WHY START A BUSINESS IN FRANCE?

There may be several motivations for deciding to set up a business in France. Extra income to supplement pension, a completely new start with a planned permanent move to France, the satisfaction of being your own boss after redundancy or following a lifetime of salaried employment in France or elsewhere – or both – or, more rarely, the start of a working life following a period of apprenticeship or higher education.

Whatever the reason – with the possible exception of topping-up pensions where limited revenue is allowed on an occasional service-provider basis (prestataire de service occasionnelle) – such as letting rooms for under 13 weeks a year without having to establish an official business – success will require full-time commitment. Working harder and longer hours than before is to be expected, especially for non-French-speaking people arriving in France who have always previously been employees. The business will become a way of life, certainly in the early years. Separating ‘living’ from ‘working’ in France will be difficult. Apart from driving motivation and getting the project’s choice right, bags of endurance (things often go wrong before they go right), patience (setting-up procedures and approvals can be complicated and take time) and style (appreciated by the French market) all help. Despite having advice and support available from family, a business partner, if you have one, and your professional advisors, be prepared to handle all conceivable problems which may just occur at the same time. The odds are they won’t, but there will be days ‘like that’! The buck stops with you and will be more difficult to stop in a foreign environment.

Think through the evolution of the project from conception, operation and development to long-term resale possibilities. A chart in Appendix 3 shows approximate resale values for different businesses (évaluation du fonds de commerce). Could family environment and personal health suffer? What personal financial resources can be risked, and written off at worst? Do you want to stay a small one-man band, keeping administrative paperwork down to a bare minimum and never have to change your business’ legal form (forme juridique)? (See Chapter 3 and consider which forme juridique will best suit your project and protect your estate.) Or are you an expansionist, planning to take on staff to help the business grow? While growth may not be a priority, adaptability and the ability to introduce new products or modify existing ones will be necessary for survival in a perpetually changing marketplace. (Even Marks and Spencer cut their losses and withdrew from France in 2001 as they were not prepared to invest in the changes demanded by the French market.)

WHAT SORT OF BUSINESS DO YOU WANT TO START?

The nature of the business is as important as motivation. A gap in a well-known market will be easier and require less investment to tap successfully than the launch of an unknown, albeit innovative – perhaps revolutionary – product or service. Previous related experience in a particular activity is obviously better than a complete change in direction. Draw up three lists, A, B and C. List A should contain what you know how to do, List B what you would like to do and List C the market or potential market you feel exists for products or services for Lists A and B. If there is an area common to Lists A, B and C it would be sensible to investigate it in detail as the basis for the business project.

France’s consumers are, ethnically, a rich, colourful mix with exotic and more European tastes, particularly in the fields of shops selling food, furniture, soft furnishings and soft goods, which are all widely catered for. There is scope here for new businesses.

An Ifop survey in January 2005 showed that 70 per cent of all new entrepreneurs were men with an average age of 39 and with, in the great majority, considerable management experience following at least a successful baccaluréat (which is roughly equivalent to GCSE Advanced Level) level of education: they are known as mid-way career men. Women are confirmed as being particularly good at running shops. The same Ifop survey indicated that 25 per cent of adults they interviewed would like to create their own business: just marginally below the UK figure of 28 per cent.

Franchises should not be overlooked, although considerable investment in successful brands and expertise will be required. McDonald’s, for example, have never looked back since they opened in France about 20 years ago and Quick, their European competitor, continue to trade successfully in the ‘fast-food’ hamburger and salad market alongside them.

About 80 per cent of all new businesses are in the service and commercial sectors. Private training and educational establishments (which include EFL (English as a Foreign Language) teaching schools) and home-help businesses (gardening, meals-on-wheels, cleaning etc.) are particular segments where new business registration shows a marked increase. Geographically, the Limousin region, which is becoming extremely popular with British homeowners, shows an increase of slightly over 10 per cent annually in all types of new businesses which is far ahead of other regions.

Practice in the medical, legal and accountancy professions requires a state-recognised diploma. Building, electronic, mechanical and technical fields demand practical experience following formal training to be competent. Many trades and other professions have strict working regulations or demand a minimum number of years previous experience in a similar or identical activity before a new business can be authorised by their ruling bodies which then issue a working licence (carte professionnelle). Some of those businesses most likely to interest foreigners are: modelling agency (agence de mannequin); estate agent (agent immobilier), although no special qualifications are required for property search agencies; antique dealer (antiquaire); camp-site operator (gérant de camping); bars selling alcohol; shops selling cigarettes; hotels; restaurants; landscape gardeners (paysagistes) and child care centres (garderies d’enfants). Details for all trades and businesses can be obtained from the local CFE (Centre de Formalités d’Entreprises) department, depending upon activity, of the trade guild (Chambre des métiers), Chamber of Commerce and Industry, Agricultural guild (Chambre d’agriculture), or URSSAF (social security contributions collection agency) office.

Different procedures, not necessarily qualifying regulations, may also apply in France. National federations will usually be prepared to supply information, often free of charge, on their trades whether the enquiry is to supplement or confirm information for people with previous experience in their field or to provide information packages for complete newcomers. Membership of a federation will be invaluable later on in terms of marketing a new business and creating customer confidence.

Consult the ROME (Répertoire Opérationnel des Métiers et des Emplois) information sheets as well, on the national employment agency website www.anpe.fr or visit an ANPE office. These sheets (fiches) detail what specific trades, professions and service activities demand in terms of usual work tasks and conditions, required or recommended qualifications, ideal experience and personal aptitudes and qualities. They also indicate other activities which are similar or have some common ground with the particular activity being consulted. This is also invaluable for composing employment advertisements if you decide later on to employ people.

If you do plan to launch a completely new product, process or design, patent it (déposer le brevet) in your name as inventor or in the name of the company (see the What name? section on p73) at the Institut national de la propriété industrielle (INPI), 26 bis, rue de St-Petersbourg, 75008 Paris Cedex 08. There are also regional offices for the INPI in Bordeaux, Grenoble, Lille, Lyon, Marseille, Nancy, Nantes, Nice, Rennes, Strasbourg and Toulouse. An international agreement with most countries in the world gives the patent holder the possibility of protecting his patent on an international scale in the first 12 months following its issue. Details of this, current registration fees and periods of validity can be obtained from all the INPI offices. Patents are issued for all inventions considered to provide a technical solution to a technical problem. They must have an industrial application which implies a completely new type of business activity. Just because your ‘baby’ is going to look much nicer than what is on the market is not a valid reason for delivery of a patent. Although new computer programs cannot be patented with the INPI, the Agence pour la protection des programmes (APP) at 119, avenue de Flandre, 75019 Paris, assists or mediates in copyright disputes and will record the first publication (fabrication) date of new programs. Bear in mind that some patents have never been exploited commercially, but they may just decide to come onto the market as you plan to go into business.

While innovation is to be congratulated, guest-houses, camping and caravan sites, building and estate agency services remain amongst the most popular businesses with foreigners.

Guest-houses

Guest-houses include both gîtes and chambres d’hôtes. Basically, the gîte classification means self-catering rural accommodation. The national federation, Gîtes de france (www.gites-de-france.fr) is the largest federation for this type of accommodation in the world so application to become a member should not be ignored although at least 12 per cent of annual receipts must be paid to remain a member. Check out any particular rules the federation lays down regarding types of property as this may have a direct bearing on the property which is intended to be used.

Chambres d’hôtes (paying guest rooms) are the bed and breakfast accommodation market. British clientele may be happy with a continental – coffee and croissant – breakfast which must be substantial, but expect a semi-gastronomic evening meal as part of the accommodation package, while French clientele will look forward to the famous traditional English breakfast, if they know you’re British, and be prepared to dine elsewhere in the evening. Offering a compromise between both meals is a good solution to attract all European nationalities. More than five rooms automatically up-grades an establishment to one star hotel status which means that rooms must be large enough for at least one chair for each occupant with one in five possessing an en suite bathroom and WC.

Camping and caravanning sites

Although the attraction of not accommodating people in your own home may appeal, camping and caravanning sites have a limited season and can involve considerable investment in essential facilities and services such as toilets, washrooms, showers and outdoor lighting. An all-year round complementary activity which involves little effort after the strict tempo of the camping season, such as renting space for open-air garaging of pleasure boats, may be necessary.

Official planning permission is required to create more than six individual camping/caravanning spaces. The overall plot of land set aside for this purpose must be level and cover at least 1,050 m2, i.e., at least 150 m2 per tent or caravan including their share of the facilities. A minimum plot of around two acres (8,000 m2 is recommended to accommodate sufficient campers to make the business pay.

Builders

All professional builders must have insurance to provide the necessary two and/or 10-year construction guarantee cover for their work. The two-year guarantee (garantie biennale) covers all items such as taps, boilers, blinds, doors and electrical equipment which can be removed without damaging the building structurally. The 10-year guarantee (garantie décennale) covers any defects which threaten the solidity of the construction or correct functioning of its integral fixtures even if the problem is due to soil subsidence. Plumbers should note that baths are considered integral fixtures. Insurance companies will naturally need to satisfy themselves that foreign applicants have documentary proof of their experience and competence.

The building market is there. Over 50 per cent of homes are owned by their occupants and around 25 per cent of executive classes possess a second home. Foreigners often buy to renovate and it is estimated that around one third of all home owners have some form of modification to their property in mind at any one time.

The competition is also out there. DIY superstores will have their approved list of building contractors and national companies like LaPeyre can install as well as supply their fixtures and fittings for the home. Being able to supply well-presented detailed estimates (devis) is vital as people will usually compare at least three estimates, unless strong recommendations are considered more important than a reasonable price. Legally, estimates in duplicate must be prepared for all building maintenance work, breakdown/assistance work or repair work where the amount including VAT (TVA) exceeds 150€. Below that amount a written estimate should be supplied if requested. These estimates should be on the business’ headed paper and contain at least the following information:

• date and customer details including address where the job would be effected;
• detailed breakdown of materials and unit costs (before and after VAT, and the rate of VAT) and the tax-inclusive total;
• hourly labour rate including rate for fractioned hourly periods, and the tax-inclusive labour total;
• any extras such as transport/delivery charges and whether the estimate is free or to be paid for;
• period for which the estimate remains valid.

Materials and labour may be subject to differing rates of VAT (TVA) depending on whether new outside construction work or general improvements are concerned. Set job rates and labour rates should be displayed in premises visited by customers as well as on a rate card if customers are visited at their homes.

Once the business is established, seals of approval from independent organisations printed on estimates will create confidence: Qualibat for general building work (www.qualibat.com); Maître Artisan (the chamber of trade’s seal) and Qualifelec (QE) for electrical installation companies (www.qualifelec.fr).

Estate agents

Britanny, Normandy, Dordogne, Provence and the Côte d’Azur all have a fair share of estate agencies (agence immobilières) which have been started by British people mainly for the international English-speaking market. The Limousin region, as mentioned above, is now becoming increasingly popular with British buyers. It is estimated that 50 per cent of all property purchases by foreigners is in the Mediterranean belt running from Toulon to Menton.

While selling properties as an employee or representative of an agence immobilière requires no specific diplomas, owning and running an estate agents requires one of the following:

• a diploma in estate agency practice following a course with one of the national federations;
• 10 years’ salaried experience in estate agencies in France;
• four years as manager of an agence immobilière.

As with buying a property, locating the business is crucial. Competition is particularly fierce in the Mediterranean area which is full of agencies chasing after fat commissions, which are about double UK rates, on properties which are at least as expensive as their equivalents in South East England.

Export sales agents

With English entrenched as the international business language and the expanding European market, opportunities are there for international sales agents and/or consultants (agents/conseillers en commerce extérieur). Export sales agents may find that landing long-term contracts is the main difficulty. As an essential part of initial market research, consult the list of exhibitors at a major trade fair, do your homework and then visit the stands to see what the reactions are to your proposition.

While many French companies that are interested in export or already export will have staff speaking acceptable business English, there is no substitute for someone British who has live contacts, a promise of orders and first-hand knowledge of Northern European markets, including of course the UK. Many companies base their management offices in the Paris area making it easy to keep in touch personally as much of France is now only a few hours from Paris with the TGV high-speed train.

Setting up as an export distributor in France is another matter. It requires a detailed knowledge of export, shipping and documentation practice based on considerable previous experience.