What better way to make a living than sitting in the sun, chatting to customers over a glass of wine? If you think this is the kind of business you would like to run in France, you must banish those daydreams and face up to reality. The hospitality trade, especially bars in tourist areas, is one of the riskiest in France. This article looks at why those people have been successful and explores some of the pitfalls that lie in wait for the unwary and the ill prepared.
If you’re serious about this kind of business and think you’re strong enough to overcome the potential hurdles, make sure your market research is as thorough as possible. If you don’t have any experience in the hospitality trade, find a temporary job working in a bar or restaurant in the area of France that you’re interested in. Get to know the busy spots in your preferred area and make sure you’re realistic about the kind of competition you will be facing.
If you’re planning to buy a bar, hotel or restaurant, you should walk around the areas you like. See which bars and restaurants are the most popular, preferably in winter as well as summer, and find out why. How do they attract customers and keep them? Sit outside a few, watching the customers come and go. What type of people are they, what do they buy and which are the busiest times?
Overstretching your finances is one of the biggest problems for expatriates who come to France intending to buy a bar, restaurant or hotel.
Don’t forget that, once you’ve bought your bar, there will be stock to buy (although sometimes this is included in the price), lawyer’s fees, licences to pay for, staff wages if you decide to employ others, marketing costs, and your own tax and social security payments – without forgetting rent and utility bills.
Bars and restaurants are usually sold as going concerns, so when you take one over, you buy the lease from the current leaseholder and pay an agreed amount for ‘goodwill’ ( fonds de commerce). Thereafter, you pay the owner a monthly rent. Make sure you find out whether the business you’re buying has a reputation worth paying for. Once you know the area, you can ask locally, and your professional advisers should be able to help. Have the business’s accounts checked by a qualified accountant before you agree on a price and, if possible, spend some time working alongside the owner, so that you can see for yourself what trade is like on a daily basis.
Various licences and permissions are required to run a bar, restaurant or hotel, particularly if you plan to sell alcohol, which you almost certainly need to. Your premises must also conform to certain standards of safety, hygiene, etc., and you can be sure that there will be regular inspections. As with any business premises, your bar, restaurant or hotel must also be inspected for electrical and general safety. The requirements are outlined below.
To establish a bar or restaurant, it’s also necessary to convene a commission de sécurité via the Maire of the commune. He arranges an inspection by representatives of the sapeurs pompiers, the gendarmes and the conseil général, who assess if any work needs doing to provide fire escapes, alarms, etc. Separately, the Service des Vétérinaires (under the auspices of the local préfecture) will visit to inspect general conditions of hygiene. Each of these authorities has the power to shut down premises that don’t comply with regulations.
One of the biggest expenses (apart from staff) involved in setting up a bar, restaurant or hotel is an alcohol licence. In fact, it may not even be possible to obtain a licence for a bar, as these are usually ‘attached’ to a business, and new licences may not be issued. A list of licensed businesses for sale can be obtained from the local chambre de commerce et d’industrie. Alcohol licences are strictly regulated and the system is typically complicated. There are different types of licence for bars, restaurants and hotels. Bear in mind that, in addition to the cost of a licence, you must pay the customs authorities duty on all alcoholic drinks sold in your bar, restaurant or hotel
If you want music in your bar or restaurant, whether live or recorded, you need a separate licence. If the business doesn’t already have a music licence, your lawyer should check whether it’s likely that one will be granted for your premises. You must obtain permission from two organizations. . Charges vary enormously according to your opening hours and whether these are seasonal, the type of drinks licence you have, the size of the bar, the number of staff, your tariffs, and whether you have a dance floor, and are reduced by 33 per cent if you belong to a confederation such as the Compagnie de Promotion Immobilière et Hôtellière (www.cpih.fr ) or Synhorcat.
Bar staff are often hired on a casual, one-off, cash payment basis. Although plenty of bars and restaurants do this, it’s illegal and, if you’re caught, you may have to pay a heavy fine. In popular tourist areas, inspectors make regular visits to check the contracts of the people who are working on the premises. If the workload varies according to the season, as it usually does in the catering trade, you can legally employ someone for a short period or on a temporary contract, provided it’s properly registered with the labour authorities. Be wary of issuing indefinite term contracts without a three-month trial period or training contract; once staff are ‘permanent’, it’s very difficult to dismiss them if they do a poor job.
You must inform the local inspecteur de travail that you’re recruiting staff, make sure you’re contributing to a pension fund on their behalf and that you issue them with a contract within two days of their engagement. You must also draw up a list of working hours, including rest periods, for staff and a registre des pourboires detailing the amount of tips received. Staff must have a bank account, as they must be paid by cheque, accompanied by a pay slip ( bulletin de paie). If staff are from outside the European Union (EU), they must have the appropriate visa or permit.
This article is an extract from Making a living in France.
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