By John Evans B.Sc. (Econ) F.C.A
Have you or are you considering a business in France? The scope of the subject is enormous, covering a complete spectrum from a "one-man business" to major corporate acquisitions. This article seeks to examine small businesses which can be easily bought/set-up and controlled by one person (or couple). At this stage it aims to provide some "food for thought".
Over the last few years there has been an increasing and continuing U.K. interest in the French property market - many people have acquired homes for a variety of reasons. Some small businesses have been acquired or established. There is now a definite trend towards establishing oneself permanently in France - and to do this in most cases requires a source of French income. Despite the U.K. being a member of the EEC it is not in practice a simple matter to find employment. However it is relatively straightforward to set up a business. This need not be a daunting prospect, provided, as with any project, sufficient homework is carried out, and the correct professional advice is sought.
Just as with house purchase the choice is enormous. It is, to some extent a chicken and egg situation - as some projects will work better in one area than another. You might have a particular project in mind, which will only operate in certain areas; you may wish to live in one area, where only certain projects can work. It is certain that most opportunities arise in the leisure (and related) industry. Two other options should be considered.
The characteristics of an area require careful evaluation. Many tourist areas, e.g. have an extremely short season, whereas in others (the north coast) the season is longer. Clearly the nature of the available attractions has important effects.
The types of business which can be established or purchased are numerous and will include:
It is worthwhile to see what facility/service may be required. For example garden centres are virtually non-existent, and catering facilities for children are rare. Also it is difficult to obtain meals outside the traditional French eating hours. (Try feeling hungry at 4p.m. whilst visiting the FUTUROSCOPE!). There is the instance of the English company flying English style sandwiches into Paris on a daily basis - it has now set up a factory outside Paris to meet demand. Look at your own talents; thus an English teacher could contemplate a language school - and somebody who made his own surfboards, investigated the possibility of a small factory in France. Recently, for example, an English printer transferred his business from the U.K. to operate from the outbuildings acquired with the farm he had purchased.
The element of competition should be evaluated - especially so in the catering trade, where the French can excel at what they do. There is also competition from the English themselves; in recent years many couples have set up B & B's and gites complex, so it may be worthwhile to look at how they operate, and what could be changed:
A very basic business can be set up/purchased for as little as £50,000 - however the financial prospects are unlikely to be favourable. Realistically one should envisage a capital requirement from £100,000 upwards. At the other end of the price range, chateaux can be acquired and converted to many uses. There are large campsites on the beach from £500,000. There are farms and vineyards too, but in all cases you should ask yourself why are the French selling them. Also be careful that prices are not inflated for the U.K. customer (it does happen). It must be ensured that you know exactly what is being purchased and the total price expected. Most existing businesses are sold on a form of lease (you purchase the business, known as "fonds de commerce" and rent the premises); and it can be possible to negotiate for the freehold ("Les murs"). And lastly a final word on prices - the add-on fees to simple property purchases are already high (12 - 15%); for commercial transactions these can be as much as 25%. Whether you buy the business or a French company (owning the business) also has significant financial effects. Professional advice should be sought prior to signing any contractual documents.
At this point it may be of interest to indicate some of the projects undertaken:
These are only a few of many; there have also been various outlandish projects (some of which did not see the light of day!).
The structure of the operation will need to be determined (sole trader, U.K. company, French company). Appropriate advice is essential - the most appropriate being from an English firm of lawyers with a French legal firm.
The person(s) running the business will need a residents card or "carte de sejour". Formalities are surprisingly easy - the local French Chamber of Commerce will provide extremely helpful advice and practical assistance with the various procedures. Many have interpreters available. The business needs to be registered, with the Chamber of Commerce and various other public bodies (fiscal, social security). Certain businesses, especially catering are subject to special controls. Depending on the trade, authority will almost certainly be required from the Mairie (TOWN HALL). Various statutory requirements (accounting, fiscal, employment) must be rigorously complied with. At this stage the advice of a French "Expert Comptable" (equivalent to a Chartered Accountant) is essential. The business must have its own bank account - besides its practical and legal importance, it enables contact to be made with the local bank manager who is an invaluable source of information.
Financing can be made available either from the U.K. or in France. Exactly what is available will depend on the project. Whatever the source of finance, a sustainable business plan is required - and you need it too! For a French loan it is absolutely essential to be able to demonstrate relevant and practical experience. Obtaining a U.K. loan can be difficult. The institutions are not geared up for the French market, and more importantly they will not have the local French knowledge. Depending on the project and the region various grants and/or incentives may be available. As a general rule incentives are only available in those areas anxious to attract new business - thus you will find no grants available around Disneyland, or on the Cote d'Azur. For manufacturing projects assistance is frequently available in the form of rent-free premises or units fitted out to specific requirements.
It is not difficult to set up in France, provided the necessary homework is carried out and professional advice is sought. Money spent on advice at the outset can provide dividends in the future, and in many cases save on initial costs.
It is unlikely that your project will make you extremely wealthy. It is fairly certain that you will have to work hard - and put in longer hours than for a comparable English business (French bars are open for much longer hours than English pubs). However, you will in all probability have a more rewarding lifestyle.
Finally, do not worry about the Frenchman's attitude to your project. You will be surprised how helpful they will be. There are too many misconceptions about the French and their attitude to foreigners. Lastly if you do not speak French do not be put off. You will be surprised how helpful the French will be and how quickly you will (or be made to) learn!
