Become an independent sales agent
Verified 14 June 2024 - Directorate for Legal and Administrative Information (Prime Minister)
Commercial agent activity offers a wide range of opportunities for entrepreneurs who want to play a key role in the distribution and promotion of products or services. The status of commercial agent is subject to specific regulation.
What is a sales representative?
The sales representative is a representative permanently loaded and independentto negotiate and possibly conclude contracts for the sale, purchase, rental or provision of services, for and on behalf of a company principal.
It offers this company (the principal) sa commercial competence and sound market experience, whether in industry, real estate, sports, construction, information technology, the medical sector, etc. Its principal may be a producer, an industrialist, a trader or another commercial agent.
In other words, the commercial agent is a commercial intermediary dealing with customers, in the name and on behalf of a company whose products it distributes. Its primary function is to bring new customers and retain those already out of the market.
Please note
When starting a business, a sales representative should choose an area in which they already have a solid knowledge base which will give it a competitive advantage.
A commercial agent may practice under one of the following legal statuses:
- Sole trader (including under the micro-entrepreneur). The commercial agent shall act as a natural person.
- Business (EURL or SASU). The commercial agent shall act as a legal person.
In either case, he may exercise alone or with staff. It may also enter into commercial agent contracts with other commercial agents. In this case, the commercial agent is the principal and the commercial sub-agents are its agents.
The profession of commercial agent is economically accessible. The commercial agent does not require substantial funds to operate as long as he does not own the goods (he does not hold any stock) and does not need to enter into a lease to occupy commercial premises.
FYI
The independent home seller (VDI) may act as a commercial agent. Conversely, some agents are not commercial agents (e.g. travel agents or bank intermediaries).
What is the difference between the sales agent and the business transferor?
Unlike a commercial agent who negotiates and enters into commercial transactions in the name and on behalf of its principal, the business transferor connects only the company and the customer. It identifies prospects but does not intervene to conclude contracts on behalf of one of the parties.
The business transferor shall act in his own name and on his own behalf. It does not represent the company for which it is carrying out a prospecting mission.
His intervention is punctual and ceases as soon as the parties have been connected, while the mission of the commercial agent is permanent.
The major consequence of this difference is that, unlike the commercial agent, the business provider does not not entitled to termination indemnity (equal to 2 or 3 years commission).
Please note
In the event of a dispute, the judge will not be bound by the qualification given by the parties to the contract. Thus, a business-feeder contract may be requalified under commercial agent’s contract, and vice versa.
Independence of the commercial agent
The sales representative uses the name, logo or trademark the company entrusting it with the sale of its products or services.
However, the commercial agent shall independent. He manage freely the organization of his work and alone determines its level of activity and its financial objectives without the requesting company being able to give it directives.
For example, the sales representative may employ sub-agents which he pays. These are other commercial agents with whom he enters into an agency contract. In this case, the commercial agent is the principal and the sub-agents are his agents.
Thus, the commercial agent is not the holder of an employment contract in respect of this activity and exercises without subordinate relationship with the mandating company. The sales representative has a commercial agency contract specifying, in particular, his status as self-employed person, the nature of his services, the conditions for exercising them and the arrangements for remuneration.
Please note
Most often, the commercial agency contract is concluded fixed-term.
Drafting a contract written is not obligatory. On the other hand, in the absence of a written document, it may be appropriate to lay down, in a simple document, the basis for the organization of the commercial agency contract. This document will be careful to mention the purpose of the mandate (products or services for sale, target clientele) and the agent's remuneration at a minimum.
Reciprocal duty of loyalty
The sales agent and the requesting company have a reciprocal duty of loyalty :
- The principal must take all practical measures to to enable the commercial agent to exercise his or her mandate normally.
For example, he must make available to the agent the documents necessary for the activity (purchase orders, product data sheets) as well as the correspondence exchanged with the customer, the invoices and the amount of commissions. The company must also notify the customer of the price increase, delivery delays and acceptance of a quote within a reasonable time.
Likewise, it is for the principal to provide the agent with all the accounting documents necessary for the calculation of the commissions due to him.
- Thesales agent shall carry out its mandate as a good professional.
It must preserve the image of the requesting company by presenting the products or services marketed in accordance with the technical guides provided by the company. The commercial agent must also inform his principal of the market outlook.
In addition, the sales representative must obtain the agreement of its principal to represent another competing company of the latter.
Warning
A commercial agent who fails in his duty of loyalty commits a gross negligence may justify the termination of agency contract by the principal and this, without payment of the allowance termination of contract.
Example :
The mere fact that the agent’s turnover is insufficient over a short period or that the volume of sales is merely reduced cannot constitute serious misconduct. On the other hand, if the reduction in turnover results from a deliberate disaffection on the part of the staff member for the exercise of his mandate, that indicates conduct incompatible with sincere cooperation which may then constitute serious misconduct.
A commercial agent is also guilty of serious misconduct if he publicly expresses doubts about the honesty and competence of his principal.
The steps to register as a commercial agent vary according to the legal form selected: sole trader or business (SASU, EURL).
Sole trader
A commercial agent who acts as an individual entrepreneur (including micro-entrepreneur) is not a trader. He must register at the SFCR: titleContent.
The application for registration must be made online on the website of the company formalities office, within 15 days after the start of the activity.
Business
The commercial agent who practices as a business (SASU, EURL) must register with the SFCR: titleContent and to SCR: titleContent.
The application for registration must be made online, before the start of the activity, on the website of the company formalities office.
How is the sales representative paid?
The remuneration of the commercial agent shall be freely fixed by the parties in the agency contract.
In most cases, the commercial agent is entitled to a commission whenever a commercial transaction is concluded through its intervention. It also has a right to commission when one of its customers subsequently concludes a similar contract directly with the requesting company (unless the agency contract opposes it).
The commission amount is usually calculated as a percentage of the realized turnover by the agent. It can also be a lump sum.
Please note
In the absence of the contract, the commercial agent is entitled to remuneration in accordance with current practice, in the sector of activity covered by its mandate.
The sales representative forfeits commission if it is established that the contract between the customer and the requesting company will not be performed (for example, in the field of sale, when it is established that the buyer will not pay the price). In this case, it may be forced to to reimburse commissions which he would have already received.
Nevertheless, the agent retains its right to commission if the non-performance of the contract is due to circumstances attributable to the requesting company (e.g. late delivery).
What is the sales agent tax?
The tax regime of a commercial agent varies depending on whether he issole trader (including micro-entrepreneurs) or business (SASU or EURL).
Sole trader
Profits generated by the activity of the agent are taxed at theincome tax (IR), in the category of non-commercial profits (NBC). Thus, they are added to the other income of the agent (salary, property income, financial investments...) and are subject to the progressive scale of income tax.
Please note
The individual entrepreneur has the possibility toopt for business tax (IS).
SASU
Profits generated by the activity of the agent are subject to thebusiness tax (IS), at the standard rate of 25% (reduced rate to 15%).
If the commercial agent is President of the SASU, the remuneration he receives under his social mandate shall be imposed on theincome tax (IR), in the category of salaries and wages.
In addition, dividends shall be subject, at the option, to the flat-rate flat-rate levy (PFU) of 30% or at progressive scale of income tax in the category of income from movable capital.
EURL
Profits generated by the activity of the agent are taxed at theincome tax (IR) in the category of non-commercial profits (NBC). Thus, they are added to the other income of the agent (salary, property income, financial investments...) and are subject to the progressive scale of income tax.
If the commercial agent is the manager of EURL, the remuneration he receives under his social mandate shall also be taxed on theincome tax (IR). Such remuneration shall not be deductible from the company's profit or loss.
Please note
Even if he exercises at home, the commercial agent is liable for the company property tax (CFE).
The social security scheme of a commercial agent varies according to whether he issole trader (including micro-entrepreneurs) or business (SASU or EURL).
Sole trader
The commercial agent is subject to the Self-employed persons (SFTs). As soon as he declares his activity, he is attached to the general social security scheme in the field of family benefits, sickness insurance and compulsory and supplementary old-age pension.
SASU
The SASU Presiding Commercial Agent shall be granted the status ofassimilated employee where he is remunerated in accordance with his social mandate. Thus, as soon as he declares his activity, he is affiliated to the general social security scheme and benefits from the same social protection as management employees.
EURL
The commercial agent managing the EURL shall be subject to the Self-employed persons (SFTs). As soon as he declares his activity, he is attached to the general social security scheme in the field of family benefits, sickness insurance and compulsory and supplementary old-age pension.
Most often, the sales representative concludes a fixed-term contract with the mandating company. If it does not contain a tacit renewal, the sales representative contract automatically terminates at the end of his term.
FYI
If the agent and principal continue to perform the contract after its expiration, the contract becomes a contract of indefinite duration.
Period of notice in the event of early termination
Where one of the parties takes the initiative to terminate the commercial agent contract early (before the termination of the contract), a notice period must be respected. This period varies according to the duration of the contract in question:
- 1 month notice in the event of a breach of contract during its first year
- 2 months notice in the event of termination of the contract during its second year
- 3 months notice in the event of termination during the third and subsequent years of the contract.
If the fixed-term contract has been converted into a contract of indefinite duration, the period of notice shall take account of the preceding fixed-term period.
The commercial agent and the requesting company may also agree in the contract on a longer notice period.
Please note
However, such notice need not be given in the event of serious misconduct invoked to justify the early termination of the commercial agent contract (e.g. physical and verbal aggression of a client by the agent).
Termination Compensation
In the event of termination of his contract with the principal, the commercial agent shall be entitled to a termination indemnity in compensation for the damage suffered (loss of income).
This compensatory allowance shall be paid within following situations :
- The commercial agent contract is completed and is not renewed.
- Sales agent contract has been broken before it ends by the principal (unless the staff member is guilty of serious misconduct).
- In case of death of the official (the allowance shall be paid to rights-holders).
- Where the termination of the contract is due to age, disability or illness as a result of which the pursuit of his activity can no longer be reasonably required.
FYI
The sales representative has 1 year only, as from the termination of the contract, to notify the principal that he intends to receive the compensation. The commercial agent may express his intention to assert his rights by means of a assignment for interim measures or by simple letter notifying the principal of his disagreement with the terms of compensation he has offered him. After this period, he loses his right to compensation.
The allowance shall be calculated by reference to gross commissions received by the sales representative in recent years. It is usually equal to 2 or 3 years of commission.
In the event of a dispute, the judge may assess the amount of the compensation taking into account multiple items, such as:
- The loss of commissions to which the officer could reasonably be entitled in the pursuit of the warrant
- Deprivation of the possibility of passing on his mandate to a successor for consideration (this right has an economic value)
- The loss or reduction of the profit which he could derive from the investments made for the performance of this contract
- Expenditure resulting from the termination of the contract, including redundancy payments for staff who have become redundant (if the staff member employed employees or commercial sub-staff).
Please note
In addition to the allowance, the commercial agent may claim damages where the circumstances of the breakdown reveal fault on the part of the principal. For example, where the principal terminates the contract before its expiry without respecting the required period of notice.
However, the termination indemnity is not due to the agent in the following cases:
- Termination of the contract is caused by the serious misconduct on the part of the commercial agent (e.g. physical and verbal aggression of a customer, refusal to comply with sales methods, failures in sending orders many times).
- Termination of the contract shall result from the agent's initiative. The staff member shall retain his right to compensation if the cessation is due to age, disability or illness or to circumstances attributable to the principal (e.g. failure to observe duty of loyalty).
- According to an agreement with the principal, the agent shall assign his commercial agent contract to a third party. The commercial agent may present to the principal a successor to whom he assigns his rights and obligations. If the principal accepts the assignment, he shall be exempt from payment of the termination indemnity.
The real estate sales agent, also called " independent real estate broker ’, obeys the commercial agent's regime. However, due to the specificity of his profession, the commercial real estate agent must respect certain specific rules :
- Prohibition of receiving or holding, directly or indirectly, money, goods, effects or customer values
- Prohibition on giving legal advice and drafting private acts, with the exception of contracts concluded for the benefit of the realtor holding the professional card
- Prohibition on the management of an establishment, branch, agency or office
- If the commercial agent is acting as a sole trader (natural person), the latter must show a collaborating certificate issued by the CCI authorizing it to negotiate. The application for certification must be made by the real estate agent holding the professional card (the principal).
- If the commercial agent is a corporate (legal person), his business must be the holder of a professional real estate card.
Any independent real estate negotiator mandated by a real estate agent to negotiate on its behalf may be subject to the status of commercial agents. There is no distinction between the commercial agent holding the collaborating certificate (natural person) and the commercial agent holding the professional card (legal person).
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