5 Common Mistakes Foreign Startups Make When Entering the French Market

Mistake 1: Choosing the Wrong Legal Structure

Some companies rush into the market by creating a branch office. While this is quick, it limits credibility and makes fundraising nearly impossible. Others set up a SARL, a rigid structure better suited to family businesses than fast-scaling startups.

The right choice for most SaaS and tech companies is the SAS (Société par Actions Simplifiée). It offers:

• Flexible governance.

• Credibility with clients and investors.

• Ability to raise venture capital.

How to avoid this mistake: Define your long-term goals. If you plan to hire and fundraise, start directly with an SAS.

Mistake 2: Underestimating Payroll and Social Charges

Foreign founders often look only at gross salaries when budgeting. In France, employer contributions add 40 to 45% on top of gross salaries.

Example:

• Gross salary: €60,000.

• Employer cost: ~€85,000.

Ignoring this can lead to cash flow issues and stalled hiring plans.

How to avoid this mistake: Always calculate total employer cost at 1.4x gross salary. Use payroll simulations before making offers.

Mistake 3: Ignoring Banking and Administrative Delays

Opening a French bank account as a foreign founder is notoriously difficult. Banks require extensive documentation, in-person meetings, and strict KYC. This can delay incorporation by weeks or months.

Meanwhile, other administrative processes (URSSAF registration, VAT, social declarations) also take longer than expected.

How to avoid this mistake: Start banking and admin processes early. Use a partner like MORN to fast-track introductions and compliance.

Mistake 4: Selling Without Local Adaptation

Many startups assume they can sell in France with the same pitch used in the US, UK, or Germany. But French buyers have different expectations:

• They prefer a local contract with a French entity.

• They value French-speaking support.

• They expect a relational, consultative sales approach.

Without local adaptation, even great products face resistance.

How to avoid this mistake: Localize your go-to-market. Hire at least one French-speaking sales or customer success professional. Adjust contracts, website, and marketing to the French context.

Mistake 5: Neglecting Commercial Presence

Some companies set up a legal entity but stop there, thinking paperwork is enough. In reality, the French market values visible presence. Without local sales, marketing, and networking, growth is slow.

Example: Clients hesitate to sign with a company that has only a mailbox in Paris but no local team.

How to avoid this mistake: Invest in a real footprint. Even one salesperson or local country manager can change market perception. Combine this with networking in French startup ecosystems like Station F and La French Tech.

Case Example

A US SaaS startup entered France in 2023. They chose a branch, underestimated payroll, and kept selling from London with English-only support. After 12 months, they had zero French clients. When they switched to an SAS, hired a French country manager, and localized contracts, they closed three deals in the first quarter.

How morn Helps

morn specializes in helping foreign startups avoid these pitfalls. We:

• Advise on the right entity from the start.

• Manage payroll and compliance.

• Accelerate banking and admin processes.

• Provide local expertise to adapt sales and marketing.

• Offer an optional commercial footprint module with market study, ICP definition, lead generation, and booked meetings.

Conclusion

France offers huge opportunities for international startups, but only if approached correctly. By avoiding the five common mistakes outlined here, you can save months of delay and thousands of euros in wasted effort.

The formula for success is simple: the right legal structure, realistic budgeting, proper administration, local sales adaptation, and a visible presence.