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Glossary entry

French term or phrase:

Le fonds de commerce

English translation:

Goodwill

Added to glossary by Julie Barber
Jun 2, 2019 19:36
4 yrs ago
14 viewers *
French term

Le fonds de commerce

French to English Bus/Financial Business/Commerce (general) temporary occupancy licence
This is in the context of a temporary occupancy licence for a plot of land. Country is Morocco.
It is noted that the plot of land (in a public area) does not fall under certain commercial laws relating to building leases
and that "X ne peut donc invoquer la propriété commerciale notamment Le Fonds de commerce.

I understand it to mean that the licensee cannot claim commercial ownership or claim it as a business asset. I looked up several previous questions with references to business assets and goodwill but wasn't sure which to choose...thanks
Proposed translations (English)
3 the Goodwill (as a going concern); (Statutes/Arts of Assoc. or Partnership) a Commercial Undertaking
5 -1 [commercial property rights in the lease, including] business activity rights
References
Le fonds de commerce en droit marocain
fwiw/hth
Change log

Jun 23, 2019 21:00: Julie Barber Created KOG entry

Discussion

Julie Barber (asker) Jun 23, 2019:
Hi all. Thanks for your help on this question, which was a tricky one. I think that we all understood the context and that it is a clause telling us what the licence isn't but this word in this context was a tough one! I went with Germaine's suggestion of "commercial property provisions, notably goodwill".
Eliza Hall Jun 4, 2019:
@ Germaine La terminologie, en droit, donne son sens…au contrat... il me semble.

It’s not the terminology, but the terms. In other words, what matters isn’t what you call the contract but what the contract says the parties can or can’t do. If you bought a license to an industrial process, but the contract also said you could practice that process on the seller’s property for a certain length of time, a court could well find that your license was also a lease of the seller’s property.

"business activity rights" (ce qui n’a rien de "fonds de commerce")

Mais si. Fonds de commerce in this context (as part of the “propriété commerciale” rights that Party B isn’t allowed to invoke) means you have the right to automatic renewal or indemnity IF you’ve (a) operated the same business (i.e., same entity and activity) for at least X years on the property, or (b) purchased, from the previous tenant, not only their contract rights in the premises but also their business, and have continued the same business activity as the previous tenant.

If you change to a new business activity, even if it’s done by the same business entity (S.A.R.L., etc.), you lose those rights.
Eliza Hall Jun 4, 2019:
@ Adrian Adrian, I 'm baffled that a former lawyer (you) continue to miss my point, which is a fairly simple matter of contract law. Of course licensing rights aren't lease-based. I’m not suggesting otherwise.

This contract says Party B cannot invoke certain rights. (The word "droits" isn't used, but if you look up Julie's terms on any French legal website, you'll see that they’re rights: to demand either automatic contract renewal or an indemnity payment for nonrenewal).

Julie's contract is simply making clear that it is NOT a commercial lease (since if it were, Party B could invoke those rights). The rights are lease-based: they flow from the existence of a commercial lease. The “can’t invoke” language is just making clear that this should not be construed as a commercial lease.

It's a bit tricky to think about for a non-lawyer. But your bio says you're a retired barrister, so it's a bit astonishing that you keep missing this.

I do realize my initial translation was in error, since it indicated the contract was a lease (albeit one that excluded those rights). I fixed that promptly. When will you fix your mistakes?
Adrian MM. Jun 4, 2019:
@ Liza Part 3 No. I agree with Germaine. Licensing (or franchising) riights are not lease-based by analogy with a leasehold interest in land: such as a droit de bail on a balance sheet that does not form part of the goodwill/ fonds de commerce. If they are, then I will need - post-retirement - to renew or roll over my professional indemnity insurance for negligent advice.
Germaine Jun 4, 2019:
Eliza, Dans un contrat, quand vous référez/renvoyez à une notion de droit, vous l’appelez par son nom (propriété commerciale, fonds de commerce) ou par une définition ("commercial property rights in the lease" (même s’il n’y en a pas), "business activity rights" (ce qui n’a rien de "fonds de commerce")? Ici, ce que je comprends, c’est que les notions étant particulières à this context only, vous renvoyez à une interprétation plutôt qu’à leur nom - qui existe pourtant dans ce contexte précis. D’après vous, quelles sont les chances qu’une retraduction de cette interprétation vers le français amène le traducteur aux notions originales?

Quand une entreprise achète des droits d’exploitation d’un progiciel ou d’un procédé industriel sous licence et fait valoir ses droits sous cette licence, personne ne viendra lui dire qu’on lui a concédé ou qu’elle a souscrit un "bail". La terminologie, en droit, donne son sens - sinon son essence - à l’intention des parties et au contrat qui en découle, il me semble. Pourquoi en serait-il autrement de cette licence d’exploitation d’un terrain, et d’un terrain public qui plus est ?
Eliza Hall Jun 4, 2019:
@ Germaine - part 2 By law, these rights exist in any commercial lease if the fonds de commerce has been operated for a long enough time. In other words the RIGHTS are lease-based.

And we care because in the law, just writing "license" at the top of a contract or "this is a license, not a lease" doesn't actually prevent it from being a lease. What type of contract it is depends on what each party's rights and responsibilities are. If the contract spells out rights and responsibilities that are those of a lessor and lessee, then the contract is a lease, even if it says "this is a license and not a lease."

If that sounds weird, imagine bringing a German shepherd into court with a sign on it that says, "Cat" or "This is a cat, not a dog." The judge is going to say, "I don't care what your sign says; that's clearly a dog." Same principle.

The only way to make sure that a contract for renting real property will not be considered a lease is to spell out that certain rights and/or responsibilities, which would exist if it were a lease, do not exist under this contract. That's what Julie's contract is doing with this "X ne peut donc invoquer la propriété commerciale..." language.
Eliza Hall Jun 4, 2019:
@ Germaine - part 1 I'm puzzled by your question. We have two terms here, which each have one meaning in everyday French and another meaning in the context of contracts for renting real property (i.e., leases, licenses to occupy land or other premises, etc.).

In a contract for renting real property, these two terms mean the right of a tenant to either have the lease automatically renew, or have the landlord pay the tenant an indemnity if it's not renewed. Tenants can "invoquer" these terms (i.e., force the landlord to renew or pay).

These terms are in Julie's contract, but in the negative: it says that the tenant is not allowed to "invoquer" these terms. In other words, there is no right to automatic renewal or to an indemnity payment for nonrenewal.
Germaine Jun 4, 2019:
Jeopardy? [Je reprends, pour clarifier la question] At some point, once you stated "The right to automatic lease renewal on the grounds that lessee has operated the same business on the premises for at least X years", will the question be "What is goodwill"? How can anyone get to the idea that you are talking about "goodwill" - or intangible business assets - from such a statement while it has nothing of the definition of "fonds de commerce" in Moroccan law? I’m puzzled.
Eliza Hall Jun 3, 2019:
Another reference "La propriété commerciale :

C‘est le droit d’obtenir le renouvellement du bail commercial à l’expiration du contrat ou à défaut de renouvellement d’obtenir une indemnité d’éviction. Le droit au renouvellement est accordé à tous les locataires commerçants qui exploitent par eux même ou par leurs préposés un fonds de commerce dans les locaux loués pour une durée minimale de deux années. Le droit au renouvellement n’a pas en principe à être invoqué par le bénéficiaire car le bail commercial qui dure deux années successives donne à son titulaire un droit de renouvellement par le fait de la loi.

Quant à l’indemnité d’éviction, elle se mesure à la valeur marchande du fonds de commerce selon des critères imposés par la pratique et l’usage de la profession à quoi il faut ajouter les frais normaux de réaménagement et de reconstruction."

http://wikimemoires.net/2013/08/droit-au-bail-et-autres-elem... (Mémoire de fin d'études, Institut des Hautes Etudes Commerciales, Carthage, Tunisie).
Eliza Hall Jun 3, 2019:
@ Adrian - what the terms mean Here's what this is about:

1. "La ‘propriété commerciale’ désigne le droit du locataire, au terme du bail, d’obtenir son renouvellement, ou... le paiement d’une indemnité d’éviction." https://www.jesuisentrepreneur.fr/faq-juridique/locaux-profe...

2. "Fonds de commerce" in this context only is another right (or an aspect of the ‘propriété commerciale’ right). If Business A is renting premises under a commercial lease and assigns (sells) its rights in that lease to Business B, so B takes over the premises, then to have the right to automatic lease renewal, B has to either (a) run the same “fonds de commerce," i.e., also buy and operate A’s business; or (b) run its own “fonds de commerce” there for at least 3 years before the lease expires.

There are additional requirements that must be met to have those rights, but that's the basic gist. See longer explanation & more links in my answer.

But in short, this is nothing to do with goodwill, articles of association/partnership, etc. It's about whether or not a contract for real property includes the right to an automatic renewal (or indemnity for nonrenewal).
Eliza Hall Jun 3, 2019:
@ Adrian - the RIGHTS, not the contract itself Adrian, regardless of what type of contract Julie is translating, the rights in question ("la propriété commerciale notamment le fonds de commerce") are commercial lease-based. They arise from a commercial lease.

This contract specifically says those rights do not exist here. Forgive me if I'm about to explain something that you already know (with your legal background, I'm sure you do), but for those here who aren't lawyers, contracts often state what rights are NOT granted by the contract, in order to "head off at the pass" any potential arguments to the contrary.

In other words, even though Julie refers to the contract as a "temporary occupancy license," so by nature it's not a long-term commercial lease under which the rights of "la propriété commerciale [et] le fonds de commerce" could potentially exist, the contract drafter has also expressly spelled out that those rights cannot be invoked here.

We do that because it's possible for litigants to argue, "It says it's X type of contract, but the terms are such that it's implicitly actually a Y type of contract, which gives me extra rights." By spelling out that such rights can't be invoked, you preclude such an argument
Adrian MM. Jun 3, 2019:
'lease-based commercial property rights'@ Eliza Again, it is not commercial lease-based, but as the asker has pointed out - for UK purposes - a mere contractual licenc/se cf. a franchise in Anglo-Am law and again the case of Street vs. Mountford in ENG land law- the fleeting-occupancy terminology being relevant to the Moroccan context.
Eliza Hall Jun 3, 2019:
Tweak to proposed translation PS: If the French word for this document is not "bail" or anything else that can be translated as "lease," then my proposed translation needs a tweak. Instead of "commercial property rights in the lease, including business activity rights," it should be:

"lease-based commercial property rights, including business activity rights."

Under French and Moroccan law, those rights arise from the existence of a commercial lease (and from the nature of the lessee's business, but for the nature of the business to matter there has to be a commercial lease in the first place).

So if the point of your text is that this is not a commercial lease and therefore the lessee/licensee/whatever cannot invoke those rights, then change from "the lease" to "lease-based."
Eliza Hall Jun 3, 2019:
@ Julie - to clarify You wrote, "I understand it to mean that the licensee cannot claim commercial ownership or claim it as a business asset."

No, that's not what it means at all. See the explanation in my proposed answer.
Germaine Jun 3, 2019:
Euh... dans ce bout de la phrase, on ne parle pas de la licence d’occupation, mais plutôt de ce qui ne s’applique pas à ce type d’occupation. A commercial tenancy is a "location commerciale" - ce qu’on dit justement être exclu: Therefore, X cannot rely upon commercial [tenancy][leasehold][property] provisions of such laws, including goodwill.
Julie Barber (asker) Jun 2, 2019:
Thanks Germaine. Yes it is a licence to occupy rather than a tenancy. See my note on Adrian's answer. Thanks
Germaine Jun 2, 2019:
This explain why this clause is so important:
https://www.doc-etudiant.fr/Droit/Affaires/Expose-Le-droit-a...

Dans ce contexte, je pense à : "...commercial [property][undertaking], namely goodwill", mais comme il s’agit de la location d’un terrain, je me demande s’il faut plutôt parler de "[commercial][business] tenancy, namely goodwill".
Julie Barber (asker) Jun 2, 2019:
Thanks Lorraine. Thanks Marco, yes I did and wasn't sure which to choose. It appears to me that there is some repetition going on in the sentence....but wanted the advice of colleagues.
Marco Solinas Jun 2, 2019:
To Asker Have you seen this https://www.proz.com/kudoz/french-to-english/bus-financial/1... and this https://www.proz.com/kudoz/french-to-english/business-commer... ?
Lorraine Dubuc Jun 2, 2019:
@ Julie I would tend to say 'business capital", but in this context, I am not 100% sure.

Proposed translations

37 mins
Selected

the Goodwill (as a going concern); (Statutes/Arts of Assoc. or Partnership) a Commercial Undertaking

If the text goes on with 'Statutes' of a corporate etc. licensee, then the term in the UK could well diversify into the 'undertaking of the company'.

The point that 'undertaking' - and even a 'statutory undertaker' in the UK and Ireland as non-funerary public-utility provider - are missing from KudoZ glossaries ought not to deter a translator from moving into uncharted territory - rather than on an unchartered flight of fancy.



--------------------------------------------------
Note added at 43 mins (2019-06-02 20:20:53 GMT)
--------------------------------------------------

To forestall and anticipate any (predictable) queries: 'According to Wheeler, a *business undertaking* is “a concern, company or enterprise which buys and sells, is owned by one person or a group of persons and is managed under a specific set of operating policies.'

--------------------------------------------------
Note added at 49 mins (2019-06-02 20:26:15 GMT)
--------------------------------------------------

Yes. Goodwill IMO - even without a def. art. - does fit. But 'the Business Undertaking' vs. asset or capital arguably does also. Comments from our accountants?
Example sentence:

The difference between the going-concern value of a company and its liquidation value is known as goodwill. Goodwill consists of intangible assets, such as company brand names, trademarks, patents and customer loyalty.

Reference:

http://www.investopedia.com/terms/g/going_concern_value.asp

Note from asker:
Thanks A. The context is a licence for a company to have temporary occupancy of a plot of land within a public area of a port. Anything built on the land will become the property of the authority granting the licence, when the licence expires. Does goodwill fit with that in the sentence? thanks
Peer comment(s):
neutral AllegroTrans : can't see how goodwill is a component of occupation of land; something tells me that "fonds de commerce" is more than what we call goodwill, or perhaps rather that we use goodwill more restrictively than the French term
2 hrs
OK. but perhaps you could d/w the term of (business or corporate) undertaking
agree Germaine : with goodwill. This segment is about the commercial laws provisions that don’t apply: commercial tenancy/leasehold/property, including goodwill.
7 hrs
Indeed. Business goodwill is 'disapplied' (the latter is a verb)
neutral Louise TAYLOR : I don;t think it is goodwill in this case - more like this leased premises cannot be included in the company balance sheet i'e.-Capital
10 hrs
Pity you refer to the premises as leased or 'let' when the asker makes the specific point that they are licensed en.wikipedia.org/wiki/Street_v_Mountford )-By implication you are not criticising the term of 'business undertaking'-
disagree Eliza Hall : This isn't about goodwill; "fonds de commerce" IN LEASES (not in other contexts) means the right to automatic renewal of the lease if the lessee continues to operate the same business (fonds de commerce). See my explanation.
17 hrs
You have conflated a 'mere licenc/se' with a lease en.wikipedia.org/wiki/Street_v_Mountford and overlooked the concept of a corporate undertaking in company law terms (for the asker's UK-centered/-centred benefit).
Something went wrong...
4 KudoZ points awarded for this answer. Comment: "Thanks"
-1
18 hrs

[commercial property rights in the lease, including] business activity rights

"X ne peut donc invoquer la propriété commerciale notamment Le Fonds de commerce" = X thus may not invoke any commercial property rights in the lease, including business activity rights.

Here's what this is about:

1. "La « propriété commerciale » désigne le droit du locataire, au terme du bail, d’obtenir son renouvellement, ou, à défaut, le paiement d’une indemnité d’éviction." https://www.jesuisentrepreneur.fr/faq-juridique/locaux-profe... (I'm quoting French law, but Moroccan law copies French law to a very large extent when it comes to commercial activities, commercial leases, etc.).

2. "Fonds de commerce" in this context only is another right that can be included in a lease, or not included. Here's how it works: if Business A is renting premises under a commercial lease -- which in France and probably also Morocco is typically a very long lease, like 7-12 years -- and assigns (i.e. sells) its rights in that lease to Business B, so that Business B takes over the premises, then what rights B is actually buying depend on when B buys:

- If B buys the lease more than 3 years before the lease is due to expire, then B gets the right to renew the lease, or the right to a compensation payment from the landlord if the lease isn't renewed. This is because if you operate a certain "fonds de commerce" (business) for at least three years prior to expiration of the lease, and you don't breach the lease (i.e. you pay rent on time etc.), then the landlord has to either renew your lease or pay you compensation if they don't.

- If B buys the lease less than 3 years before expiration, B doesn't get either of those rights UNLESS B is also buying A's business (because the right to lease renewal requires the lessee to operate the business in question for at least 3 years prior to expiration -- so if B is actually buying A's business in addition to buying A's lease rights, and continuing to operate the same business on the premises, then B gets to count A's time in business on top of its own).

This 3 years before expiration/automatic renewal/compensation thing is the "fonds de commerce" right in a commercial lease. I haven't checked whether Moroccan law also follows this three-year rule -- their laws may require a different number of years -- but regardless of the number of years, this is the legal concept that the lease is talking about.

A few links: https://www.legavox.fr/blog/maitre-joan-dray/exploitation-fo...

http://www.assistant-juridique.fr/cession_bail_renouvellemen...

These rights don't exist as such in US leases, and I'd be surprised if they exist in the UK (but don't quote me on that). In other words, there isn't a legal concept here that translates this French legal concept exactly. Therefore, you have to embroider the translation a bit (i.e. provide an explanatory translation). That is why I've added the word "rights."

--------------------------------------------------
Note added at 20 hrs (2019-06-03 16:22:51 GMT)
--------------------------------------------------

PS: As Adrian has pointed out, if the French word for this document is not "bail" or anything else that can be translated as lease, then my proposed translation needs a tweak:

"lease-based commercial property rights, including business activity rights."

Those rights arise from the existence of a commercial lease. If the point of your text is that this is not a commercial lease and therefore the lessee/licensee/whatever cannot invoke those rights, then make it "lease-based" instead of "the lease."
Note from asker:
Thanks for your help
Peer comment(s):
disagree Adrian MM. : It is not a letting or lease, but a licenc/se en.wikipedia.org/wiki/Street_v_Mountford Pls read this ENG land law case *carefully* & extrapolate from your US realty studies. A bus passenger in the UK is a 'mere licensee' for the duration of the bus ride.
50 mins
Why are you referring to a UK case when we're talking about Moroccan law? Calling it an occupancy license in English doesn't mean that this English case has anything to do with it. More comments in discussion.
neutral Germaine : There is NO lease, just a LICENCE specifically stipulating that commercial laws don’t apply and therefore, that licencee can’t argue, at any time, that its "commercial activity" and "goodwill" give him rights to renew such licence.
10 hrs
The contract says that the tenant cannot rely on commercial lease-based rights. * Le sigh *
Something went wrong...

Reference comments

1 hr
Reference:

Le fonds de commerce en droit marocain

Le fonds de commerce est un bien meuble incorporel constitué par l’ensemble de biens mobiliers affectés à l’exercice d’une ou de plusieurs activités commerciales.

Les éléments du fonds de commerce :

Le fonds de commerce comprend obligatoirement, la clientèle et l’achalandage.

De plus, il englobe tous autres biens nécessaires à l’exploitation du fonds tels que le nom commercial, l’enseigne, le droit au bail, le mobilier commercial, les marchandises, le matériel et l’outillage, les brevets d’invention, les licences, les marques de fabrique, de commerce et de service, les dessins et modèles industriels et, généralement, tous droits de propriété industrielle, littéraire ou artistique qui y sont attachés.
Reference:

http://www.cielmaroc.ma/ciel/le-fonds-de-commerce-en-droit-marocain/

Note from asker:
Merci Germaine
Peer comments on this reference comment:
agree writeaway
2 hrs
Thanks, writeaway.
neutral Eliza Hall : True, but that's not what this means in the context of commercial leases. Invoquer fonds de commerce = invoke the right to automatic lease renewal on the grounds that lessee has operated the same business on these premises for at least X years.
17 hrs
There is no commercial lease, but a licence. Such licence doesn’t give any rights in "a" lease.
Something went wrong...
14 hrs
Reference:

fwiw/hth

Note from asker:
Thanks for your help W
Something went wrong...
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