The 60-year-old Swiss manager is one of the top candidates being considered for the role at the Emirates with the report claiming the Nice manager could be available at the end of the season for the small price of £3.5m.
Wenger confirmed on Friday that he is set to leave Arsenal at the end of the season, despite still having a year left on his contract, and inevitable speculation on who will be the next Gunners boss has followed, with Nice boss Favre one of their top targets.
Favre, who managed Borussia Monchengladbach from 2011-2015 and got the best out of then-Gladbach midfielder Granit Xhaka, helped Nice qualify for European football while handling the attitude of players like Mario Balotelli and constant rumours of his top players' future.
The former Switzerland international has been in charge at Nice, who currently sit fifth in the Ligue 1 table, since 2016 and led the Eaglets to a third place finish in his first season at the French coastal club - resulting in qualification for European football.
Arsenal chief Ivan Gazidis recently admitted that finding Wenger's successor would not be easy, with the French manager's impact on the club almost impossible to replace, but that they should rise to the challenge of finding their new leader.
"We will have a process. We haven’t had any discussions today regarding that. I don’t underestimate the challenge of that. This club has to rise to the challenge. You don’t find a replacement for him, you find a new path forward," revealed the Arsenal chief, via the Sun.
Arsenal are also looking at ex-Barcelona treble winning manager Luis Enrique and current Juventus boss Massimiliano Allegri to possibly replace the Frenchman at the end of the season.
Arsenal, who currently sit sixth in the Premier League table, return to action on Thursday when they face Atletico Madrid in the Europa League semi final - with European glory the only realistic way the Gunners will be in the Champions League come next year.