"This will be an incentive for the Palestinians to come and not compromise," Netanyahu said at the start of a cabinet meeting on Sunday.
"The substance of negotiations is compromise and the French initiative, as it has been reported, in effect gives the Palestinians in advance reasons not to do so."
French Foreign Minister Laurent Fabius said on Friday that his country was working to quickly revive plans for an international conference to work toward a two-state solution to the Israeli-Palestinian conflict.
Should efforts to breathe life into the moribund peace process fail, France would move to unilaterally recognise Palestine as a state, Fabius said.
Netanyahu said "I believe that we will see a sobering up on this issue. In any case, we will work to bring this about and our position is very clear: We are prepared to enter into direct negotiations without preconditions and without dictated conditions."
Palestinian officials have welcomed the French initiative, having long argued for an international process to end the Israeli occupation and bring about the two-state solution.
Peace talks collapsed in April 2014 and the situation has since deteriorated, with the prospects of fresh dialogue appearing increasingly remote.
A wave of Palestinian knife, gun and car-ramming attacks erupted in October, with 25 Israelis, an American and an Eritrean killed, according to an AFP count.
At the same time, 160 Palestinians have been killed by Israeli forces, most while carrying out attacks but others during clashes and demonstrations.