1) Contractual DNA: What a Turkish franchise really is
In Turkish practice, a franchise is a sui generis (innominate) contract built from three pillars: trademark/know-how licence, distribution of goods/services, and continuous operational support (training, audits, marketing). The Turkish Code of Obligations supplies the basic rules on formation, performance, and breach; the Turkish Commercial Code frames the parties as traders and sets unfair-competition standards. From day one, your drafting must anticipate how competition, IP, currency, tax, consumer, employment, data, and real estate rules will interact with the text you sign.
Key takeaway: the franchise agreement isn’t just a private deal—it is the hub that must “speak the language” of multiple mandatory regimes at once.
2) Trademarks and know-how: the engine of the model
The brand is the asset you are selling access to. Your contract should:
- Grant a trademark licence (territory, permitted uses, signage, online use).
- Define know-how (what it is, how it’s delivered, how secrecy is preserved).
- Establish quality control: manuals, inspections, test purchases, cure timelines.
- Set de-branding mechanics on termination (signage removal, stock sell-off, platform delisting).
Example: A burger chain grants Istanbul-Asian-side rights. The agreement requires quarterly audits, mandatory supplier lists, and brand-standard packaging. If the franchisee uses unapproved buns that affect taste, the franchisor can issue a cure notice; after repeated failure, it can step in, suspend supply, and terminate with rapid de-branding.
3) Competition law pressure points: verticals logic in everyday clauses
Franchise provisions live or die by vertical-agreement logic. Safe drafting patterns:
- Pricing: Use recommended or maximum resale prices, never fixed or minimum. Train staff not to send coercive emails that look like RPM.
- Territory/Exclusivity: Grant exclusive catchments but allow passive sales (unsolicited orders) and structure online sales rules around quality criteria rather than absolute bans.
- Non-compete: Keep the in-term NC tied to the franchise business; any post-term NC should be tightly limited (premises-linked, time-limited, scope-specific) and justified by access to know-how.
- Selective distribution: Where brand image matters (cosmetics, premium apparel), set objective admission standards and consistent audit criteria; avoid arbitrary denials.
Example: A cosmetics franchisor uses recommended price lists and an “online quality schedule” instead of a blanket marketplace ban. The schedule requires approved photography, after-sales support, and delivery times. This protects brand positioning without sliding into hardcore restraints.
4) Currency and payments: engineering royalties that survive scrutiny
Royalty, marketing fund, and development fees must be structured with currency rules in mind. Between Turkish residents, foreign-currency clauses may be restricted depending on the contract type and status of the parties; even when FX is used, you still need payment mechanics that handle exchange risk, bank fees, and withholding. A robust scheme typically includes:
- Currency definition and hierarchy (invoicing vs. payment currency).
- Indexation (if TRY is used) with objective, auditable indices.
- Tax gross-up language and cooperation for treaty relief where applicable.
- Payment waterfall (royalty first, then marketing fee; default interest; right of set-off carefully limited).
Example: A master franchise between two Turkish entities prices base royalties in TRY with quarterly CPI indexation, but allows certain imported inputs to be billed in FX by approved suppliers. This aligns day-to-day costs with real inflation while avoiding unenforceable FX terms.
5) Consumer-facing obligations: your manual is also a compliance program
Although the franchisee is a trader (B2B), the system sells to consumers. That means:
- Distance sales and after-sales processes must match consumer rules on withdrawal, refunds, repairs, and guarantees.
- Promotions need clear eligibility, duration, and inventory commitments to avoid misleading practices.
- Gift-card and loyalty-point expiries should be transparently disclosed and consistently applied.
Example: A coffee chain’s app offers free drinks after 10 purchases. The operations manual defines point accrual, expiry, and complaint handling. The franchisor monitors complaint ratios per store; chronic under-performance triggers mandatory retraining.
6) Employment boundaries: control quality, not people
Franchisors must safeguard brand standards without becoming a de-facto joint employer. Practical drafting:
- The franchisee hires and pays staff; the franchisor trains on standards but does not set wages, schedules, or disciplinary actions.
- Training certifications are conditions of brand use, not employment approvals.
- The agreement prohibits the franchisee from presenting itself as the franchisor’s agent or employer proxy.
Example: A fitness brand requires trainers to pass the brand’s technique exam annually. The franchisor provides the exam and accreditation; the franchisee decides salaries, shifts, and HR discipline.
7) Data and marketing tech: define the controller, then the pipes
Loyalty apps, CRMs, and booking systems move personal data across the network.
- Decide who is data controller (often the franchisor for system-wide tools; the franchisee for local HR and day-to-day sales).
- Sign a data-processing addendum: purposes, lawful bases, retention, data subject requests, audits, incident notice windows.
- Map cross-border transfers if servers or service providers sit abroad; obtain valid consents or alternative transfer mechanisms where required.
Example: The franchisor controls the central CRM; franchisees access only their customer subset. The DPA sets a 48-hour breach-notification duty and mandates quarterly deletion of dormant profiles.
8) Real estate alignment: lease, licence, and step-in
Many franchise failures trace back to lease misalignment. Fix it upfront:
- Landlord consent to signage and brand standards.
- Step-in rights: if the franchise ends, the franchisor can take over the site or nominate a new franchisee.
- De-branding obligations backed by a lease side letter (landlord can require removal; franchisor can supervise).
- Fit-out ownership and return condition on exit.
Example: A mall coffee site includes a tripartite letter: the landlord consents to brand signage; on franchisor termination, rent can be paid by the franchisor for 60 days while it installs a replacement operator.
9) Taxes and transfer pricing: economics you can defend
Cross-border royalties attract withholding tax and sometimes VAT on services. Build:
- Gross-up mechanics and cooperation on certificate of residence.
- Arm’s-length royalty ranges supported by benchmarks (even a short contemporaneous memo is better than none).
- A marketing fund with a separate bank account, clear spend rules, and audit rights.
Example: A 5% royalty sits within the sector’s defensible range; the parties keep a simple transfer-pricing file and exchange annual confirmations to reduce audit friction.
10) Pre-contract stage: no FDD statute, but real liability
Türkiye does not impose a statutory franchise disclosure document, yet pre-contractual good faith still bites. Practical protection:
- Provide a concise disclosure pack (unit counts, fee table, capex, training, required equipment, known litigation).
- Avoid “earnings claims” unless you can evidence them. Label business-plan tools as projections, not assurances.
- Minutes of discovery calls, Q&A logs, and acknowledgment pages go a long way in later disputes.
Example: The franchisor gives a 12-page pack with a sample P&L scenario, expressly marked as illustrative, plus a checklist of mandatory capex. The franchisee signs a receipt confirming independent financial advice.
11) Termination and exit: make the off-ramp safe
Plan the end at the start:
- Cure ladder (notice → cure → suspension → termination).
- De-branding milestones (days to remove signage, return manuals, shut down domains).
- Post-term NC limited to premises and scope; non-solicit of staff and suppliers.
- Inventory options (buy-back of branded stock at defined discounts).
- Escrow or source code access if mission-critical software is bespoke.
Example: On repeated QC failures, the franchisor suspends the store’s listing on the brand app; after missed cure, termination follows. The franchisee removes signage within 10 days, sells branded cups back at 65% of net cost, and disables the store domain under a registrar letter prepared at signing.
12) A short clause toolkit (plug-and-play ideas)
- Pricing: “Franchisor may publish recommended or maximum resale prices. Franchisee remains free to determine its resale prices.”
- Online sales: “Franchisee may sell online subject to the Online Quality Schedule. Passive sales cannot be restricted; platform use must meet brand presentation and service SLAs.”
- Currency: “If local currency is required, royalties shall be denominated in TRY and indexed to an objective index; any FX use shall comply with applicable currency rules.”
- QC & step-in: “Material QC failures allow temporary step-in to protect brand standards; costs are reimbursable and do not waive termination rights.”
- Data: “Franchisor acts as controller for the central CRM; Franchisee is controller for in-store sales data. The DPA governs processing, retention, transfers, and incident response.”
- Post-term NC: “For 12 months after expiry, within the former premises only, Franchisee shall not operate a competing business offering substantially similar products based on the Franchisor’s know-how.”
Bottom line
In Türkiye, franchising is contract first, but the contract only works when it is drafted to fit the competition, IP, currency, consumer, employment, data, tax, and real-estate frameworks it inevitably triggers. If each clause is written with those intersections in mind, the network scales faster—and you spend far less time litigating later.
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