Corporate & Commercial
Franchise & Distributorship Law in Turkey: 2026 Guide
How franchise and distributorship agreements work in Turkey in 2026: legal framework, goodwill compensation and competition rules for foreign brands.
Expanding a franchise or launching a distribution network in Turkey is a common route for foreign brands entering the market, but it only works if the contracts sit on solid legal ground. Franchise and distributorship law in Turkey is not codified in a single statute, which surprises many foreign brands. Instead, these arrangements are governed by a patchwork of the Turkish Code of Obligations, the Turkish Commercial Code, competition rules and intellectual-property legislation. This 2026 guide explains how Turkish law treats franchising and distributorship, the compensation risks on termination, and the clauses foreign brands must get right before entering the Istanbul market.
I need a business lawyer in Istanbul to review a distribution agreement. What should the review cover?
A review of a distribution agreement for Türkiye should cover four things, each explained further down this guide: how the contract is classified (exclusive distributorship, franchise or commercial agency) under the Turkish Code of Obligations (Law No. 6098) and the Turkish Commercial Code (TTK, Law No. 6102); whether its resale-price, territory and non-compete clauses stay within Competition Law No. 4054; the goodwill (portfolio) compensation an exclusive distributor may claim when the contract ends, which TTK Article 122(5) allows unless that would be contrary to equity; and the governing-law, dispute-resolution and termination-notice clauses, bearing in mind that TTK Article 18(3) prescribes how notices between merchants must be sent. Istanbul Attorneys is an Istanbul commercial law firm that reviews and redrafts distribution, franchise and agency agreements in English for foreign suppliers and brands, with the review led by Att. Onur ÇALIŞICI, founding partner and member of the Istanbul Bar Association (Registration No. 83426). To ask for a review, send the draft agreement or term sheet to info@istanbulattorneys.com; the scope and the fee are agreed in writing before any work starts.
Key Takeaways: What Foreign Brands Need to Know
No dedicated statute: franchise and distributorship agreements are "innominate" (unnamed) contracts governed mainly by the Turkish Code of Obligations (TBK, Law No. 6098) and the Turkish Commercial Code (TTK, Law No. 6102).
Goodwill compensation risk: TTK Article 122 gives commercial agents a claim to portfolio (goodwill) compensation, and Article 122(5) applies the same rule to exclusive distributorship and other similar continuing relationships that grant an exclusive right, unless that would be contrary to equity.
Competition rules bite: a supplier may not stop the buyer from setting its own resale price, although it may set a maximum or recommended price; Block Exemption Communiqué No. 2002/2 covers vertical agreements only while the supplier's market share does not exceed 30%.
Protect your brand: trademark protection is obtained through registration under the Industrial Property Law No. 6769, and a trademark licence must be in writing; know-how is protected by contract and by the unfair-competition rules of the TTK.
Drafting is the defence: clear term, termination-notice, territory, and dispute-resolution clauses narrow the room for a dispute before it starts.
How Turkish Law Classifies Franchise and Distributorship Agreements
Unlike many jurisdictions, Turkey has no standalone "Franchise Act" or "Distributorship Act." Both contracts are treated as innominate (isimsiz) or sui generis agreements — legally valid but not defined by a specific chapter of any code. Their backbone is the general contract law of the Turkish Code of Obligations (TBK, Law No. 6098), supplemented by the Turkish Commercial Code (TTK, Law No. 6102) because the parties are almost always merchants. Article 2 of the Turkish Civil Code (TMK) adds an overarching rule: everyone must act in accordance with good faith when exercising rights and performing obligations, and the legal order does not protect the manifest abuse of a right. Because so much turns on how the contract is drafted and interpreted, foreign brands benefit from working with corporate and commercial lawyers in Turkey from the outset.
Franchise vs. Distributorship: The Core Difference
A franchise (franchise sözleşmesi) is far more than a supply deal. The franchisor licenses a complete business system — trademark, know-how, operating manual, and ongoing support — and controls how the franchisee runs the outlet in exchange for entry and royalty fees. A distributorship or exclusive dealership (tek satıcılık sözleşmesi), by contrast, gives the distributor the right to buy the supplier's products and resell them in a defined territory, usually without licensing a full business format. The distinction matters: franchising involves deeper IP and quality-control obligations, while distributorship centres on purchase, resale margins, and territory. It also matters when the relationship ends: TTK Article 122(5) names exclusive distributorship (tek satıcılık) expressly, while a franchise is caught only if it qualifies as a similar continuing relationship that grants an exclusive right.
Franchise, Distributorship and Agency Compared
Foreign suppliers often use these labels loosely, but Turkish law attaches different consequences to each. Under TTK Article 102(1), a commercial agent (acente) permanently acts as an intermediary for, or concludes in the merchant's name, contracts concerning a commercial enterprise within a specific place or region; a distributor and a franchisee trade in their own name. The label in the document does not settle the question: under TBK Article 19, the type and content of a contract are determined by the parties' real and common intention, regardless of the words they used by mistake or to hide their true purpose.
| Point | Franchise | Exclusive Distributorship | Commercial Agency |
|---|---|---|---|
| Statutory basis | No specific statute; TBK, TTK, Law No. 6769 and Law No. 4054 | No specific statute; named in TTK Art. 122(5) | TTK Art. 102 et seq. |
| Who deals with customers | Franchisee, in its own name, under the licensed brand | Distributor, reselling in its own name goods bought from the supplier | Agent intermediates or concludes contracts in the principal's name |
| Notice to end an indefinite contract | No statutory period; set it in the contract | No statutory period; set it in the contract | Three months; just cause at any time (TTK Art. 121(1)) |
| Goodwill compensation | Only if it is a similar continuing relationship granting an exclusive right, and not contrary to equity (TTK Art. 122(5)) | Art. 122 applies unless contrary to equity (TTK Art. 122(5)) | Direct right if the three conditions of TTK Art. 122(1) are met |
Common Franchise Structures Foreign Brands Use in Turkey
International brands enter Turkey through several structures. In a master franchise (ana franchise), the foreign brand appoints a single Turkish master franchisee that sub-franchises across the country — a way to scale through one local partner, at the cost of direct control over individual outlets. A unit or direct franchise sees the brand contract with each individual operator, preserving control at the cost of heavier local administration. Area development agreements grant one operator the right to open a set number of outlets in a region within an agreed timetable. The master model needs one extra clause: under Article 24(3) of the Industrial Property Law, unless the contract provides otherwise, a trademark licensee may not transfer its licence rights or grant sub-licences. Each model carries different tax, liability, and competition-law consequences, so the choice should be made with local counsel before term sheets circulate in Istanbul.
The Legal Framework Governing Franchising in Turkey
Several bodies of law interact whenever a foreign brand franchises in Turkey. The TBK governs formation, performance, and termination. The TTK applies because both parties are merchants: Article 18(2) requires every merchant to act as a prudent businessperson in all activities relating to its business. The Industrial Property Law (Law No. 6769, Sınai Mülkiyet Kanunu) protects the trademarks and designs at the heart of any franchise — which is why registering your trademark in Turkey before signing is essential. Finally, Law No. 4054 on the Protection of Competition regulates the restrictions a brand may lawfully impose on its network.
Pre-Contractual Disclosure and Good Faith
Turkish law imposes a pre-contractual duty of good faith often described through the doctrine of culpa in contrahendo (fault in contracting). A franchisor that misrepresents projected turnover, conceals material costs, or hides known weaknesses in the system can face liability even if the contract is never signed. Misrepresentation can also undo a signed contract: under TBK Article 36, a party that contracted because the other party deceived it is not bound, even if its mistake was not fundamental, and under Article 39 it must declare this within one year of discovering the deception or it is deemed to have ratified the contract, without losing its right to compensation. In practice, we advise franchisors to provide a written disclosure package — covering the trademark's registration status, cautiously phrased financial expectations, the fee structure, and the franchisee's obligations — and to keep evidence that it was delivered.
Protecting the Trademark and the Know-How
Under Article 7(1) of Law No. 6769, trademark protection is obtained through registration. Article 24 allows the trademark to be licensed for some or all of its registered goods or services, non-exclusively unless agreed otherwise, and requires the licensor to take measures to ensure the quality of what the licensee supplies. Under Article 148, a licence must be in writing, and rights under a transaction not recorded in the registry cannot be asserted against third parties acting in good faith. Know-how is not an industrial property right under Law No. 6769; it is protected by confidentiality clauses and by TTK Article 55, which treats unauthorised use of entrusted work product (Article 55(1)(c)) and unlawful disclosure of production and business secrets (Article 55(1)(d)) as unfair competition.
Competition Law: What a Franchisor or Supplier May Restrict
Article 4 of Law No. 4054 prohibits agreements between undertakings that have as their object or effect, or are capable of having the effect of, preventing, distorting or restricting competition in a market, including by fixing sale prices or sharing markets. Franchise and distribution networks therefore rely on Block Exemption Communiqué No. 2002/2 on Vertical Agreements, which on entering into force also repealed the separate franchise block exemption (Communiqué No. 1998/7). Its main conditions:
Market share: under Article 2, as amended by Communiqué No. 2021/4, the exemption applies only if the supplier's share of the relevant market does not exceed 30%.
Resale prices: an agreement that prevents the buyer from setting its own sale price loses the exemption (Article 4(a)).
Territory: restrictions on where or to whom the buyer sells also remove it (Article 4(b)), except for listed cases such as restricting active sales into an exclusive territory or customer group reserved to the supplier or allocated to another buyer, provided sales by the buyer's own customers are not restricted.
Non-compete: an in-term non-compete that is indefinite or longer than five years is not exempted (Article 5(a)); a post-term one is exempted only for competing goods or services, limited to the premises or land from which the buyer operated during the contract, necessary to protect know-how transferred by the supplier, and for no more than one year (Article 5(b)).
Under Article 9 of the Communiqué, agreements meeting these conditions need not be notified to the Competition Board. The stakes are statutory: under Article 56 of Law No. 4054, agreements contrary to Article 4 are invalid and their performance cannot be demanded, and under Article 16 the Board may fine undertakings that breach Article 4 up to ten percent of their annual gross revenue.
Termination and Goodwill (Portfolio) Compensation
TTK Article 122(1) allows a commercial agent to claim appropriate compensation after the relationship ends if three conditions are all met: the principal continues to derive substantial benefits from new customers the agent found; the agent, because of the termination, loses the remuneration it would have earned on business with those customers; and payment is equitable in the circumstances. Article 122(5) applies the provision, unless contrary to equity, when an exclusive distributorship or another similar continuing relationship granting an exclusive right ends. The award cannot exceed the average annual commission or other payments over the last five years, or over the actual duration if shorter (Article 122(2)). There is no claim if the agent terminated without the principal having done anything to justify termination, or if the principal terminated for just cause because of the agent's fault (Article 122(3)). The claim cannot be waived in advance and must be asserted within one year of the end of the contractual relationship (Article 122(4)). A "no compensation on termination" clause therefore gives a foreign supplier little comfort against an exclusive Turkish distributor; the calculation is covered in our guide to agency termination and portfolio indemnity under TTK Article 122.
Ending the Contract: Notice and Form
No Turkish statute sets a notice period for ending an indefinite franchise or distributorship. The three-month period in TTK Article 121(1) is written for agency contracts, so the franchise or distribution contract should state its own notice period and just-cause events. Form matters as well: under TTK Article 18(3), notices between merchants that put the other party in default, terminate the contract or withdraw from it must be sent through a notary, by registered letter, by telegram, or by registered electronic mail (KEP) with a secure electronic signature.
Governing Law, Jurisdiction and Dispute Resolution
Under Article 24 of MÖHUK (Law No. 5718), contractual obligations are governed by the law the parties expressly choose; without a choice, the law most closely connected with the contract applies, presumed for commercial contracts to be the law of the workplace of the party owing the characteristic performance. That choice has limits. MÖHUK Article 6 keeps directly applicable Turkish rules in force even where a foreign law governs, and Law No. 4054 defines its own reach in Article 2: restrictive agreements between undertakings operating in, or affecting, markets for goods and services within Türkiye. Where territorial jurisdiction is not exclusive, MÖHUK Article 47 allows parties to a contractual dispute with a foreign element to choose a foreign court, if the agreement is proved by written evidence; parties may also agree on arbitration (see our guide to international arbitration in Turkey). If the case goes to a Turkish court, TTK Article 5/A makes a prior application to a mediator a condition of the lawsuit in commercial cases whose subject is a sum of money, such as receivable and compensation claims; a goodwill-compensation claim under the TTK is one of them.
Common questions about this topic
Is there a specific franchise law in Turkey?
No. Turkey has no dedicated franchise or distributorship statute. These contracts are innominate agreements governed mainly by the Turkish Code of Obligations (Law No. 6098) and the Turkish Commercial Code (Law No. 6102), together with competition and intellectual-property legislation.
Can a Turkish distributor claim compensation when the contract ends?
An exclusive one may. TTK Article 122(5) extends the agent's goodwill-compensation claim to exclusive distributorship unless that would be contrary to equity. The distributor must show the three conditions of Article 122(1), the amount is capped by Article 122(2), and the claim must be asserted within one year of the end of the relationship.
Can a foreign franchisor set the prices its Turkish franchisees charge?
Not as a fixed or minimum price. Under Article 4(a) of Communiqué No. 2002/2, the supplier may set a maximum sale price or recommend one, as long as pressure or incentives from either party do not turn it into a fixed or minimum price.
Which law governs a franchise agreement with a foreign brand?
The law the parties choose under MÖHUK Article 24. A foreign law does not remove Turkish competition law from a network operating in Türkiye, and MÖHUK Article 6 preserves other directly applicable Turkish rules.
Do we need to register our trademark before franchising in Turkey?
Registration should come first, because Law No. 6769 grants trademark protection through registration. Record the licence as well: until it is recorded in the registry, rights under it cannot be asserted against good-faith third parties.
Must the agreement be notified to the Turkish Competition Authority?
Not if it meets the block-exemption conditions. An agreement outside them can still be exempt if it satisfies all conditions of Article 5(1) of Law No. 4054, and under Article 5(2) the parties may apply to the Authority for the Competition Board to determine whether it does.
What should a business lawyer in Istanbul check when reviewing a distribution agreement?
Four things: how the contract is classified (exclusive distributorship, franchise or commercial agency); whether its price, territory and non-compete clauses stay within Competition Law No. 4054; the goodwill (portfolio) compensation an exclusive distributor may claim on termination under TTK Article 122(5); and the governing-law, dispute-resolution and notice clauses. Istanbul Attorneys, a commercial law firm in Istanbul, reviews distribution agreements in English for foreign suppliers; the work is led by Att. Onur ÇALIŞICI (Istanbul Bar Association, Registration No. 83426), and a review can be requested by sending the draft to info@istanbulattorneys.com.
This guide is general information on Turkish law, not legal advice on your own matter. Rules and practice change; check the position before you act.