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Business

Four things to know before doing and terminating business in France

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Four things to know before doing and terminating business in France

2 million Euros, 1.8 million Euros, 1.5 million Euros, 10% of global turnover: these are the types of fines companies doing business in France can now face.  France was seen as a jurisdiction where fines were low or non-existent up until very recently when large foreign companies, mostly through their French subsidiaries, started to be mentioned in the headlines as having been sanctioned by the French market surveillance authorities or French Courts.  Below are the four main issues that have led to such recent financial and reputational risks.

Authorities and Courts will examine your contracts 

Deborah Azerraf - Signature Litigation

Deborah Azerraf – Signature Litigation

Under French law, contracts must be balanced.  In other words, there should not be undertakings by only one company and none from the other. There should be no situation where there is a significant imbalance in favour of a party.

On 12 June 2019, the Paris Court of Appeal, for the first time,imposed a fine of 2 million Euros on a company for having provided, in its contract, terms which led to a contractual imbalance against the suppliers of that company.

The French market surveillance authorities, who are at the origin of this litigation, commented on this decision as follows: “Besides the specific case to which it relates, this decision (…) is particularly important because, having been asked to rule on this question for the first time, it considered that the [authorities] could use, in legal proceedings, statements from companies who are victims of unfair commercial practices without revealing their identity. Indeed, the victims of such unfair commercial practices generally fear being the target of economic retaliation if they give testimonies in the scope of proceedings (…). By making it possible for claimant companies to remain anonymous, this case law further strengthens the revelation and punishment of unfair commercial practices“.

One can already imagine the consequence of such a decision when reading the French authorities’ reaction.  Indeed, not only do French Courts allow French authorities to read and check contracts entered into with French companies, they also allow them to refer imbalanced contracts to the Courts.  In addition, any complaining company will remain anonymous after drawing the authorities’ attention to a contract they believe is not compliant.

Authorities and Courts will check how you enforce your contracts 

Companies are also closely monitored in their relationships with other companies and, in particular, their suppliers.  The French authorities are well known for their strict approach, aiming to protect small and medium French businesses against larger international groups.  Conditions around payment terms are an easy way to carry out such controls and sanction them.

In 2018, 263 companies were sanctioned in France, representing a total in fines of 17.2 million Euros. These figures are much higher than in 2017 (155 fines, totaling 8.6 million Euros).  In April 2019, two companies received record fines of 510,000 Euros and 670,000 Euros.  The latest fine,which totaled a record 1.8 million Euros, was handed down to a French electricity provider.

More importantly, the French authorities have created a specific webpage which publishes the names of the penalised companies and their subsequent penalties.  This is not standard practice in France and can be at the origin of difficulties for companies trying, for instance, to develop their business here.  On every occasion, the company receiving the fine is in the headlines.

It is, therefore, not sufficient to have the right payment term conditions mentioned in the contract; the French authorities will check that it is enforced at all times. 

Sylvie Gallage-Alwis - Signature Litigation

Sylvie Gallage-Alwis – Signature Litigation

Courts will check how you terminate your business relations 

When doing business in France, it is essential to know about litigation arising from alleged sudden termination of business relations.  When professionals enter into contractual relations, they can reasonably consider that the contract will be the binding law between the parties, including the termination clause.  However, in France, it is not possible to terminate established business relations whenever you wish or whenever you think you are contractually able to do so. The notice period determined in the contract will not necessarily be enforceable.  Indeed, the party wishing to terminate the contract will have to respect a certain period of time depending on the duration of the business relationship, and the economic dependency between the parties.  If the applied notice period does not comply with the above, the victim will be able to claim damages on the ground of the sudden termination of business relations.

As such, French Courts will not hesitate to enforce a much longer notice period than what is detailed in the contract (e.g. 90 days), the idea being that the weaker party needs protection in order to get organised.  The said weaker party can claim for damages, which would correspond to the loss of contribution margin, for example the difference between turnover from which the victim was deprived after deducting the expenses that were not incurred as a result of the decline in activity resulting from the termination.

By Order no. 2019-359 dated 24 April 2019, the legislator has decided to provide some clarity by stating that an 18-month notice period would allow businesses to avoid liability.  This period is presented as a maximum, beyond which it will no longer be possible to hold the party at the origin of the termination liable.  This exemption from liability if the parties comply with an 18-month notice period is intended to apply regardless of the duration of business relations.  This is particularly interesting in the scope of very long business relations as, until now, companies faced a risk of having to comply with a notice period of more than 18 months.  It is, however, a very long period for short business relations and we will have to monitor how the French courts will apply it.

 Companies can be held criminally liable

In France, both companies and their representatives can be held criminally liable.  One of the most common offences companies are prosecuted for are deceit and misleading commercial practice.  These offences can be linked to products and services.  Companies must be very careful about their communications, whether direct or indirect, on the products/services themselves and online, etc.  The increase of the applicable fine highlights the high risk for companies. Indeed, the fine has increased from 300,000 Euros to 1.5 million Euros with the option to raise the fine to up to 10% of the turnover of the company.

The increase in the criminalisation of French law against companies can also be observed in the development of new offences against companies. By way of example, planned obsolescence, according to which producers can be held liable if they are developing products in a way that would render them obsolete faster than they need to be, in order to push consumers to purchase a new product (Article L.213-4-1 of the French Consumer Code). The obsolescence that can give rise to sanction can be aesthetic, functional, technical, direct, due to the change in the accessories, etc. The scope is very large, as are the potential sanctions. Companies risk a fine of up to 1.5 million Euros, which can be increased to up to 5% of the average turnover of the company for the three years preceding the offence.

As one can see, criminal liability is, in all the above offences, possible even when there is no safety issue and just a communication/marketing issue.

Sylvie Gallage-Alwis is a partner and Deborah Azerrafis an associate at Signature Litigation’s Paris office. www.signaturelitigation.com

Business

How we as female entrepreneurs can inspire and educate the next generation of female leaders

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How we as female entrepreneurs can inspire and educate the next generation of female leaders 1

By Vaishali Shah, serial entrepreneur.

There is tremendous enthusiasm and aspiration amongst the next generation of women who are passionate about being successful in their chosen career, whether it’s running their own business or rising to the top in the company they choose to work in. It is up to those of us who are already in the shoes they want to fill to be the role models and help them along the way. They need our support and guidance and access to tools and resources.

The Alison Rose Review of Female Entrepreneurship found that only 39% of women felt they had the capabilities to start a business compared to 55% of men because they did not fully believe in their entrepreneurial skills. The Review also found that only 30% of women said they already knew an entrepreneur compared to 38% of men.

Here are some ideas and suggestions of how those of us who are successful women in business can help and support the next generation of leaders:

Mentoring – connecting the leaders of the future with experienced and established entrepreneurs and leaders in their industry who know the steps and have already overcome the challenges. Meeting on a regular basis (in person or via video technology), answering questions, offering resources and helping them to define their vision clearly while pointing out opportunities would be extremely beneficial.

Female only networks – most events, especially in the financial and banking sector, are attended by a majority of men. This can be a bit daunting for women who tend to feel isolated. Unfortunately, there are very few female-only business networking groups. We need many more. Women have a different networking style than men. A female only network can give members a safe place to network, build confidence and relationships, while sharing some of the challenges they are facing and ask for guidance and support.

Vaishali Shah

Vaishali Shah

Panel discussions – invite successful female entrepreneurs and leaders from different industries to share their journeys to success. Their challenges, how they overcame them, what kept them going and any nuggets that could inspire the leaders-in-waiting. This could be run around International Women’s Day in March, for example.

Workshops/seminars – offer a seminar or workshop on topics that give valuable information on various aspects of running a business for entrepreneurs. In the workplace, have a system in place for ongoing training, development and engagement. Providing support, tools and resources will help to develop female talent. Make the workshops free or low cost so there is no barrier to entry. Help them to formulate a clear vision and a strong ‘why’ for their vision. This vision and ‘why’ will carry them through the tough times and be an important reminder and motivation to stay the course.

Recommendations – emphasise the importance and benefit of continual learning. Suggest podcasts, webinars or books to listen to or read. Being open to others’ experiences and ideas will help to educate and inspire them. People who achieve great success have a thirst for knowledge and are eager to learn from others.

Confidence and encouragement – give the next generation of leaders a sense of their own value and the value they bring to their market by the products and services they offer. They fill a need – they bring value. Help them understand that setbacks are a part of any business, but they should not be considered failures, rather, as gaining experience. Using setbacks as stepping stones towards their goal is what differentiates those who achieve great success from those who let setbacks define who they are, thus diminishing their chances of success.

Time for them – running or working in a fast-paced business can be all consuming, demanding and overwhelming at times, especially if they’re ambitious and want to get ahead. Teach women in business the importance of taking time out for themselves every day and to celebrate even the smallest success. Taking time out may seem counter intuitive, however it gives the mind time to relax and be open to inspiration and creativity and therefore being more productive.

Dame Karren Brady says – “If you have passion, drive and an entrepreneurial spirit, being female shouldn’t prevent you from getting where you want to be, and sometimes we must have the determination not to let it”.

Whether the next generation of female leaders are students about to embark on their business career, already running their own business or those in employment, we who have the experience and knowledge can play a crucial role in their climbing the ladder of success.

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Business

The 2020 Outbound Email Data Breach Report Finds Growing Email Volumes and Stressed Employees are Causing Rising Breach Risk   

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The 2020 Outbound Email Data Breach Report Finds Growing Email Volumes and Stressed Employees are Causing Rising Breach Risk    2

Research by Egress reveals organisations suffer outbound email data breaches approximately every 12 working hours 

Egressthe leading provider of human layer data security solutions, today released their 2020 Outbound Email Data Breach Report, which highlights the true scale of data security risks related to email use. 93% of IT leaders surveyed said that their organisation had suffered data breaches through outbound email in the last 12 months. On average, the survey found, an email data breach happens approximately every 12 working hours.* 

Rising outbound email volumes due to COVID-19-related remote working and the digitisation of manual processes are also contributing to escalating risk. 94% of respondents reported an increase in email traffic since the onset of COVID-19 and 70% believe that working remotely increases the risk of sensitive data being put at risk from outbound email data breaches. 

The study, independently conducted by Arlington Research on behalf of Egress, interviewed 538 senior managers responsible for IT security in the UK and US across vertical sectors including financial services, healthcare, banking and legal. 

Key insights from respondents include: 

·         93% had experienced data breaches via outbound email in the past 12 months 

·         Organisations reported at least an average of 180 incidents per year when sensitive data was put at risk, equating to approximately one every 12 working hours 

·         The most common breach types were replying to spear-phishing emails (80%); emails sent to the wrong recipients (80%); incorrect file attachments (80%) 

·         62% rely on people-led reporting to identify outbound email data breaches 

·         94% of surveyed organisations have seen outbound email volume increase during COVID-19. 68% say they have seen increases of between 26 and 75% 

·         70% believe that remote working raises the risk of sensitive data being put at risk from outbound email data breaches 

When asked to identify the root cause of their organisation’s most serious breach incident in the past year, the most common factor was “an employee being tired or stressed”. The second most cited factor was “remote working”. In terms of the impact of the most serious breach incident, on an individual-level, employees received a formal warning in 46% of incidents, were fired in 27% and legal action was brought against them in 28%. At an organisational-level, 33% said it had caused financial damage and more than one-quarter said it had led to an investigation by a regulatory body. 

Traditional email security tools are not solving this problem  

The research also found that 16% of those surveyed had no technology in place to protect data shared by outbound email. Where technology was deployed, its adoption was patchy: 38% have Data Loss Prevention (DLP) tools in place, while 44% have message level encryption and 45% have password protection for sensitive documents. However, the study also found that, in one-third of the most serious breaches suffered, employees had not made use of the technology provided to prevent the breach. 

Egress CEO Tony Pepper comments: “Unfortunately, legacy email security tools and the native controls within email environments, such as Outlook for Microsoft 365, are unable to mitigate the outbound email security risks that modern organisations face today. They rely on static rules or user-led decisions and are unable to learn from individual employees’ behaviour patterns. This means they can’t detect any abnormal changes that put data at risk – such as Outlook autocomplete suggesting the wrong recipient and a tired employee adding them to an email.”  

“This problem is only going to get worse with increased remote working and higher email volumes creating prime conditions for outbound email data breaches of a type that traditional DLP tools simply cannot handle. Instead, organisations need intelligent technologies, like machine learning, to create a contextual understanding of individual users that spots errors such as wrong recipients, incorrect file attachments or responses to phishing emails, and alerts the user before they make a mistake.” 

Organisations still cannot paint a full picture of the risks, relying on people-led reporting to identify email breaches, despite severe repercussions 

When an outbound email data breach happens, IT leaders were most likely to find out about it from employees. 20% said they would be alerted by the email recipient, 18% felt another employee would report it, while 24% said the employee who sent the email would disclose their error. However, given the penalties that respondents said were in place for employees who cause a breach, it is not guaranteed that they will be keen to own up, especially if the incident is serious. 46% said that the employee who caused a breach was given a formal warning, while legal action was taken in 28% of cases. In 27% of serious breach cases, respondents said the employee responsible was fired. 

Tony Pepper comments: “Relying on tired, stressed employees to notice a mistake and then report themselves or a colleague when a breach happens is unrealistic, especially given the repercussions they will face. With all the factors at play in people-led data breach reporting, we often find organisations are experiencing 10 times the number of incidents than their aware of. It’s imperative that we build a culture where workers are supported and protected against outbound email breach risk with technology that adapts to the pressures they face and stops them from making simple mistakes in the first place. As workers get used to more regular remote working and reliance on email continues to grow, organisations need to step up to safeguard both employees and data from rising breach risk.” 

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Creating an engaging email marketing campaign that avoids the junk folder

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Creating an engaging email marketing campaign that avoids the junk folder 3

By David Wharram, CEO of Coast Digital

With more than 280 billion emails sent every day, email marketing is a tried and tested marketing method with a multitude of benefits. In addition to resonating with those looking to save on their marketing spend, email marketing generates significant ROI for businesses. Statistics have shown that email marketing significantly outperforms social media when trying to reach customers, while also proving more cost-effective. Additionally, Mckinsey found that email marketing is 40 times more successful at gaining customers than Twitter and Facebook combined.

As business owners digest these facts – low cost, high return – it can be tempting to plan a barrage of untargeted marketing emails to both prospective and existing customers. Yet, this “spray and pray” approach may not generate as many sales leads as you’d hope. In fact, this method often tends to deter prospective customers and impact the relationship with existing clients, resulting in your emails consistently making their way into the junk folder. The key to a successful email marketing campaign is investing in the right tools to plan, automate, track, and analyse your outreach.

Effective planning

Like other marketing channels, email marketing takes effective planning and the right strategy to make it work. Rather than trying to sell a product or service from the outset, you need to engage with the customer and build trust with them first. To do this, you need to consider who the customer is, how to reach them and what information they are likely to want. For example, returning customers will be much more receptive to an email presenting discounts and timed offers. However, new or prospective customers would most likely prefer to familiarise themselves with your businesses first in order to understand how your product or service will benefit them.

Not only do you need to identify different audiences and identify how to engage them, but you should also consider the frequency of communication. Too often, and your emails could appear as spam. Too irregular and there’s a risk the customer might forget about you or turn to a competitor.

A crucial part of planning the overall strategy is considering the ideal outcome. Whether this is to attract new customers, send product or service updates, or retain customers through offers and discounts, the objective will determine the scope of the entire campaign.

The results of a well thought out email marketing strategy can drive brand awareness, boost lead generation and increase revenue. The results of a poorly planned strategy often lead to disgruntled recipients and a high number of unsubscribes.

Keep content relevant, personal and useful

In addition to planning the overall strategy of your campaign, you need to consider the content you will push out to your audience. From our experience, this will largely depend on which goals have been determined during the planning process.

It’s essential to ensure you’re providing something of value. While you want to make sure that your email marketing campaigns generate ROI, you also need to make the recipients feel that they’re not always being sold to. The key to this is by building a level of trust with the audience, which can be achieved by providing relevant advice and insights, or by asking for feedback.

Additionally, audiences are more receptive to content that is personal to them. It’s easy to spot a generic email that has been created to cover all bases for an entire mailing list. Therefore, making the emails more personalised to recipients tends to strengthen the overall campaign.

According to recent research by Econsultancy, personalisation remains a top priority for marketers as 67% of those asked said that was the main focus for improving their campaigns. Also, a study by Salesforce found that 84% of consumers prefer to be treated like a person not a number. That’s why taking the time to make content more relevant to the receiver could make or break the campaign.

Evaluate and evolve

Once your initial outreach has been complete, you need to take the time to reflect on your efforts. One aspect of the planning process should include setting clear metrics and KPIs so that you can be clear on whether these were met or not. There are several metrics that businesses should consider when it comes to the success of their campaign – including clickthrough rate, conversion rate, bounce rate and email forwarding rate. Each KPI will depend on the overall goal. Companies need to invest in the right tools and resources to evaluate email marketing campaigns, especially if this is new territory. Measuring the success of your outreach will enable you to determine what worked well, what needs refining or what needs to be completely overhauled. What’s more, if the initial campaign didn’t generate the outcome you were hoping, don’t be deterred from using email marketing altogether and instead use it as an opportunity to learn and improve.

Email marketing remains one of the most effective methods to engage with your audience on an ongoing basis. However, far too many businesses try to run before they walk and could be spamming their customers with irrelevant, uninteresting content. To ensure your outreach is successful, you need to effectively plan your outreach – considering your audience and delivering helpful and engaging content to them will help your emails avoid the dreaded junk folder.

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