Are you embarking on an adventure that's both family-oriented and entrepreneurial? You've come to the right place!
Family businesses, though fewer in number than in the past, still form a solid foundation for the French economy, with no less than 60% of French companies being family businesses , according to the Institut de l'Entreprise Familiale.
To shed some light on the particularities of family businesses, we focus today on their definition and characteristics.
First of all, we need to define what a family business is.
As the Institute for Family Business explains, there is no real definition of what a family business actually is. Nevertheless, it points out that such businesses can be identified by three characteristics:
- The entrepreneurial structure is owned by a single family.
- This same family is involved in the management of the company.
- The company sees several generations of the family in question acting and interacting within it.
The European Family Business website then adds that company size is not a factor in determining the family nature of a business. Companies can be SMEs or multinationals, listed or unlisted.
In a nutshell, a family business is owned and managed by a family, who then pass it on to the next generation.
Secondly, it is important to consider the different legal forms that can be used to develop a family business.
First and foremost, to qualify as a family business, a company must have several partners who are members of the same family. In this respect, sole proprietorships are not eligible.
Despite this, one form is particularly popular, as it is ideally suited to the development of a family business.
This is a special form of SARL, known as a "SARL de famille".
This structure, obviously based on the classic SARL model, offers the opportunity, if the right conditions are met, for all the company's partners to be subject to partnership taxation.
This opens up the possibility of the company being permanently subject to income tax (impôt sur le revenu - IR) instead of corporation tax (impôt sur les sociétés - IS).
There are a number of special features of family businesses
These are primarily the following :
- The family nature of the business means that not only the company's strategy, but also the manager's succession is determined within the family circle.
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A company's strategy is often based on medium- or long-term projects, facilitated by the nature of the business.
- A family-run business is characterized by a high degree of flexibility, lasting relationships and a strong human factor.
- In many cases, these companies are more sustainable than non-family businesses.
In conclusion, in France today, the family business model is still a real option for developing a long-term project.
Today, there are many large French family businesses, such as Lactalis, Darty and Bonduelle.
Written by our expert Quentin Moyon
December 18, 2018
