. To know where stands your company towards Bank holidays, you need to refer to the Convention Collective Nationale (CCN) of your company.

What is a Mairie?

A mairie is a Town Hall and is therefore a local Government office. Each commune/village has a Mairie and they all have different opening times depending on the size of the commune. They are great source about information about life in France (e.g. marriage, contact details of the local CFE, car registration, etc).

How do I claim for a court order for debtors?

Regardless of the amount owed, you can apply for a court order but the debtor must be another company or merchant. The claim must be contractual (e.g. unpaid invoice, rental agreement, etc.) and must be for a specific amount and have the applicable documents to support the claim. You can apply for a court order to the Registry of the Commercial Court (RCS) where the debtor is registered. These courts are located throughout France with different jurisdictions. The order is presented to the Presiding Judge.

What happens if a company cannot pay their debts?

The company must file for a declaration of suspension of payments with the RCS. Submission of this declaration must be within 45 days of the date of the suspension of payments so that Court proceedings can take place to start liquidation or court supervised recovery. These Court proceedings apply to all types of businesses, large or small.

What if my activity is on a quote / odd job basis?

Cheque Emploi Service is a simple way to be declared, which is free and secure: www.cea.urssaf.fr

What is a notaire?

Notaires are registered with the Ministry of Justice. They are public officers who also work independently. Notaires deal with all legal matters in relation to the following:

  • Family e.g. marriage (wedding contracts), divorce, adoption, etc
  • Home e.g. Purchasing/selling, letting, funding, etc
  • Estate e.g. Organising and transferring
  • Business e.g., Commercial and Rural Leases, Agricultural businesses, Martial Regimes for business owners, contracts, etc

Visit the Notaires de France website to find a notaire in your area www.notaires.fr and click on the Union Flag for the English version.

Can I sell my UK franchise / business opportunity in France?

It is possible to sell your UK Franchise in France. There are many things to consider e.g. to decide if French or UK law will apply, will your franchisees have to speak English - the paperwork will be French as your Franchisee will have to start a French business to start trading, will you be able to commute easily to visit your franchisees, etc. You can contact the Federation Francaise de la Franchise. They have French speaking staff that can assist you: www.franchise-fff.com


Click here to Ask an Expert about Starting a Business in France

Organisations that can assist with Starting a Business

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  • > B2B International

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  • > Sedi Group

    SEDI helps foreign companies setup and do business in France

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  • > TMF Group

    TMF Group helps companies expand and invest seamlessly across international borders.

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  • > Radius

    Your Global Growth Experts. Radius helps businesses move into new markets, manage overseas operations or outsource entire global accounting and administration functions

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  • > Scott’s Business Travel

    Scott’s Business Travel is a trading name of Scott’s Travel Management Ltd. Founded in 1991 and trading as Scott’s Tours, the company originally offered holidays in then-communist Russia and the rest of the Soviet Union, but soon expanded to cater for all types of travel with corporate travel in particular.

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  • > Emily Crews-Montes

    Bridge the gap between your current market and your potential new customer base in France.

    More Details Visit Website
  • > Franco-British Chamber of Commerce & Industry

    Founded in 1873 and with a membership network of over 700 companies and organisations, the Chamber is the principal voice of Franco-British business community in France.

    More Details Visit Website

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