An important factor to be borne in mind when choosing the type of premises is that the domiciliation de I’entreprise – the business‘ head office address – does not necessarily have to be the place where the actual activity (lieu d’exercice de l’activité) is carried out. In the case of an entreprise individuelle no registered head office is required, and their business address (adresse entreprise) can well be their home address. Especially if all the productive work is carried out away from the business’ home address and customers have no need to visit the business’ premises.

Do you want to buy premises outright or rent on a long- or short-term basis? Would it make sense to operate from home (regulations permitting) extending your property or using or converting part of it? Under what circumstances would it be sensible to register the business’ head office permanently at a local Centre de domiciliation? What are the advantages of taking limited office space in a local Centre d’affaires? If there is a zone franche (tax-free zone) locally, what are the real advantages? Before registering the business a choice must be made, which will depend on the type of business and its requirements, and the initial resources available.

BUYING PREMISES

The buying procedure – described on page 110 – is the same as for residential property purchase, whether you find the premises and negotiate the purchase through an estate agent or a specialised consultant en immobilier d’entreprise or deal directly (particulier a particulier) with the seller. The latter is only recommended for those who have already purchased premises in France successfully without going through an agent.

Particular attention should be paid to net floor areas which are usually expressed as an overall surface area, in metres of course, without necessarily giving the dimensions. If an on-plan purchase is being made and there is no show unit around the same size to visit look at other existing units around the same size. The Carrez Law stipulates that surface areas for units within a multi-unit block, whether they are offices, shops or warehouses or depots, given on official documents must be correct to within 5 per cent either side. An indépendent (detached) building is not subject to the Loi Carrez. If you are buying a detached building on its own plot of land check whether the planning permission density for the plot (coefficient d’occupation des sols (COS)) is up to its limit or not. An expanding business may need more space later on.

If further planning permission is possible an official application for approval of any work extending the premises by more than 20 m2 has to be lodged with the town hall or the local office of the Direction Départementale de I’Equipement (DDE). An official application form for permis de construire (PC) must be used and the laid-down procedure strictly followed. Any changes to windows and business signs or building work providing less than an additional 20 m2 (subject to planning permission density limits) must simply be notified to either of the above authorities using an official declaration de travaux form following the laid-down notification (declaration) procedure.

While residential property has to cover at least 16 m2 net floor area overall, business premises and offices of all types are not subject to a minimum overall floor area or minimum room sizes. However, two office-based persons who both receive customers or clients would be cramped in a 16 m2 space. Thirty m2, equivalent to a medium-sized through-lounge-living room, would be about right. If a number of staff are employed, for example in a telephone-canvassing business, where there are no customers visiting, less space per person would be required: around 4 m2 per person would be ideal with cubicle partitioning. Note that businesses employing more than 25 people must provide a refectory area, which should be away from the work area if staff request it.

Due attention should be paid to the type of business activity permitted in the premises. A local commercial in a shopping mall (centre commercial) can only be used for shops, boutiques, banks or service businesses. An industrial or trading estate (zone indus-trielle or zone d’activites) just nearby may well have a large workshop/warehouse building with mezzanine office area ideal for a variety of manufacturing/repair/wholesale/ex-factory sales activities. Note that any new retail business with a sales area of more than 300 m2 requires prior approval from the Prefecture. (This regulation was introduced some years ago to protect the old corner shop, which offered a useful service, from the ever-increasing competition from new supermarkets and hypermarkets.) Approval appears to be given readily, however, to new discount-supermarkets with over 300 m2 sales area. They open up all the time providing fierce competition, in turn, to classic supermarkets and hypermarkets. Parc tertiares are modern office block estates which may accept some quiet high-tech industry or light engineering. Check whether there is any clause allowing or prohibiting directly competitive businesses in the same building. This is particularly relevant to retail businesses, with good frontages, where passing trade is important.

All properties must be certified free of asbestos (amiante) or with asbestos dust giving off less than five fibres of asbestos per litre of air; and any accessible lead-content paint (peintures au plomb). They must also show, if in an officially recognised termite area, if termites are present or not (I’état parasitique). Additionally all properties for sale (or for let) must now indicate a list of possible natural or technological local risks such as flooding, earthquakes, pollution, etc. if they are in an officially deemed risk-area. If no indication is included with the contract ask for confirmation from the Préfecture that the area is not a risk-area. An estimated five million people in France live in what are now known to be flood-risk areas.

If planning permission is given for transformation of, say, an old barn with some lighting to a modern warehouse with an office area, the insulation and electrical-wiring system will almost certainly need improvement. The CONSUEL organisation (www.consuel.com) will visit the premises, at a charge, to confirm whether or not the installation complies with current requirements.

Individual units for sale in modern office blocks are rare as the economics of office developments is based on rental income. Converted town centre buildings are a better source. An estate agent’s advertisement, in the local paper under Immobilier, Entreprises et Commerces or a property owner’s advertisement in a national magazine such as Les Annonces Immobilieres entre particuliers might read:

The translated words in brackets would not of course be in the advertisement.

Larger units, either individual buildings or premises in a row of buildings in an out-of-town industrial/trading estate can be found through national specialists in larger offices, depots and industrial units, such as DTZ Jean Thouard. An advertisement for the sale of part of an industrial building with a mezzanine office might read:

An advertisement offering units for rent in the last phase of a new office block development might read :

An advertisement for an old town centre building, in a prime position, might offer three modernised office floors with a lift, for sale, or possibly for rent, as follows:

Notaires publics (see acte de vente on page 110), who are all appointed by the French government, can also act as property agents. The main advantage is that their negotiating fee, which they do not like to be called ‘commission’, is laid down by a national sliding scale related to the price of the sale.

Chambers of commerce may also have details of available premises, although their ‘for sale’ information sheets usually offer premises (murs) and the existing business (fonds de commerce) as an overall proposition.

Placing a business-premises search advertisement in the local press under Locaux Commerciaux and Achats can have a good response as proprietors and estate agents sometimes have the misconceived idea that they will get a better price by selling to a foreigner who, supposedly, has not checked out property values in the area. The advertisement should start along the lines:

‘homme d’affaires etranger recherche’

before proceeding to the location and size and type of premises sought.

The buying procedure

Two preliminary sales contracts are possible after the verbal or written offer (offre d’achat) has been accepted:

• the compromis de vente
• or the promesse unilaterale de vente

Both contracts specify the precise address of the property and its total usable space with a brief description (such as the number of rooms with surface areas), the land and any other local property taxes, the agent’s commission or notaires negotiating fee, completion and possession dates. It is important at this point to detail fixtures, fittings and any permanent office equipment which will remain part of the property. Note that a notaires negotiating fee should not be confused with legal fees. Notaries sometimes advertise premises with an all inclusive acte de vente en main price: the price for the seller plus the negotiating and legal fees.

Both contracts ask for immediate deposits, held in a sequestered account, of up to 10 per cent of the purchase price.

The compromis contract is the contract more frequently used. Estate agents are quite accustomed to drawing up these preliminary contracts. If you are dealing directly with the property’s owner you are advised to have the preliminary contract drawn up and signed before a notary and preferably the one who will draw up the acte authentique. Deferment clauses (conditions suspensives) should be included making the purchase subject to any required finance being obtained – it is advisable to detail the nature of the loan and the organisation concerned – and null and void if a local town planning decision is revealed which will depreciate the value of the property. The buyer’s deposit is returned in these instances. A droit de préemption clause will also ensure that, in the event of a compulsory purchase order before completion which precludes the sale, the buyer recovers their deposit.

The unilatérale contract does not commit the buyer to purchase the property whereas the seller is bound to reserve the property for the potential buyer at an agreed price for an agreed period of time. As with the compromis contract, conditions suspensives and a droit de préemption clause should be included. The buyer’s deposit is returnable if these clauses have to be applied.

Bilingual assistance from a qualified person is strongly recommended when signing agreements to documents as these will usually only be in French. Don’t expect any special assistance from the notary, who as the French government’s appointee must be French and is unlikely therefore to be truly bilingual. You can appoint your own notary, but if it is agreed to use only one notary the choice is the property owner’s privilege.

Please note the following:

• A seven-day cooling-off period gives the buyer additional protection at this stage. Buyers can change their minds, no questions asked, within seven days of signing a preliminary contract.
• During the agreed period prior to the acte de vente definitive the notary verifies property title, outstanding loans, charges,obtains the asbestos, termite and lead-free paint certificates (if they have not already been produced) and checks land registry details and town planning regulations, and any other local regulations which may concern the property.
• The completion deed reconfirms the information given in the preliminary contract, with more detailed information on the property, with the exclusion now of any previous suspensive/préemption clauses.
• Details of notary fees, i.e. legal fees, can be consulted under ‘frais de notaires’ on the notaries’ website: www.immonot.com.
• Buying business premises offers certain financial advantages. Transfer tax, notarial fees and land tax (taxe foncière) are tax-deductible company expenses. If the premises are a personal purchase by the owner of the business they can be let to the company for a rent which can cover any mortgage repayments. Additionally, the premises remain part of the personal estate of their owner and cannot be possessed or impounded, unless the business is an entreprise individuelle (where there is no distinction between private and business resources) if the company fails.

Prices

So many variables are involved that it is meaningless to give examples of new, old or renovated office, industrial and warehouse prices throughout France for comparative purposes.

Apart from looking at advertisements for business premises (locaux commerciaux and locaux professionnels) in newspapers, look at the following magazines and/or website:

Logic-Immo magazine. Distributed free outside many bars, petrol stations, bakers etc. Consult the Immobilier Divers pages for further information.

www.logic-immo.com. English instructions for property search for further information. The website has some colour photos (enlargeable) and descriptions in English.

Entre Particuliers magazine. There are no agents. You should consult the colour sections and the special Locaux section for further information.

Use the www.entreparticuliers.com website property search service.

www.bureaux-commerces.com has information/descriptions in French.

www.cession-commerce.com has information/descriptions in French, plus photos.

Both of the above are particularly easy to visit and use.

Visit www.dtz.com or www.dtzresearch.com for industrial or commercial property search.

If you are looking for a home which will also be used, or partially converted, as business premises (see page 121, Working from home) the French notaries website www.immoprix.com is also useful. It shows average transaction prices i.e. ‘sold’ prices, throughout France for old and new properties and also for building land. Use of all private property or construction possibilities for business purposes must, of course, be verified with the local planning department before purchase.

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RENTING PREMISES

Most new businesses find renting more attractive. More funds are available for investment directly in the business and, in general, it is easier to move the business if larger premises are required later on. (More office space may well become available throughout France. Since June, 2005, residential property, including apartment blocks, in towns with populations of under 200,000 with the exception of those in the He de France 92, 93 and 94 départements no longer require special Prefectural authorisation to become business or professional premises.)

Whatever type of lease is signed, registration details of the business will be required which include the official address. So, unless your home address is going to be the registered office, temporary recourse to a centre de domiciliation (see pages 123–4) will be necessary. The landlord or their agent will also ask for proof of a comprehensive business risk assurance policy (multi-risque professionnelle) which should cover fire, theft, storm, snow, hail, electrical damage, burst pipes, civic responsibility related to the business’ activity, natural disasters, etc.

Generally, leases contain a wider variety of possible clauses than property sales contracts. It is therefore advisable to get them checked by a qualified person/solicitor who understands exactly what they stipulate and also to ensure that any specially agreed clause to protect the tenant’s interest is inserted.

Bail commercial

This is the classic business lease. It is established between ‘le bailleur’ (the property owner) and the tenant, called ‘le preneuf or ‘le locataire’

Tenants are strongly advised to pay particular care and attention to the following points which may or may not be expressed in contracts.

• 1.Any underestimation of the premises’ features by the owner or his agent will not be grounds for a reduction in rent.
• 2.In the absence of an inventory and inspection of the premises and their fixtures and fittings, when the keys are handed over, the premises are deemed to be in perfect order.
• 3.At least six months’ notice by recorded delivery letter is required to terminate the nine-year lease at the end of each triennial period.
• 4.The tenant is entitled to continue to hold the lease after the initial nine years. A continuation lease should be signed for a further nine-year period to ensure that the annual rent review continues to be in line with, and not in excess of, the official INSEE building-cost/rent evaluation index which is updated every quarter.
• 5.If the tenant is an individual (personne physique) as opposed to a company they are entitled, subject to documentary proof, in the case of disability or retirement to cancel the lease contract at any time provided that at least six months’ official notice is given.
• 6.Authorised business activities (activités autorisées) stipulated in the lease should cover, from the tenant’s stand-point, all possible related activities which may be necessary to the development or evolution of the business. This is officially recognised as ’déspécialisation’. (A point to consider also when the nature of the business is registered.)
• 7.The furniture and equipment supplied by the tenant should always equal the value of the rent and any other charges for which they are responsible.
• 8.The tenant may be liable for replacement and repair of certain windows, including those that leak.
• 9.If basic changes to the structure or room lay-out of the premises are requested by the tenant, and authorised in writing by the owner, all costs including those of the building’s architect will be borne by the tenant. At the end of the lease, any provisional and unauthorised modifications carried out by the tenant (for example partitions) must be completely removed.
• 10.The owner can carry out any work required to the building in general including any necessary plumbing within the premises rented without any compensation due to the tenant.
• 11.Similarly, the tenant will not be entitled to any compensation in the event of any break-down in heating, telephone, water, electricity, gas services ... including dustbin clearance.
• 12.No compensation will be due to the tenant, from the owner, in the event of the building or premises being made subject to a compulsory purchase order.
• 13.The tenant, provided they have the approval of the property owner, can transfer the lease for the entire premises if they decide to sell their business. If a tenant is unable to find a buyer for their business they may offer the lease for a premium, the droit au bail, to a new tenant who must only use the premises for those business activities set out in the original lease.

A deposit (depôt de garantie) representing three months’ rent is usual. This is returnable, interest-free, at the end of the lease minus any repair costs outstanding. Letting agents‘ fees can be around 15 per cent of annual rent, a not inconsiderable percentage, especially if a pas de porte premium is asked for as well as the monthly rent.

Pas de porte is often expected for shops and other premises in prime sites and is calculated on what the owner foresees is the difference between the rent they could ask for in a free-market situation during the length of the bail and what they estimate will be the official increases permitted by the INSEE index. Although the tenant signs a nine-year lease with a classic bail commercial, if they think they may well use the triennial cancellation option an attempt to negotiate an appropriate reduction in the pas de porte would be logical.

The bail professionnel runs for a minimum six-year period and is designed for doctors, lawyers, chartered accountants/surveyors, etc. It is automatically extended if neither the tenant nor owner give six-months’ officially recorded notice of cancellation. The owner is in a stronger position than with a bail commercial as they do not have to adhere to the INSEE rental index after six years or renew the lease with the out-going tenant.

Bail precaire (bail de courté duree)

This is the lease to use if the tenant is unsure of the future plans for their business, as it is a short-term lease running for a maximum of 23 months with a let-out (résiliation) option which can be exercised at any time provided two months official notice by recorded delivery letter is given. NB. The résiliation clause may not be included in the lease proposed, although you should ensure that it is.

Tenants who are still renting premises after 24 months are in fact normally entitled to sign a bail commercial, which is why the bail précaire is never more than 23 months, and, unlike the nine-year bail commercial, it is not renewable.

As with a bail commercial, special attention should be paid as to what type of businesses are generally permitted in the premises and to what particular business activity, allowing for déspécialisation, is written into the lease. A bail précaire which runs for more than 12 months is subject to the INSEE rental index so a pas de porte may be asked for.

The lease‘s general conditions should stipulate that premises will not be let out in the same building by the owner to a similar, competitive, business. In most other respects, the tenant of a bail précaire has the same responsibilities and liabilities as for a bail commercial and particularly with regard to points 7, 9 and 11 above. Transferring the lease is not, however, possible.

Letting agent’s fees are normally expressed as a total amount, not as a percentage of annual rents as there will not be two annual amounts. Calculate what percentage the amount represents. While a depot de garantie will of course be necessary, the amount should be calculated according to the length of the lease. An amount representing three months’ rent, for example, would be excessive.

Note that chambers of commerce or trade and town halls sometimes own premises suitable for artisans and small industries setting up, ateliers relais, which are available on courte durée leases at favourable rents. See also Les pépiniéres d’entreprises.

Crédit-bail

Leasing with an option to buy outright after several years for a price based on the premises’ value at term less total rental amount paid is an interesting compromise. These kinds of rents are higher than for normal leases. However, property purchase is almost always a guaranteed investment. A crédit-bail lease should only be considered if the intention is to buy when the lease terminates.

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