The Paris economic affairs court ruled that the group Stéphane Plaza France was held liable for damages suffered by a franchised agency, considering that the network's reputation had been affected by the criminal conviction of its founder. The court ruled that this damage to the brand image had resulted in economic losses justifying compensation for the franchisor.
In a ruling issued in mid-December, the court held that media revelations and Stéphane Plaza's subsequent conviction for domestic violence led to a loss of customers and a measurable decline in business. The judges considered the founder's public persona to be a central pillar of the network's brand identity, thus engaging the liability of the company that operates the brand.
A contractual obligation to protect the trademark
The franchise agreement requires the group to guarantee the brand's continued existence and reputation in exchange for the royalties paid by the agencies. The court ruled that this commitment had not been met, thus entitling the franchisees to compensation for the damages suffered. The compensation awarded exceeds €117,000, covering, in particular, lost profits, the decrease in the value of the business, and the royalties paid after the scandal broke.
Stéphane Plaza France has announced it will appeal the decision, which it considers legally questionable. For their part, the franchisees' lawyers emphasize the unprecedented nature of the ruling, which could set a precedent, given that several similar cases are currently pending before commercial courts.
