Territorial Exclusivity in Franchise Agreements in Turkey: Legal Scope, Active Sales and Online Restrictions

Introduction

Territorial exclusivity is one of the most commercially important provisions in a franchise agreement. A franchisee investing in premises, equipment, employees, local marketing and customer development generally wants protection from competing outlets operating under the same brand. The franchisor, on the other hand, wants to preserve its ability to expand the network, serve national customers and use new distribution channels.

These competing interests make the territorial clause one of the most frequently disputed parts of a franchise agreement.

A franchisee may believe that an “exclusive territory” prevents the franchisor from conducting any business within a particular district, city or region. The franchisor may intend only to promise that it will not appoint another physical franchise outlet within that area. Unless the agreement addresses online sales, mobile applications, delivery platforms, supermarkets, airports, hotels, institutional customers and corporate-owned stores, both parties may develop substantially different expectations.

Territorial exclusivity in franchise agreements in Turkey must also comply with Turkish competition law. Although a franchisor may grant an exclusive territory and protect a franchisee against certain targeted sales activities, territorial protection cannot ordinarily become absolute. Restrictions preventing passive sales, unsolicited orders or effective internet use may remove the agreement from the block exemption available under Turkish vertical agreement rules.

The principal legal framework consists of Law No. 4054 on the Protection of Competition, the Block Exemption Communiqué on Vertical Agreements No. 2002/2 and the Turkish Competition Authority’s Guidelines on Vertical Agreements. These rules distinguish between permitted restrictions on active sales and generally prohibited restrictions on passive sales. They also regulate internet sales, customer allocation, selective distribution and the conditions for exemption.

A well-drafted territorial clause should therefore do more than draw a line on a map. It should define the scope of exclusivity, reserved rights, prohibited targeting methods, online channels, performance conditions and consequences of territorial breaches.

This guide examines territorial exclusivity in Turkish franchise agreements and provides practical drafting recommendations for franchisors, master franchisees and franchisees.

What Is Territorial Exclusivity in a Franchise Agreement?

Territorial exclusivity is a contractual arrangement under which a franchisor allocates a particular geographical area to a franchisee and agrees to provide a defined level of protection within that area.

The territory may be described by reference to:

• A country;
• A province or district;
• Postal codes;
• Municipal boundaries;
• A radius around the franchised premises;
• A shopping centre;
• An airport or transport facility;
• A map attached to the agreement;
• A specified customer group;
• A delivery zone.

Territorial exclusivity does not have one standard legal meaning. Its scope depends primarily on the wording of the agreement.

A fully exclusive territory may prohibit the franchisor from appointing additional franchisees, opening corporate-owned outlets and actively selling to customers within the territory. A more limited protected territory may only prevent the opening of another physical outlet within a specified radius.

The agreement should therefore distinguish among the following concepts:

• Exclusive territory: The franchisor agrees not to appoint another franchisee or operate a competing outlet within the defined area, subject to stated exceptions.
• Protected territory: The franchisee receives limited protection, often against another traditional outlet, while the franchisor reserves alternative sales channels.
• Area of primary responsibility: The franchisee is expected to market and develop the brand in the area but may not receive complete exclusivity.
• Non-exclusive territory: The franchisor may appoint additional franchisees or operate directly within the same area.

Using one of these labels without defining its consequences is insufficient. The legal and commercial rights must appear expressly in the agreement.

Territorial Exclusivity and Turkish Competition Law

Article 4 of Law No. 4054 prohibits agreements between undertakings whose object, effect or potential effect is the prevention, distortion or restriction of competition. Territorial and customer allocation clauses may fall within this provision because they limit where and to whom independent undertakings may sell.

Not every exclusive territory is unlawful. Exclusive distribution may encourage a franchisee to make local investments, develop customer demand and provide better services without fearing that another network member will immediately benefit from those investments.

The Turkish Competition Authority therefore permits certain territorial protections under Communiqué No. 2002/2, subject to market-share limits and the absence of hardcore restrictions.

The current block exemption generally applies where the franchisor’s market share in the relevant market does not exceed 30%. Where an exclusive-supply obligation is involved, the buyer’s market share in the relevant purchasing market may also become relevant.

The relevant market must be identified before the threshold can be calculated. It is not necessarily the general market for all franchise businesses. The analysis depends on which products or services customers consider substitutes, the geographical area in which competition takes place and the commercial position of competing brands.

A franchise agreement falling outside the 30% threshold is not automatically unlawful. It loses the automatic protection of the block exemption and must be assessed individually under Article 5 of Law No. 4054. The parties may need to demonstrate efficiency benefits, consumer advantages, preservation of sufficient competition and proportionality of the restriction.

An Exclusive Territory Does Not Provide Absolute Protection

One of the most important principles of Turkish vertical agreement law is that an exclusive territory does not normally provide absolute territorial protection.

The franchisor may protect a franchisee against certain active sales made by other franchisees into the allocated territory. However, the franchisor should not generally prevent other franchisees from responding to unsolicited customer requests originating from that territory.

The Competition Authority’s Guidelines state that undertakings allocated exclusive territories or customer groups may generally be protected against the active competition of other network members. Restrictions on passive sales into those territories, by contrast, are treated as restrictions capable of removing the agreement from the block exemption.

This distinction means that an exclusive franchisee does not legally “own” every customer located within the territory.

A customer may travel to another franchise outlet, independently contact another franchisee or order from another franchisee’s generally accessible website. The exclusive franchisee may not be entitled to prevent such transactions merely because the customer’s residence or delivery address is inside its territory.

The agreement must therefore distinguish active sales from passive sales clearly and consistently.

What Are Active Sales?

Active sales are sales generated through targeted efforts directed at customers in another franchisee’s exclusive territory or customer group.

The Competition Authority’s Guidelines identify direct communications, visits, territory-specific advertising and establishing a sales location or distribution warehouse in another exclusive territory as examples of active sales.

In a franchise context, active sales may include:

• Sending unsolicited promotional e-mails to customers located in another exclusive territory;
• Making direct telephone calls to businesses in another franchisee’s area;
• Distributing brochures exclusively within another protected district;
• Purchasing digital advertisements targeted at users in another franchisee’s territory;
• Establishing a temporary or permanent sales point in another territory;
• Hiring local sales representatives to solicit customers there;
• Offering territory-specific discounts to customers in the protected area;
• Purchasing search-engine advertisements limited to a competing franchisee’s location;
• Conducting local influencer campaigns specifically directed at the protected territory.

A franchisor may generally prohibit these targeted activities where the territory or customer group has been validly allocated on an exclusive basis and the other conditions of the block exemption are satisfied.

The prohibition should focus on deliberate targeting. It should not be drafted so broadly that every sale delivered into another territory is automatically treated as an active sale.

What Are Passive Sales?

Passive sales arise when a franchisee responds to an unsolicited request from a customer without having specifically targeted that customer or territory.

The Guidelines state that responding to a request not generated by the seller’s active efforts is a passive sale, even where the franchisee subsequently delivers the product to the customer’s address. General advertising and internet sales are also generally treated as passive sales.

Examples include:

• A customer independently visiting an outlet located outside the customer’s home territory;
• A customer calling another franchisee after finding its general contact details;
• A consumer placing an order through a generally accessible website;
• A business requesting a quotation without having received targeted marketing;
• A customer subscribing voluntarily to general electronic communications;
• A customer responding to a nationwide advertisement;
• A consumer asking for delivery to an address outside the franchisee’s territory.

A clause requiring a franchisee to refuse all such orders may constitute a passive-sales restriction.

The distinction is commercial rather than purely geographical. A sale does not become active merely because the product is delivered into another franchisee’s territory. The decisive issue is whether the seller deliberately targeted that territory or simply responded to independent customer demand.

Online Sales and Territorial Exclusivity

Online commerce is one of the most difficult issues in territorial franchise arrangements.

A franchisor may wish to protect physical franchisees from online competition within their local areas. However, Turkish competition law generally treats the operation of a website and the fulfilment of unsolicited online orders as passive selling.

The Guidelines state that, as a principle, each distributor should be able to sell through the internet. Preventing customers in another territory from accessing a franchisee’s website, automatically redirecting them to another website or ending a transaction because the delivery, postal or payment address falls outside the franchisee’s territory may be treated as prohibited passive-sales restrictions.

The following contractual or technical practices therefore create significant risk:

• Blocking a customer’s access based on location;
• Automatically redirecting the customer to the local franchisee;
• Refusing to process an order because the address is outside the allocated territory;
• Limiting the percentage of sales that may be completed online;
• Requiring the franchisee to pay a higher wholesale price for products sold online;
• Prohibiting the franchisee from maintaining its own approved website;
• Requiring all internet orders to be transferred to the franchisor;
• Preventing delivery outside the franchisee’s territory, regardless of how the order was generated.

A franchisor may impose objective quality requirements relating to website design, brand presentation, customer service, cybersecurity, product information and delivery standards. These conditions should preserve the franchise network’s identity without making effective online selling impossible.

Targeted Online Advertising May Constitute Active Selling

Not every online activity is passive.

Online advertising specifically targeted at another franchisee’s exclusive territory may constitute active selling. The Guidelines refer to territory-specific online advertisements, unsolicited electronic communications and paid search-engine advertising aimed at a particular geographical area as active sales methods. Advertising through third-party platforms or marketplaces directed specifically at residents of another exclusive area may receive the same treatment.

For example, a franchisee located in Ankara may operate a website accessible throughout Türkiye without necessarily engaging in active sales in Istanbul.

However, the same franchisee may be regarded as actively targeting Istanbul if it:

• Purchases search advertisements shown only to Istanbul users;
• Sends unsolicited promotional messages to an Istanbul customer database;
• Uses an advertisement stating “special delivery campaign for Istanbul”;
• Pays influencers whose campaign is designed specifically for another franchisee’s protected district;
• Creates a separate landing page optimised for customers in the protected territory.

The franchise agreement should permit general online visibility while prohibiting objectively identifiable targeting of another exclusive territory.

Delivery Platforms and Mobile Applications

Food delivery applications, reservation platforms and online marketplaces complicate territorial protection because the platform may automatically display multiple outlets to the same customer.

The agreement should identify who contracts with the platform, who determines the delivery radius, how orders are allocated and whether a franchisee may independently participate in additional platforms.

A franchisee’s presence on a nationally accessible platform will not necessarily constitute active selling. The analysis may depend on whether the franchisee deliberately configures advertisements, promotions or delivery zones to target another exclusive territory.

The following questions should be addressed:

• Does the customer select the outlet?
• Does the platform allocate orders according to location?
• Can the franchisee enlarge its delivery zone?
• Does the franchisor control the central application?
• Are customers automatically redirected?
• Can different franchisees apply different prices?
• Who owns the customer relationship?
• Who bears refunds and delivery risks?

A centrally operated application may provide commercial efficiency, but it should not be used to eliminate the pricing or customer freedoms that independent franchisees must retain.

Where orders are automatically allocated to the nearest outlet, the agreement should state whether the allocation is a contractual benefit, a technical operating method or a guaranteed territorial right. Otherwise, a temporary technical change may be alleged to constitute a breach of exclusivity.

Central E-Commerce and Reserved Online Channels

A franchisor may reserve a national website, mobile application or e-commerce channel for itself.

Such a reservation should be expressly stated in the franchise agreement. A franchisee granted an exclusive physical territory should not assume that the franchisor has also surrendered all online sales rights.

The agreement should define:

• Whether the franchisor may sell directly online;
• Whether online revenue is allocated to local franchisees;
• Whether the franchisee receives a commission;
• Who fulfils the order;
• Whether online sales count toward performance targets;
• Whether customer data are shared;
• Whether national campaigns apply locally;
• Whether the franchisor may use third-party marketplaces.

The commercial arrangement should also remain consistent with competition law. The franchisor should not reserve online sales merely as a method of preventing franchisees from effectively using the internet.

A more balanced model may allow the franchisor to operate a central digital platform while giving local franchisees responsibility for fulfilment and an agreed share of the revenue.

Reserved Customers and National Accounts

Territorial exclusivity may be combined with customer-group reservations.

A franchisor may wish to reserve large national customers, government contracts, hotel groups, supermarket chains, transport facilities or corporate accounts.

The agreement should identify these customers or categories with sufficient precision. Expressions such as “all important customers” or “all strategic accounts” are likely to create uncertainty.

Reserved accounts may include:

• National retail chains;
• Public tenders;
• Airlines and airports;
• Hotels and tourism groups;
• Hospitals and universities;
• E-commerce marketplaces;
• Military or government customers;
• International corporate clients;
• Existing customers of the franchisor.

The agreement should determine whether the franchisee will participate in supplying or servicing a reserved account within its territory.

For example, the franchisor may negotiate a national contract while the local franchisee performs delivery, installation or customer support. The franchisee’s fee or commission should be defined in advance.

Customer-group allocation must also comply with the active and passive sales distinction. A customer reserved exclusively to the franchisor may generally be protected against active solicitation, but the complete legal treatment depends on the distribution system and the applicable exemption conditions.

Corporate-Owned Outlets and Dual Distribution

Some franchisors operate corporate-owned outlets while also granting franchise territories.

The agreement should state whether the franchisor may establish or acquire a corporate outlet within or near the franchisee’s territory.

A reservation allowing corporate-owned outlets may substantially reduce the practical value of territorial exclusivity. It should therefore be disclosed clearly rather than hidden in a broad reserved-rights clause.

Dual distribution may also create information risks because the franchisor is both the supplier and a retail competitor of its franchisees.

The franchisor may legitimately receive sales information required for royalty calculation, quality control and network management. However, detailed access to future pricing, discounts, margins or customer strategies may create competition concerns where the franchisor uses the information to favour its own outlets.

The agreement should limit the collection and use of commercially sensitive information to objectively necessary purposes.

Territorial Exclusivity in Selective Distribution Systems

A selective distribution system operates differently from a traditional exclusive distribution model.

In selective distribution, the supplier appoints distributors according to specified criteria and generally restricts sales to authorised network members. However, authorised retailers should not ordinarily be prohibited from making active or passive sales to end users merely because those users are outside a designated territory.

The Guidelines state that selective distribution system members cannot generally be restricted from selling actively or passively to final customers, including through the internet, even where the supplier has created local territories.

A franchisor should therefore determine whether its network is primarily exclusive, selective or a combination of both.

Using selective distribution terminology while imposing absolute territorial restrictions may create internal inconsistency and competition-law risk.

Franchise Encroachment

Franchise encroachment occurs when the franchisor opens or authorises another outlet or sales channel that competes with an existing franchisee.

Encroachment may occur through:

• A new physical franchise outlet;
• A corporate-owned store;
• A kiosk or mobile unit;
• A supermarket concession;
• An airport location;
• A delivery-only kitchen;
• An online store;
• A national delivery application;
• A wholesale customer;
• Another brand owned by the franchisor.

Turkish law does not provide an automatic statutory rule prohibiting every form of encroachment. The dispute will usually depend on the wording of the franchise agreement, pre-contractual representations and good-faith principles.

The agreement should define which channels are protected and which are reserved.

A clause granting exclusivity for “traditional retail stores” may still allow the franchisor to operate airport outlets, online channels or wholesale distribution if those rights are expressly reserved.

A clause promising complete territorial exclusivity without exceptions may create liability if the franchisor later introduces competing channels inside the territory.

Territorial Rights and Performance Requirements

Franchisors often make exclusivity conditional on the franchisee meeting development, sales or quality targets.

This structure may be commercially reasonable because the franchisor does not want a large territory to remain underdeveloped.

Possible conditions include:

• Opening a required number of outlets;
• Reaching minimum sales levels;
• Maintaining specified operating hours;
• Conducting local marketing;
• Meeting quality scores;
• Paying all royalties on time;
• Retaining sufficient working capital;
• Complying with reporting obligations.

The agreement should explain the consequences of failing to meet a target.

Possible remedies may include:

• A corrective action period;
• Removal of exclusivity;
• Reduction of the territory;
• Appointment of additional franchisees;
• Suspension of new development rights;
• Termination of the area development rights;
• Termination of the entire franchise agreement.

Loss of exclusivity should not occur automatically because of a minor or short-term failure unless the commercial justification is clear.

Targets should be measurable and should account for delays caused by permits, force majeure, franchisor supply problems or circumstances outside the franchisee’s reasonable control.

Master Franchise and Area Development Territories

Territorial exclusivity is especially important in master franchise and area development agreements.

A master franchisee may receive the right to operate and appoint sub-franchisees throughout Türkiye or within a defined region. An area developer may be required to open multiple outlets without appointing independent sub-franchisees.

The agreement should regulate:

• Development schedules;
• Minimum outlet numbers;
• Sub-territories;
• Approval of sub-franchisees;
• Reserved national accounts;
• Direct franchisor sales;
• Cross-border customers;
• Online channels;
• Failure to meet development targets;
• Reduction or reallocation of territory;
• Consequences for existing sub-franchisees.

Granting nationwide exclusivity without development obligations may prevent the franchisor from expanding for many years.

The franchisor may therefore structure the agreement so that exclusivity continues only while the master franchisee satisfies the development schedule.

Any reduction mechanism should be objective. The franchisor should not be permitted to remove valuable territory arbitrarily after the master franchisee has built the market.

Defining the Territory Accurately

Territorial disputes frequently arise because the geographical description is incomplete or ambiguous.

The agreement should ideally include a map as an annex and identify objective boundaries.

Possible methods include:

• Postal codes;
• Administrative districts;
• Streets and natural boundaries;
• Geographic coordinates;
• A radius measured from the premises;
• Shopping centre or facility boundaries;
• Delivery zones defined by an attached schedule.

Radius-based territories require additional detail. The agreement should explain whether distance is measured by road, straight line or travel time.

The agreement should also address changes in administrative boundaries, construction of new roads, population growth and relocation of the franchise premises.

If the franchisee moves, the original territory should not automatically move with it unless the contract expressly provides for this result.

Local Marketing and Territorial Targeting

A territorial clause should be coordinated with the marketing provisions.

The franchisee may be required to advertise actively within its own territory while avoiding targeted campaigns in another franchisee’s area.

The contract should distinguish between:

• Local advertising;
• National advertising;
• General social-media content;
• Location-specific advertising;
• Search-engine marketing;
• Influencer marketing;
• Direct customer communications;
• Sponsorships and local events.

A social-media page accessible nationally does not necessarily target every territory. However, paid advertising configured for users in another exclusive area may constitute active sales.

The franchisor should provide practical marketing guidelines rather than relying solely on legal terminology.

Remedies for Territorial Breach

The agreement should regulate what happens when a party breaches territorial exclusivity.

A franchisee may allege breach where the franchisor appoints another outlet, permits unauthorised targeting or sells directly through a channel that was not reserved.

The franchisor may allege breach where a franchisee actively solicits customers in another protected territory.

Possible remedies include:

• Written warning;
• Cessation of the campaign;
• Removal of location-targeted advertisements;
• Correction of delivery zones;
• Transfer of the customer or order;
• Payment of an agreed commission;
• Compensation for proven losses;
• Contractual penalties;
• Loss of exclusivity;
• Termination for repeated material breaches.

Contractual penalties should be proportionate and should not be used to enforce an unlawful passive-sales restriction.

The injured party must also preserve evidence. Relevant evidence may include digital advertisement settings, platform delivery maps, screenshots, customer communications, invoices, website data and marketing records.

Competition-Law Consequences of Unlawful Territorial Restrictions

A prohibited restriction may remove the franchise agreement from the block exemption and require an individual assessment under Article 5 of Law No. 4054.

Where the restriction cannot satisfy the exemption conditions, it may be unenforceable and may expose the parties to investigation by the Turkish Competition Authority.

Under the current administrative fine framework, fines imposed on undertakings for infringements of Articles 4 and 6 are calculated by reference to annual gross revenue and may not exceed 10% of the undertaking’s relevant annual gross revenue. The current regulation also provides for adjustments based on the duration, seriousness and aggravating or mitigating circumstances of the infringement.

Both franchisors and franchisees may face exposure if they participate in an unlawful territorial allocation arrangement.

The risk does not arise only from the written agreement. Technical restrictions, internal e-mails, franchisee complaints, delivery settings and actual enforcement practices may demonstrate that passive sales are being prevented.

Drafting Recommendations

A territorial exclusivity clause in a Turkish franchise agreement should include the following elements:

1. A precise geographical description and map;
2. A statement identifying whether the territory is exclusive, protected or non-exclusive;
3. A clear definition of the protection granted;
4. The franchisor’s reserved rights;
5. Treatment of corporate-owned outlets;
6. Treatment of national and institutional customers;
7. Online sales and central platform rules;
8. Delivery application and marketplace rules;
9. Active-sales restrictions;
10. Confirmation that lawful passive sales will not be prohibited;
11. Local and digital advertising standards;
12. Development and performance conditions;
13. Procedures for territory reduction;
14. Rules for relocation;
15. Remedies for breach;
16. Competition-law severability language.

The agreement should avoid language stating that the franchisee has an absolute right to every customer located in the territory.

It should instead explain which targeted activities are prohibited and which customer-initiated transactions remain permissible.

Territorial Exclusivity Checklist

Before signing the agreement, the parties should verify that:

• The territory is objectively defined;
• The type of exclusivity is stated;
• Physical and online channels are addressed separately;
• Reserved accounts are identified;
• Corporate outlets are regulated;
• Active and passive sales are distinguished;
• General internet sales are not unlawfully restricted;
• Territory-specific online advertising is addressed;
• Delivery platform rules are clear;
• The franchisee knows whether online revenue is allocated locally;
• Performance targets are measurable;
• Loss of exclusivity procedures are proportionate;
• Relocation consequences are explained;
• Market shares have been assessed;
• The clause has been reviewed under Communiqué No. 2002/2;
• Actual commercial practices match the written contract.

Conclusion

Territorial exclusivity in franchise agreements in Turkey can provide important commercial protection, but it must be drafted with precision and implemented consistently with Turkish competition law.

An exclusive territory does not normally give the franchisee absolute ownership of every customer within a geographical area. The franchisor may protect the franchisee against targeted active sales by other network members, but passive sales and unsolicited customer requests should not generally be prohibited.

The active and passive sales distinction is therefore central. Direct customer targeting, territory-specific advertising and establishment of a sales location inside another exclusive territory may constitute active selling. Responding to unsolicited requests, general advertising and ordinary internet sales are generally passive.

Online channels require particular care. Blocking access, redirecting customers, terminating transactions based on addresses, imposing online sales caps and applying higher wholesale prices to online products may create serious competition-law risk.

The agreement should also regulate central websites, delivery platforms, national accounts, corporate-owned outlets and alternative formats such as kiosks and delivery-only kitchens.

Territorial protection may be linked to development obligations and performance targets. However, the conditions for removing or reducing exclusivity should be objective, measurable and proportionate.

Where market-share thresholds are exceeded or territorial provisions fall outside the block exemption, the restriction must be assessed individually. An unlawful arrangement may result in unenforceability, damages exposure and administrative fines reaching up to 10% of annual gross revenue.

A legally effective territorial clause is not simply the broadest possible promise of exclusivity. It is a carefully structured provision that protects franchise investment, preserves the franchisor’s legitimate expansion rights and respects the competitive freedom required under Turkish law.

Frequently Asked Questions

Can a franchisor grant an exclusive territory in Turkey?

Yes. A franchisor may grant an exclusive or protected territory, subject to the franchise agreement and Turkish competition-law requirements.

Does an exclusive territory prevent every sale by another franchisee?

No. The franchisee may generally be protected against active sales into its territory, but passive sales and unsolicited customer requests should not ordinarily be prohibited.

What is an active sale?

An active sale involves targeted efforts directed at customers in another exclusive territory, such as direct marketing, territory-specific advertisements or establishing a sales location there.

What is a passive sale?

A passive sale occurs when the franchisee responds to an unsolicited customer request without deliberately targeting the customer’s territory.

Is delivering an order outside the territory an active sale?

Not necessarily. If the customer independently requested the order, delivery to an address outside the franchisee’s territory may still be a passive sale.

Can a franchisee sell online outside its territory?

Generally, yes, where the sale results from a generally accessible website and an unsolicited customer request. Targeted online advertising in another exclusive territory may be restricted as active selling.

Can the franchisor redirect online customers to the local franchisee?

Automatic redirection or blocking based on customer location may be treated as a prohibited passive-sales restriction.

Can a franchisor operate a central e-commerce website?

Yes, provided that its rights are clearly reserved and the system is structured consistently with competition law and the franchise agreement.

Can delivery application zones be restricted?

Delivery zones may be organised for operational reasons, but restrictions should not become a mechanism for prohibiting lawful passive sales or customer choice.

Can the franchisor reserve national accounts?

Yes. National, institutional or strategic accounts may be reserved if the contract defines the reservation clearly and the arrangement complies with competition law.

Can the franchisor open a corporate-owned outlet in the territory?

This depends on the agreement. If corporate outlets are reserved, the franchisor may be able to do so. If complete exclusivity was promised, the opening may constitute breach.

Can exclusivity depend on performance targets?

Yes. Exclusivity may be linked to sales, development or quality targets, provided that the targets and consequences are clearly stated and applied in good faith.

What happens if the franchisee actively sells in another territory?

The agreement may require the franchisee to stop the conduct, correct advertisements, compensate proven losses or face contractual sanctions. The remedy must comply with competition law.

What is the market-share threshold for the block exemption?

The franchisor’s market share must generally not exceed 30% in the relevant market.

Is a territorial clause automatically unlawful if the threshold is exceeded?

No. The agreement loses automatic block-exemption protection but may still qualify for individual exemption under Article 5 of Law No. 4054.

What is the maximum administrative fine?

Competition-law fines imposed on an undertaking may reach up to 10% of its relevant annual gross revenue.

This article provides general legal information and does not constitute legal advice. Territorial exclusivity should be evaluated according to the relevant market, business model, sales channels, contractual wording and legislation in force on the date of implementation.