A commercial tenant receives a notice refusing renewal, leaves its shop in a shopping arcade and takes a lease on other premises from the day after the notice takes effect. Has its fonds de commerce (the business as a going concern: goodwill, lease rights, fixtures, clientele) simply moved, or must it be compensated on its value? On 15 June 2023 the Third Civil Chamber of the Cour de cassation (the French supreme court for civil and commercial matters) dismissed the landlord’s appeal: as the landlord had not proved a lower loss, the Court of Appeal could base the compensation on the value of the business. For the valuer, everything turns on the comparison of the two locations and on the accounts.
The facts
A landlord company had granted a bail commercial (French commercial lease) to a tenant company for a business selling photographic and video equipment, photographic services and copies. It served a notice refusing renewal, with an offer to pay an indemnité d’éviction (statutory eviction compensation under a French commercial lease), effective 31 December 2015. The tenant left the premises, took a lease on other premises from 1 January 2016, then sued the landlord for payment.
By a decision of 2 March 2022, the Saint-Denis Court of Appeal (La Réunion) fixed the amount of the compensation. The landlord appealed to the Cour de cassation. According to its ground of appeal, the Court of Appeal had found that the eviction had not caused the loss of the business, which had been transferred, but only a partial loss of clientele and turnover; it therefore could not order the landlord to pay, in addition to removal and reinstallation costs, “a replacement compensation equal to the value of the original business” (translated from the French). Only the partial loss should have been compensated, under article L. 145-14 of the French Commercial Code and the principle of full compensation.
The appeal decision and its figures are discussed in the article on eviction compensation for a photo shop in a French shopping centre.
The decision
The Cour de cassation dismissed the appeal (Cass. 3e civ., 15 June 2023, appeal no. 22-16.076, unreported).
It first noted the Court of Appeal’s findings on the two premises (quotations translated from the French): the new premises “had lesser attractiveness, accessibility and visibility than those of the premises from which it had been evicted, which were located in a shopping arcade”, and “it was not established that the clientele moves between the two geographical areas”.
It then restated the Court of Appeal’s reasoning on the loss: the Court of Appeal found “that the eviction had been accompanied by a loss of clientele and turnover”, “adopted the method of calculation proposed by the expert to assess the value of the business in the light of that figure” and found that the landlord had not produced “the proof, which is incumbent on it, that the loss caused by the failure to renew the lease, which includes in particular the market value of the business, was lower”.
It concluded: “Having assessed the amount of the eviction compensation within its sovereign power, the Court of Appeal legally justified its decision.”
The decision, not published in the Bulletin, does not lay down a new rule: it restates, without citing it, the rule in article L. 145-14 of the French Commercial Code relied on in the ground of appeal, under which eviction compensation includes in particular the market value of the business, determined according to trade practice and increased where appropriate by normal removal and reinstallation costs, unless the owner proves that the loss is lower. The Court does not say that a partial loss of clientele always justifies compensation for the full value of the business; it holds that, in the absence of such proof by the landlord, the amount set lay within the sovereign assessment of the lower courts (the trial and appeal courts, which assess the facts). A decision of the same Chamber of 23 November 2023 decides a different question, that of the tenant’s buildings after an eviction following pre-emption.
What this changes for valuation
The starting point is the value of the business. The Charte de l’expertise en évaluation immobilière (French property valuation charter, 6th edition, November 2025, Title III, § 1.19) distinguishes two cases: replacement compensation (indemnité de remplacement), based on the value of the business, if the trader loses its clientele; relocation compensation (indemnité de déplacement, also called indemnité de transfert), based on the value of the droit au bail (leasehold right) and the temporary loss of earnings, if it can relocate and continue trading.
Relocating does not prove that the clientele followed. Taking new premises at once was not enough, as they were less attractive, less accessible and less visible, with no evidence that the clientele moved between the two areas. The valuer therefore compares the two premises on the same grid: commercial environment, footfall, anchor stores, visibility and shop frontage, access and parking, catchment area. In compulsory purchase too, on the basis of article L. 321-1 of the French Expropriation Code, whether a transfer is possible is assessed concretely, for each replacement site proposed.
The loss is measured in the accounts. The report compares turnover in the financial years before and after the move, adjusted for economic and seasonal effects. For the landlord, this is how a lower loss is established: a transfer without loss, or a limited and quantified loss, shown by documents and not inferred from the existence of the new premises.
The value of the business follows trade practice. The Court of Appeal adopted the expert’s method of calculation, which valued the business in the light of turnover. The report cross-checks the percentage of turnover customary in the trade against a multiple of restated EBITDA (excédent brut d’exploitation). The leasehold right of the premises vacated must be valued in any event: the reported decision of 13 October 2021 requires it to be taken into account even where the tenant has relocated at a lower rent. The two decisions fit together: in 2021, the lost leasehold right cannot be reduced to nothing merely because the new rent is lower; in 2023, compensation calculated on the value of the business was left to the lower courts’ sovereign assessment, as the relocation had caused a loss of clientele and the landlord had proved no lower loss.
The ancillary heads remain separate. According to the appeal, removal and reinstallation costs had been awarded in addition to the replacement compensation. The report quantifies them from quotes or invoices, head by head.
What the valuer takes from it
- Eviction compensation is measured in principle on the market value of the business; the burden of proving a lower loss lies on the landlord.
- An actual relocation does not by itself prove that the clientele followed: the valuer compares the two locations on a common grid.
- Loss of clientele is shown by the accounts before and after the move, adjusted and sourced.
- A landlord who argues for a simple transfer quantifies a lower loss with documents; asserting it is not enough.
- The amount lies within the lower courts’ sovereign assessment: a report setting out its method and references helps them give reasons.
Further reading
The Eviction compensation page describes the assignment, its timescale and its fee. The guide My landlord refuses to renew my lease in France: what compensation? and the glossary entries indemnité de remplacement, indemnité de transfert and indemnité d’éviction complement this article. The decision of 23 November 2023 is discussed in Eviction after pre-emption: the tenant is paid for its buildings. On the same theme: Eviction compensation: a photo shop in a French shopping centre and Relocated for less, the leasehold right lost still has a value. The decision is available on Légifrance.
What next
Relocated after a refusal to renew, and lost part of your clientele?
I compare the old and new premises, analyse the accounts before and after the move and value the business according to trade practice. The report sets out for the court, with supporting documents, whether the loss reaches the value of the business or is lower.
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