Franchise Site Approval and Commercial Lease Risks in Turkey

Introduction

The commercial success of a franchise outlet often depends as much on its location as on the strength of the brand.

A well-known franchise system may fail at a poorly selected site because of inadequate customer traffic, unsuitable access, insufficient utility capacity, legal restrictions, weak visibility, excessive rent or the inability to obtain the required operating licence.

A franchisee may invest substantial amounts in:

• Construction and renovation;
• Furniture and equipment;
• Exterior signs;
• Architectural design;
• Deposits and advance rent;
• Shopping-centre charges;
• Municipal permits;
• Employee recruitment;
• Opening advertising;
• Technology infrastructure.

These investments may be difficult to recover if the site cannot open lawfully or if the franchise agreement ends before the lease expires.

Site approval and commercial leasing should therefore not be treated as separate administrative steps.

The franchise agreement, site approval letter, commercial lease, construction contract and municipal licensing process must be designed as one coordinated legal structure.

A common mistake is to assume that the franchisor’s approval of the location confirms that:

• The premises are legally suitable;
• A municipal licence will be issued;
• The business will be profitable;
• The landlord has approved the fit-out;
• The lease term matches the franchise term;
• Exterior signs may be installed;
• The necessary ventilation, fire and utility systems are available.

Franchisor approval normally means only that the location satisfies the franchisor’s commercial and brand criteria, subject to the terms of the approval.

It does not replace the landlord’s consent, zoning review, municipal licensing, title due diligence, condominium approvals or sector-specific permits.

Turkish law requires an appropriate workplace opening and operating licence before a business falling within the applicable regulatory framework may open and operate. Other registrations or permits obtained from public or professional bodies do not eliminate that separate licensing obligation, and an unlicensed workplace may be closed by the competent authority.

A franchisee should consequently avoid signing an unconditional, long-term lease before completing legal and technical due diligence or securing appropriate contractual exit rights.

This guide examines franchise site approval and commercial lease risks in Turkey, including location approval, municipal licensing, fit-out works, lease duration, rent adjustment, security deposits, assignment, subletting, early return and post-termination restoration.

Why Site Selection Is a Legal Issue

Site selection is often presented as a commercial exercise involving customer traffic, visibility, demographics and competition.

Those factors are important, but they represent only part of the analysis.

A commercially attractive property may be legally unsuitable because:

• The intended activity is inconsistent with the authorised use of the building;
• The occupancy documentation is incomplete;
• The condominium management plan restricts the activity;
• Necessary co-owner approvals are unavailable;
• The premises cannot satisfy ventilation or fire requirements;
• Exterior signage is prohibited;
• The landlord lacks authority to grant the required rights;
• The shopping-centre rules conflict with the franchise system;
• The property cannot obtain the necessary workplace licence;
• Renovation requires structural or municipal approval.

A franchisee may therefore pay rent for premises that cannot be operated as the intended business.

The franchise agreement should require both commercial and legal approval before the location becomes binding.

The Legal Nature of Franchisor Site Approval

A franchisor’s site approval is primarily a contractual decision.

The franchisor may examine:

• Population and customer profile;
• Pedestrian and vehicle traffic;
• Visibility;
• Parking;
• Delivery access;
• Local competition;
• Floor area;
• Frontage;
• Rent-to-sales ratio;
• Expansion strategy;
• Distance from other outlets.

The approval may be:

• Preliminary;
• Conditional;
• Final;
• Valid for a limited period;
• Subject to execution of an approved lease;
• Subject to technical inspection;
• Subject to municipal licences.

The approval document should state its legal effect clearly.

A preliminary approval should not be described as final where the franchisor still intends to review the lease, architectural plans or technical suitability.

The franchisee should understand whether approval means:

• The location is commercially acceptable;
• The franchisor has approved only the geographic area;
• The architectural project is approved;
• The lease terms are approved;
• The opening deadline begins;
• The franchisee may begin construction;
• The franchisor guarantees any aspect of the site.

Unless the agreement provides otherwise, site approval should not be interpreted as a guarantee of turnover, profit, licence issuance or lease enforceability.

Commercial Approval Is Not Legal Due Diligence

The franchisor’s real estate team may have substantial experience selecting locations. That experience does not necessarily mean that the franchisor has investigated every legal issue.

The franchise agreement should allocate responsibility for:

• Title review;
• Landlord authority;
• Zoning;
• Occupancy status;
• Workplace licences;
• Condominium restrictions;
• Fire compliance;
• Construction permits;
• Sector-specific approvals.

The franchisor may review some of these matters, but the franchisee should not rely on assumptions.

A site approval letter should state whether the franchisor has conducted legal due diligence or whether the franchisee remains responsible for obtaining independent advice.

Misunderstanding this allocation may produce later claims that the franchisor negligently approved an unusable property.

Use Conditions Before the Lease Becomes Binding

The safest structure is often a lease subject to conditions precedent or termination conditions.

Possible conditions include:

• Final written franchisor approval;
• Approval of architectural plans;
• Workplace licence eligibility;
• Confirmation of permitted use;
• Landlord consent for renovation;
• Landlord consent for signage;
• Availability of utilities;
• Fire-system approval;
• Shopping-centre approval;
• Receipt of construction permits;
• Execution of franchise agreement;
• Financing approval.

The lease should state what happens if a condition is not satisfied by the long-stop date.

Possible consequences include:

• Automatic termination;
• Franchisee termination right;
• Return of deposit;
• No rent becoming due;
• Reimbursement of specified costs;
• Extension of the condition period.

The franchisee should avoid a structure in which rent begins immediately while licence and construction risks remain entirely unresolved.

Letter of Intent and Reservation Agreements

Before signing the final lease, the parties may execute a letter of intent, reservation agreement or preliminary leasing protocol.

This document may regulate:

• Reserved period;
• Exclusivity;
• Deposit;
• Due diligence access;
• Confidentiality;
• Draft lease timetable;
• Permitted preliminary works;
• Conditions for refund.

The document should state clearly which provisions are binding.

A letter labelled “non-binding” may still contain binding obligations concerning confidentiality, exclusivity or cost allocation.

The franchisee should not pay a substantial non-refundable reservation amount before confirming whether the site can obtain the necessary approvals.

Title and Landlord Authority

The franchisee should verify who owns the premises and who has authority to grant the lease.

Relevant questions include:

• Is the landlord the registered owner?
• Are there several co-owners?
• Does the signatory have authority?
• Is the property subject to usufruct?
• Is a sublease being offered?
• Does the head lease permit subletting?
• Are there mortgages, attachments or disputes affecting possession?
• Is the landlord a company represented validly?

A long lease signed by an unauthorised person may create substantial operational and evidentiary problems.

Where the lessor is not the registered owner, the franchisee should identify the legal basis on which that person grants possession.

Permitted Use

The lease should describe the intended use precisely.

A general expression such as “commercial use” may not be sufficient.

The permitted-use clause may need to cover:

• Restaurant;
• Café;
• Retail store;
• Beauty service;
• Education centre;
• Hotel;
• Health-related service;
• Delivery and takeaway;
• Online order fulfilment;
• Storage;
• Production;
• Entertainment;
• Outdoor seating.

A narrow use clause may prevent the franchisee from adapting its product range or using new sales channels.

A very broad clause may not reflect municipal or building restrictions.

The lease, workplace licence and franchise agreement should describe the business consistently.

Workplace Opening and Operating Licence

The franchisor’s approval does not authorise the premises to open.

The Workplace Opening and Operating Licences Regulation defines the licence as the authorisation issued by the competent authority for a workplace to open and operate. It also states that workplaces may not be opened or operated without a duly issued licence and that permits or registrations issued under other legislation do not remove the separate licensing requirement.

The competent authority and application requirements depend on:

• Location;
• Activity;
• Municipality;
• Organised industrial zone status;
• Nature of the workplace;
• Whether the business is sanitary, non-sanitary or open to the public for entertainment and recreation.

The franchisee should determine the correct category before signing the lease.

The Regulation also imposes general conditions relating to matters such as occupational health and safety, condominium status, fire precautions and activity-specific requirements.

A licence application based on a declaration does not create an unconditional acquired right. For sanitary workplaces, the competent authority may inspect the premises after the licence is issued. If non-compliance is identified, the business may receive a one-time period of fifteen days to correct deficiencies; failure to correct may result in cancellation of the licence and closure.

The franchisee should therefore evaluate continuing compliance, not merely whether an application can be filed.

Transfer of the Business Licence

A franchise transfer does not necessarily allow the purchaser to continue operating automatically under the old licence.

Under the Regulation, where the business is transferred without a change to the activity, operating area or address, a new licence may be issued in the name of the transferee based on the existing file, provided that non-compliance attributable to the operator has been corrected. A change of address generally requires a new licensing process. Merely admitting or removing a shareholder does not itself require a new licence.

This distinction is important when structuring a franchise sale.

An asset transfer to a new operating company may require a new licence in the buyer’s name, while a share transfer may leave the licensed legal entity unchanged.

The transfer documents should make completion conditional on the necessary regulatory process.

Condominium and Management Plan Restrictions

A franchise outlet located in a mixed-use building may be subject to the Condominium Law, the building’s management plan and decisions of the owners.

The Workplace Opening and Operating Licences Regulation recognises that certain businesses to be opened in independent sections recorded as residential property may require unanimous approval of the condominium owners. It also links some activities in sections recorded as workplaces to the building management plan and owner approvals.

The franchisee should review:

• Title classification;
• Management plan;
• Prior owner resolutions;
• Restrictions on food businesses;
• Opening hours;
• Music;
• Alcohol;
• Odour and ventilation;
• Customer traffic;
• Outdoor seating;
• Signs and façade use.

A landlord’s statement that “there will be no problem” should not replace examination of the registered management plan and required approvals.

Technical Suitability

Technical due diligence should be completed before rent and construction liabilities become irreversible.

Relevant matters may include:

• Electrical capacity;
• Natural gas;
• Water pressure;
• Wastewater;
• Grease traps;
• Ventilation shafts;
• Chimney rights;
• Heating and cooling;
• Floor loading;
• Fire exits;
• Sprinklers;
• Accessibility;
• Loading access;
• Waste storage;
• Internet connectivity;
• Generator capacity.

The technical requirements should be compared with the current franchise design and not merely with the needs of an ordinary business in the same sector.

A property may be suitable for a small independent café but unsuitable for a franchise requiring heavy kitchen equipment and a dedicated ventilation shaft.

Fire and Safety Requirements

The licence framework requires applicable fire precautions.

In buildings containing several workplaces, fire documentation may be obtained by building management in specified circumstances. However, structural alterations affecting fire precautions may create a requirement for a separate report for the altered premises.

The lease should allocate responsibility for:

• Building-wide fire systems;
• Outlet-specific systems;
• Emergency exits;
• Sprinklers;
• Fire doors;
• Alarm integration;
• Required upgrades;
• Re-inspection after renovation.

The franchisee should not assume that a shopping centre’s existing fire approval covers every alteration required by the franchise concept.

Aligning the Lease Term with the Franchise Term

The lease and franchise agreement should be coordinated.

A common risk arises where:

• The franchise agreement lasts five years;
• The commercial lease lasts ten years;
• The franchisee has no binding renewal right;
• Post-termination non-compete provisions restrict alternative use.

If the franchise agreement ends after five years, the franchisee may remain liable for another five years of rent without the right to use the brand.

The opposite problem arises where the lease ends before the franchise term.

The franchisee may remain liable for royalties and development obligations while losing the approved premises.

Possible solutions include:

• Equal initial terms;
• Lease renewal options matching franchise renewal;
• Franchise termination right if the lease is lost without fault;
• Relocation rights;
• Rent liability compensation;
• Franchisor step-in rights;
• Lease assignment mechanisms.

The renewal processes should also be aligned. The franchisee should know whether it must renew the lease before receiving confirmation that the franchise agreement will be renewed.

Fixed-Term Roofed Workplace Leases

For residential and roofed workplace leases, expiry of the written term does not automatically give the landlord a general right to remove the tenant.

Under Article 347 of the Turkish Code of Obligations, the tenant must give notice at least fifteen days before the end of a fixed term if it does not wish the lease to continue. Otherwise, the lease is generally extended for one year under the same conditions. The landlord cannot terminate merely because the original term has expired; after the statutory ten-year extension period, the landlord may terminate at the end of a subsequent extension year by giving at least three months’ notice without stating a separate reason.

A commercial lease provision stating that the tenant will be removed automatically on the last day should therefore be assessed together with the mandatory roofed-workplace lease rules.

The franchisee should not confuse contractual expiry with immediate physical eviction.

Risk of Landlord Termination

Although the landlord cannot ordinarily terminate a roofed workplace lease merely because the initial term expires, Turkish law provides specific termination grounds.

Article 350 permits termination proceedings based on genuine need and specified reconstruction or redevelopment circumstances. Article 351 gives a new owner a potential termination route where the property is genuinely required for the new owner or specified close relatives, subject to notice and action periods.

A franchisee considering substantial construction expenditure should therefore assess:

• Likelihood of property sale;
• Planned redevelopment;
• Building age;
• Urban transformation risk;
• Landlord’s business plans;
• Remaining economic life of the property.

A long contractual term reduces some uncertainty but does not eliminate all statutory termination risks.

Rent Commencement

The lease should distinguish:

• Delivery date;
• Construction-access date;
• Rent commencement date;
• Opening date;
• Common-charge commencement date.

Rent should not necessarily begin merely because the keys have been delivered.

A franchise fit-out may require several months.

Possible structures include:

• Rent-free construction period;
• Rent beginning on opening;
• Rent beginning on a fixed long-stop date;
• Reduced rent during fit-out;
• Extension for landlord-caused delay.

The clause should address delays arising from:

• Landlord approval;
• Municipal permits;
• Utility connection;
• Construction defects;
• Franchise plan changes;
• Contractor failure.

The franchisee should not receive unlimited rent relief for delays under its own control, while the landlord should not receive full rent during a period in which landlord-caused defects make construction impossible.

Rent Adjustment

The rent-adjustment clause is especially important in a high-inflation market.

The current text of Article 344 of the Turkish Code of Obligations provides that agreements concerning rent in renewed periods are valid to the extent they do not exceed the twelve-month average change in the consumer price index for the previous rental year.

For leases extending beyond five years or renewed after five years, the statutory framework also allows a court to determine rent by considering the relevant index, the condition of the property, comparable rents and equity.

The lease should state:

• Adjustment date;
• Applicable index;
• Calculation method;
• Treatment of negative figures;
• Foreign currency;
• Turnover rent;
• Minimum rent;
• Five-year review.

A clause using several cumulative increases may create uncertainty or conflict with mandatory rules.

Fixed and Turnover Rent

Shopping-centre leases frequently combine:

• Fixed minimum rent;
• Turnover rent;
• Common expenses;
• Marketing contribution;
• Management charges.

The agreement should define turnover independently.

The definition should address:

• VAT;
• Refunds;
• Online orders;
• Delivery-platform sales;
• Click-and-collect;
• Gift cards;
• Sales through affiliates;
• Corporate customer sales.

The lease and franchise royalty definitions should be coordinated, although they do not necessarily need to be identical.

The tenant may otherwise report different turnover figures to the landlord and franchisor, creating audit and credibility problems.

Security Deposit

Article 342 provides that a security obligation imposed on a tenant in a residential or roofed workplace lease may not exceed three months’ rent.

Where the security consists of money or negotiable instruments, the law provides for deposit through a bank structure that prevents withdrawal without the landlord’s consent, a final enforcement proceeding or a final court decision. If the landlord does not notify the bank within three months after the lease ends that proceedings have been commenced, the bank must return the security upon the tenant’s request.

The parties should distinguish the statutory lease deposit from:

• Bank letter of guarantee;
• Advance rent;
• Franchise security;
• Construction bond;
• Shopping-centre deposit;
• Personal suretyship.

Each security has different legal consequences.

Other Tenant Payment Obligations

Article 346 provides that the tenant may not be required to make payments other than rent and ancillary expenses in residential and roofed workplace leases. It specifically invalidates agreements requiring a contractual penalty for late rent or making future rent instalments immediately due because of late payment.

Commercial lease schedules should therefore be reviewed carefully where they impose:

• Late-payment penalties;
• Automatic acceleration;
• Undefined administrative charges;
• Charges unrelated to use of the premises.

The legal treatment of common expenses, marketing charges and separately provided services depends on their nature and documentation.

Fit-Out and Landlord Consent

Franchise outlets usually require substantial alterations.

Under Article 321 of the Turkish Code of Obligations, the tenant may make alterations and improvements with the landlord’s written consent.

Where the landlord has consented, it cannot demand restoration to the previous condition unless restoration was agreed in writing. Unless otherwise agreed in writing, the tenant cannot claim compensation for the increase in property value caused by the authorised works.

The lease should specify:

• Approved plans;
• Structural works;
• Mechanical systems;
• Signage;
• Contractor rules;
• Permits;
• Restoration;
• Ownership of improvements;
• Removal rights;
• Landlord contribution.

General consent to “fit-out” may not be enough for structural openings, roof penetrations, ventilation shafts or façade changes.

Landlord Contribution to Construction

The landlord may provide a fit-out contribution or construction allowance.

The clause should address:

• Amount;
• Payment milestones;
• Supporting invoices;
• VAT;
• Repayment if the lease ends early;
• Ownership of improvements;
• Treatment following landlord default;
• Treatment following franchise termination.

A contribution should not be described as a gift where it is repayable under broad circumstances.

The franchisee should calculate whether the repayment obligation continues even when the outlet closes because the premises cannot obtain a licence.

Exterior Signs and Branding

A franchise business may depend on visible signs.

The lease should grant specific rights concerning:

• Storefront signs;
• Totems;
• Façade signs;
• Window graphics;
• Direction signs;
• Shopping-centre directories;
• Roof signs;
• Digital screens;
• Delivery entrance signs.

Approval may be required from:

• Landlord;
• Shopping-centre management;
• Municipality;
• Condominium owners;
• Heritage authority.

Franchisor approval of the design does not replace these permissions.

The agreement should also regulate removal after termination.

Shopping-Centre Operating Rules

Shopping-centre leases often contain detailed regulations concerning:

• Compulsory opening hours;
• Common promotions;
• Refurbishment;
• Delivery times;
• Waste disposal;
• Music;
• Staff entrances;
• Security;
• Common charges;
• Store closure penalties.

These obligations should be compared with the franchise operations manual.

Conflicts may arise where the franchise system requires different:

• Opening hours;
• Promotional materials;
• uniforms;
• delivery methods;
• exterior designs.

The franchisee should not sign the lease first and later discover that the landlord’s rules prevent compliance with the franchise agreement.

Exclusivity and Competitor Protection

The franchisee may request that the landlord not lease another unit in the same building or shopping centre to a competing business.

An exclusivity clause should define:

• Protected product or service;
• Competitor category;
• Geographic area within the property;
• Exceptions;
• Existing tenants;
• Temporary kiosks;
• Online fulfilment;
• Remedies.

An overly broad clause may be commercially unacceptable or raise competition concerns.

A clause protecting only the specific core concept may be more workable than one prohibiting every business selling any overlapping product.

The franchise agreement should also confirm whether the franchisor has approved the landlord exclusivity wording.

Utilities and Building Services

The lease should allocate responsibility for utility capacity and service continuity.

Important matters include:

• Electricity;
• Water;
• Gas;
• Ventilation;
• Air conditioning;
• Internet;
• Wastewater;
• Delivery access;
• Lift use;
• Generator;
• Security.

The landlord may be responsible for bringing utility capacity to the unit, while the tenant installs internal systems.

The handover protocol should record:

• Meter numbers;
• Capacity;
• Existing defects;
• Connection status;
• Photographs;
• Outstanding works.

A franchisee should not accept a clause confirming that the property is fully suitable before technical inspection is completed.

Subletting and Use by an Operating Company

A franchise structure may involve different entities.

For example:

• One group company signs the lease;
• Another company signs the franchise agreement;
• A third company employs workers;
• A local operating subsidiary runs the outlet.

This structure can constitute subletting or transfer of use.

Article 322 provides that, for residential and roofed workplace leases, the tenant cannot sublet the premises or transfer the right of use without the landlord’s written consent. The original tenant remains responsible where the subtenant uses the premises outside the permitted terms.

The lease should name all permitted operating entities.

A general right to use affiliates may prevent later disputes during corporate restructuring.

Transfer of the Lease

Transfer of the franchise business does not automatically transfer the commercial lease.

Article 323 requires the landlord’s written consent for transfer of the lease relationship. In workplace leases, the landlord may not refuse consent without justified cause.

Following an approved transfer, the incoming tenant replaces the outgoing tenant. However, the outgoing tenant remains jointly liable with the transferee until the end of the lease and for no longer than two years.

The franchise and lease transfer procedures should be coordinated.

A buyer should not purchase the franchise assets without certainty that:

• The franchisor approves the buyer;
• The landlord approves the lease transfer;
• The business licence can be updated;
• Personal guarantees will be released;
• Security deposits will be transferred or returned.

Change of Control

A share sale does not ordinarily change the legal identity of the tenant company.

However, the lease may define a share transfer or change of control as an event requiring landlord consent.

This can create a double approval requirement:

• Franchisor approval;
• Landlord approval.

The transaction timetable should allow both reviews to be completed before closing.

A franchisee should also examine whether lender enforcement of a share pledge would trigger the change-of-control clause.

Franchisor Step-In Rights

The franchisor may want the right to take over the lease if:

• The franchisee defaults;
• The franchise agreement terminates;
• The franchisee becomes insolvent;
• The outlet is transferred;
• The franchisee abandons the premises.

A franchise agreement alone cannot compel the landlord to recognise the franchisor as tenant.

Step-in rights should be documented through:

• Landlord consent;
• Tripartite agreement;
• Conditional lease assignment;
• Direct agreement;
• New lease option.

The document should state:

• Triggering events;
• Notice;
• Cure rights;
• Assumption of arrears;
• Treatment of deposit;
• Release of the franchisee;
• Transfer of equipment.

Without landlord participation, a franchisor’s contractual right against the franchisee may be practically ineffective.

Early Closure and Return of the Premises

A franchisee may wish to leave the premises before the lease term or applicable termination period ends.

Article 325 provides that where the tenant returns the premises early, its lease obligations continue for the reasonable period during which the premises could be re-let under similar conditions.

The tenant’s obligations may end earlier if it presents a replacement tenant whom the landlord can reasonably be expected to accept, who has adequate payment ability and who is ready to assume the lease. The landlord must deduct expenses saved and benefits obtained, or intentionally avoided, from the claim.

The franchisee should therefore begin replacement-tenant efforts promptly.

Simply returning the keys does not necessarily end rent liability immediately.

Relocation

A franchise agreement may permit or require relocation where:

• The lease ends;
• The property is redeveloped;
• Sales are inadequate;
• The landlord breaches;
• The location loses access or visibility.

The relocation clause should regulate:

• Approval process;
• Territory;
• New opening deadline;
• Transfer of equipment;
• New franchise fee;
• Construction costs;
• Continuing royalty;
• Temporary closure;
• Customer communication.

The franchisee should also negotiate a corresponding lease exit right where the franchisor requires relocation for network reasons.

Franchise Termination While the Lease Continues

This is one of the most serious risks.

After termination, the franchisee may no longer use:

• Trademark;
• Store design;
• Operations manual;
• Software;
• Branded packaging;
• Confidential know-how.

The premises may therefore require expensive conversion before another business can operate.

The franchisee may remain liable for:

• Rent;
• Common charges;
• Employees;
• Utilities;
• Restoration;
• Loan payments.

The documents should address whether:

• The franchisor will assume the lease;
• The franchisor may nominate another franchisee;
• The franchisee may operate a different business;
• A post-term non-compete restricts use;
• The landlord accepts a transfer;
• The franchisor purchases equipment.

De-Branding and Restoration

The franchise agreement may require immediate de-branding, while the lease may require restoration only at the end of the lease.

These obligations should be coordinated.

The franchisee may need to remove:

• Signs;
• Logos;
• Colour schemes;
• Menus;
• Furniture;
• Proprietary equipment;
• Digital displays.

The lease should identify which improvements remain and which must be removed.

Written landlord consent to alterations is important because Article 321 affects the landlord’s ability to require restoration and the tenant’s right to compensation for increased value.

A joint handover protocol should record the condition of the premises and completion of restoration.

Casualty, Earthquake and Urban Transformation

The lease should regulate serious physical events affecting the property.

Relevant issues include:

• Partial damage;
• Total destruction;
• Unsafe-building determination;
• Urban transformation;
• Mandatory evacuation;
• Insurance;
• Rent suspension;
• Reconstruction;
• Termination;
• Replacement site.

The franchise agreement should provide corresponding relief.

A franchisee should not remain bound by minimum royalties and opening obligations while legally prohibited from using the premises.

Insurance

The parties should identify required insurance policies, including:

• Property;
• Fire;
• Earthquake;
• Public liability;
• Employer liability;
• Business interruption;
• Glass and signs;
• Equipment;
• Product liability.

The lease should state:

• Policyholder;
• Beneficiary;
• Coverage limits;
• Deductibles;
• Waiver of subrogation;
• Evidence of renewal;
• Treatment of insurance proceeds.

The franchisor’s insurance requirements should be compared with the landlord’s requirements to avoid gaps or unnecessary duplication.

Disputes and Mandatory Mediation

Commercial lease disputes may concern:

• Rent;
• Deposit;
• Common expenses;
• Defects;
• Restoration;
• Assignment;
• Eviction;
• Early return;
• Rent determination.

Before filing most civil proceedings arising from lease relationships, mandatory mediation must be considered. Rental disputes have been subject to the mandatory pre-litigation mediation framework since 1 September 2023.

The franchise agreement and lease may contain different jurisdiction or arbitration clauses.

A dispute may therefore be divided among:

• Landlord and franchisee;
• Franchisee and franchisor;
• Franchisor and supplier;
• Shopping-centre management.

The documents should use compatible dispute mechanisms where possible.

Drafting Recommendations for Franchisors

A franchisor should ensure that the site approval procedure:

1. Distinguishes preliminary and final approval;
2. States that public permissions remain separate;
3. Requires submission of the proposed lease;
4. Reviews rent and term against the business model;
5. Confirms technical suitability;
6. Requires landlord approval of branding;
7. Coordinates the opening deadline with construction;
8. Provides relocation procedures;
9. Regulates franchise transfer and lease assignment;
10. Provides a practical exit following termination.

The franchisor should avoid approving a location informally before receiving complete information.

Drafting Recommendations for Franchisees

A franchisee should negotiate:

• Conditions precedent;
• Refundable deposits;
• A rent-free fit-out period;
• Licence-based exit rights;
• Landlord renovation consent;
• Signage rights;
• Utility warranties;
• Transfer and subletting rights;
• Franchisor step-in arrangements;
• Early-return protection;
• Rent relief following closure;
• Release of guarantees after transfer;
• Clear restoration obligations.

The franchisee should not rely solely on the franchisor’s commercial assessment.

Independent legal, technical and financial due diligence remains essential.

Franchise Site and Lease Due Diligence Checklist

Before signing a lease, the franchisee should confirm that:

1. The franchisor has issued final written site approval.
2. The approval conditions are understood.
3. The landlord owns or may lawfully lease the property.
4. The signatory has authority.
5. The intended use is stated.
6. The title classification is appropriate.
7. The management plan has been reviewed.
8. Required owner approvals are available.
9. Workplace licence eligibility has been checked.
10. Occupancy and zoning documents are available.
11. Fire requirements are satisfied.
12. Ventilation and utility capacity are sufficient.
13. Exterior signs are permitted.
14. Technical plans are approved.
15. Rent begins after an appropriate fit-out period.
16. Delay responsibilities are allocated.
17. Rent-adjustment rules comply with Turkish law.
18. Common charges are defined.
19. Security is limited and documented properly.
20. The lease term matches the franchise term.
21. Renewal rights are coordinated.
22. Transfer requires a workable consent process.
23. Subletting and affiliate use are authorised.
24. Change-of-control rules are understood.
25. Franchisor step-in rights are documented with the landlord.
26. Early return consequences are calculated.
27. Replacement-tenant rights are preserved.
28. Restoration and de-branding are coordinated.
29. Insurance requirements are complete.
30. Dispute resolution and mediation requirements are understood.

Conclusion

Franchise site approval and commercial lease risks in Turkey should be evaluated as one integrated transaction.

The franchisor’s approval is important, but it ordinarily represents a commercial and brand decision rather than a public licence, legal opinion or guarantee of profitability.

The franchisee must determine whether the premises can be used lawfully for the intended activity.

A workplace may not open and operate without the required licence. Other permits do not eliminate this obligation, and continued non-compliance may lead to licence cancellation and closure.

The lease should be conditional on completion of legal and technical due diligence where important matters remain unresolved.

Title, landlord authority, permitted use, condominium restrictions, fire systems, ventilation, utilities and signage should be examined before substantial payments are made.

The lease term must also be coordinated with the franchise term.

A franchisee should not accept a long rent obligation where the right to use the franchise brand may end much earlier without a lease exit, transfer or alternative-use mechanism.

Fit-out obligations should be supported by written landlord consent. Turkish law regulates the effect of that consent on restoration and the tenant’s ability to claim compensation for improvements.

Transfer and subletting require particular attention.

A roofed workplace tenant needs written landlord consent to sublet or transfer use. Transfer of the lease also requires written consent, although a workplace landlord may not refuse without justified cause. The outgoing tenant may remain jointly liable for up to two years.

Early return of the premises does not necessarily end rent immediately. Liability may continue for a reasonable re-letting period unless a suitable and solvent replacement tenant is presented.

Rent adjustment, deposits and additional charges should be reviewed under the mandatory rules applicable to residential and roofed workplace leases.

Finally, termination of the franchise does not terminate the lease automatically.

The franchisee may remain responsible for rent, restoration and employees after losing the right to use the brand. A carefully coordinated lease should therefore contain transfer, step-in, relocation and post-termination provisions.

The best franchise location is not merely the location with the greatest customer traffic.

It is a location that can be licensed, operated, transferred and exited under a legally and financially sustainable structure.

Frequently Asked Questions

Does franchisor site approval guarantee that the premises are legally suitable?

No. Franchisor approval ordinarily concerns the franchise system’s commercial and brand criteria. Municipal, zoning, landlord and condominium approvals remain separate.

Can the outlet open after franchisor approval but before receiving a workplace licence?

No. A workplace subject to the Regulation cannot lawfully open and operate without the appropriate workplace opening and operating licence.

Do other permits replace the workplace licence?

No. Registrations and permissions issued under other legislation do not remove the separate workplace-licensing obligation.

Can an issued licence later be cancelled?

Yes. If regulatory non-compliance is identified and is not corrected within the applicable period, the licence may be cancelled and the workplace closed.

Should the lease be signed before final franchise approval?

This creates substantial risk. The lease should be conditional on final approval or should contain an effective exit mechanism.

What should a site approval letter contain?

It should state the property, approval stage, conditions, validity period, required documents and whether any construction or lease commitment may begin.

Who is responsible for zoning and licence review?

This should be stated contractually. The franchisee should generally obtain independent legal and technical review even where the franchisor assists.

Can the franchisee renovate without landlord consent?

Material alterations should be supported by the landlord’s written consent.

Can the landlord demand restoration after approving the works?

The result depends on the written agreement. Article 321 limits restoration demands where written consent was granted unless restoration was agreed in writing.

Can the franchisee claim the value added by renovation?

Not automatically. Unless otherwise agreed in writing, the tenant cannot claim the increase in property value created by authorised improvements.

How much deposit can be requested?

For residential and roofed workplace leases, a contractual security obligation may not exceed three months’ rent under Article 342.

Can a lease impose a penalty for late payment of rent?

Article 346 invalidates provisions requiring a contractual penalty for late rent or making future rent immediately due because of late payment.

How is rent increased in renewed periods?

The current Article 344 framework limits contractual renewed-period increases by reference to the twelve-month average change in the consumer price index.

Does a fixed-term commercial lease end automatically on the final date?

For roofed workplace leases, the tenant’s failure to give timely notice generally extends the agreement for one year, and the landlord cannot terminate merely because the initial period ended.

Can the landlord terminate because it needs the property?

Turkish law provides specified termination routes for genuine need, reconstruction and certain new-owner circumstances.

Can the franchisee transfer the lease to a buyer?

The landlord’s written consent is required. In workplace leases, consent may not be refused without justified cause.

Is the outgoing tenant released immediately after a lease transfer?

The incoming tenant replaces the outgoing tenant, but the outgoing workplace tenant may remain jointly liable until the lease ends and for no longer than two years.

Can another group company operate from the premises?

Only if the lease permits the arrangement or the landlord gives the necessary written consent. It may constitute subletting or transfer of use.

Does a share transfer require landlord consent?

The tenant company remains the same, but the lease may contain a separate change-of-control clause requiring approval.

Can the franchisor take over the lease after franchise termination?

Only if the landlord has accepted an appropriate assignment, step-in or direct agreement. The franchise agreement alone does not bind the landlord.

Does returning the keys end rent liability?

Not necessarily. Under Article 325, liability may continue for the reasonable re-letting period.

How can early-return liability end sooner?

The tenant may present a suitable, solvent replacement who is ready to assume the lease and whom the landlord can reasonably be expected to accept.

What happens to the lease if the franchise agreement terminates?

The lease normally continues independently unless it contains a linked termination or transfer mechanism.

Who removes the franchise signs?

The franchise agreement normally places de-branding duties on the franchisee, while the lease should regulate landlord consent, restoration and façade requirements.

Is mediation required before a commercial lease lawsuit?

Most civil disputes arising from lease relationships require pre-litigation mediation to be considered before filing proceedings.

What is the most important protection for a franchisee?

The lease should not become unconditionally binding until the premises, licences, franchise approval, technical requirements and financial terms have been verified.

This article provides general legal information as of July 2026 and does not constitute legal, real estate, zoning, tax, technical or investment advice. Every franchise location should be assessed according to the property, intended activity, lease, municipal requirements, building status and franchise agreement.