Learn how agency, distribution, and franchise contracts work under Turkish law, including agency commission and termination rights, exclusivity, portfolio compensation, competition-law limits, franchise know-how and trademark structures, and dispute risks.
Introduction
Agency, distribution, and franchise contracts in Turkey are among the most important commercial relationship contracts in Turkish practice. They are used to structure market entry, sales networks, territorial expansion, customer development, brand rollout, and ongoing distribution of goods and services. But Turkish law does not treat these three models as interchangeable. Agency is expressly regulated in the Turkish Commercial Code. Distribution and franchise, by contrast, are shaped mainly through freedom of contract, competition law, and judicial or doctrinal extension of certain agency principles to comparable long-term exclusive relationships.
That distinction matters commercially. An agent typically intermediates or concludes contracts on behalf of the principal within a territory or customer group, without becoming an internal employee of the business. A distributor usually buys and resells in its own name and for its own account. A franchisee normally operates under a branded business format that combines trademark and know-how use with operational assistance, common identity, and standardized commercial methods. Each model produces different consequences for commissions, goodwill compensation, territorial exclusivity, risk allocation, customer ownership, post-termination restrictions, and competition-law review.
For that reason, the real legal question in Turkey is not whether the parties called the contract an agency agreement, distributorship agreement, or franchise agreement. The more important questions are what the relationship actually does, which party sells in whose name and on whose account, whether there is territorial or customer exclusivity, how the relationship ends, whether post-term restrictions are enforceable, and whether the contractual restraints fit inside Turkish competition law. This guide explains agency, distribution, and franchise contracts in Turkey in practical English and with a focus on the issues that most often matter in drafting and disputes.
The Legal Landscape in Turkey
The legal starting point is freedom of contract. Article 26 of the Turkish Code of Obligations states that parties may freely determine contractual content within the limits laid down by law, while Article 27 invalidates contracts contrary to mandatory law, morality, public order, personal rights, or impossible subject matter. That is the main reason why Turkish law can accommodate complex distribution and franchise structures even though they are not organized in one dedicated statutory chapter like agency.
At the same time, Turkish law is highly structured where it chooses to regulate a contract type expressly. Agency is regulated in the Turkish Commercial Code, starting with Article 102. The Code defines the agent, sets default exclusivity rules, regulates authority, commissions, principal duties, termination, portfolio-compensation rights, and post-term non-compete agreements. This means agency is not just a market practice in Turkey; it is a codified commercial contract model.
Distribution and franchise contracts do not receive the same kind of dedicated chapter in the Commercial Code. But Turkish law still gives them a clear legal environment. First, they can be built under general contract freedom. Second, Article 122(5) of the Turkish Commercial Code expressly extends the agent’s goodwill or portfolio compensation rule, unless inequitable, to sole distributorship and similar continuous contract relationships granting monopoly-type rights. Third, Turkish competition law treats distribution and franchise as vertical agreements, which means exclusivity, non-compete obligations, resale restraints, online-sales restrictions, and IP-related clauses must be assessed under the current block-exemption communiqué and the Competition Authority’s vertical guidelines.
Agency Contracts in Turkey
Definition and basic structure
Article 102 of the Turkish Commercial Code defines an agent as a person who, without occupying an internal legal position dependent on the enterprise like a commercial representative, commercial proxy, sales clerk, or employee, undertakes, on the basis of a contract, as a profession and on a continuous basis within a certain place or region, either to intermediate contracts concerning a commercial enterprise or to conclude such contracts in the name of that merchant. The same article also states that, where the agency chapter is silent, brokerage, commission, and then mandate rules apply in sequence depending on the type of agency activity.
This definition is crucial because it shows what makes agency distinct. The agent is independent from the enterprise in organizational status, yet works continuously for the principal in a defined commercial field and geography. That makes agency different from employment, and also different from a distributor who ordinarily trades in its own name and for its own account. Turkish law therefore places agency between internal employee structures and independent resale structures.
Default exclusivity
Article 104 sets a strong default rule. Unless otherwise agreed in writing, the principal may not appoint multiple agents at the same time in the same place or region for the same line of trade, and the agent may not act in the same place or region for several competing commercial enterprises. In other words, Turkish agency law starts from a presumption of bilateral exclusivity within the assigned territory or customer field unless the parties displace it in writing.
This is commercially important because many foreign businesses assume exclusivity must always be expressly added. Under Turkish agency law, the opposite is often true: exclusivity is the default unless displaced in writing. Parties who want a non-exclusive model should therefore say so clearly.
Authority and litigation position
Articles 105 to 108 regulate the agent’s authority. Article 105 authorizes the agent to make and receive rights-preserving declarations such as notices and protests regarding the contracts it intermediated or concluded, and it also provides that the agent may sue or be sued in the principal’s name for disputes arising from those contracts. For foreign merchants acting through agents in Turkey, contractual clauses contrary to this litigation rule are invalid. Article 106 requires special written authority for accepting payment for undelivered goods, taking delivery of unpaid goods, novating receivables, or reducing their amount. Article 107 states that, without special written authority, the agent cannot conclude contracts in the principal’s name, and documents granting that power must be registered and announced by the agent.
These rules make agency a precise legal instrument. Turkish law does not assume that every commercial intermediary has full contracting power. Authority must match the contract and, in some cases, written special authority is indispensable.
Duties of the agent and duties of the principal
Articles 109 to 120 divide the relationship into bilateral duties. The agent must look after the principal’s affairs and protect its interests in the assigned territory and line of trade, inform the principal about market conditions, customer finances, changes in circumstances, and transaction-related matters, and take necessary steps where goods are damaged or in danger while in agency handling. The agent must also account for and transfer money belonging to the principal.
The principal, in turn, must provide the documents relating to the goods, give the information necessary for the agency contract’s performance, inform the agent if business volume may be significantly lower than the agent could normally expect, notify the agent whether transactions are accepted or not performed, and pay the remuneration to which the agent became entitled. Any clause contrary to these principal duties is invalid to the extent it operates against the agent.
Commission rights
Articles 113 to 116 regulate commission. The agent is entitled to commission for transactions concluded during the agency relationship through the agent’s efforts or with customers previously brought in by the agent for similar transactions. If a territory or customer group was assigned, the agent may also claim commission for transactions concluded within that area or customer circle even without direct contribution, again subject to statutory limits. Commission may also arise for certain post-termination transactions closely linked to the agent’s prior efforts or to offers received before termination. The code also states when the right to commission accrues, how the amount is determined absent contract, and that commission information and accounting support must be provided to the agent.
This commission structure is one reason why agency remains commercially attractive in Turkey. It recognizes that an agent often builds customer relationships and market momentum that continue to generate value after individual transactions are closed.
Termination, portfolio compensation, and post-term non-compete
Article 121 allows indefinite-term agency contracts to be terminated on three months’ notice, while definite-term contracts may still be terminated at any time for justified reasons. If a definite-term agency continues after expiry, it becomes indefinite-term. A party that terminates without justified reason or without respecting the three-month notice period must compensate the other party for the loss caused by unfinished business.
Article 122 then grants the agent a powerful portfolio compensation claim after termination if three cumulative conditions are met: the principal continues to derive substantial benefit from new customers brought in by the agent, the agent loses commission that it would have earned had the relationship continued, and payment is equitable in the circumstances. The compensation is capped at the average of the annual commissions or other payments received over the last five years, or over the shorter relationship if it lasted less. The right cannot be waived in advance, and it must be asserted within one year of termination. Most importantly for broader commercial practice, Article 122(5) states that this rule also applies, unless inequitable, to sole distributorship and similar continuing relationships granting monopoly-like rights.
Article 123 regulates the post-term non-compete agreement in agency. It must be in writing, a document signed by the principal must be delivered to the agent, it may last no more than two years, it must be limited to the assigned territory or customer circle and the subject matter of the contracts the agent intermediated, and the principal must pay the agent appropriate compensation for the restriction. Any clause contrary to these rules is invalid to the extent it operates against the agent.
Distribution Contracts in Turkey
The basic model
A distribution contract in Turkey is typically a continuing commercial relationship under which the distributor buys goods from the supplier or manufacturer and resells them in its own name and for its own account. Unlike an agent, the distributor usually becomes the owner of the goods it purchases and bears resale risk. Because Turkish law does not place distribution in a dedicated statutory chapter comparable to agency, the legal structure is mainly built through contract freedom, mandatory-law limits, and competition-law review of vertical restraints.
This does not mean distribution is legally weak or unstructured. It means parties must draft more carefully, because Turkish law will often look to the contract itself, to general obligations law, and in some cases to agency-style analogies such as Article 122(5) when the distribution relationship is exclusive and long-term.
Why Article 122(5) matters
Article 122(5) is one of the most important provisions for Turkish distribution law. It states that the portfolio-compensation rule applies, unless inequitable, to sole distributorship and similar continuous relationships granting monopoly-type rights. This means that even though Turkish law does not give sole distributorship a full separate statutory chapter, it expressly acknowledges that at least one major agency-style termination consequence may extend into that field.
In practical terms, that makes termination strategy in exclusive distribution much more important. A supplier ending a long-term exclusive distributorship in Turkey should not assume that the absence of an agency label eliminates all post-termination payment risk. If the distributor built a customer base that continues to benefit the supplier and the equitable conditions are present, a portfolio-compensation argument may become central.
Competition-law overlay
Distribution agreements usually qualify as vertical agreements under Turkish competition law. The current block-exemption communiqué provides that vertical agreements can benefit from block exemption if the supplier’s market share in the relevant market does not exceed 30%, following the 2021 amendment. The communiqué also allows block exemption for certain IP-related vertical agreements where the IP clauses are directly related to the use, sale, or resale of the goods or services and do not constitute the main purpose of the agreement.
But the exemption is not automatic. The communiqué identifies hardcore restraints, including resale price maintenance: preventing the purchaser from determining its own selling price falls outside the exemption, although maximum or recommended resale prices may be possible if they do not become fixed or minimum prices through pressure or incentives.
The Competition Authority’s vertical guidelines also treat some online-sales restraints as severe restrictions. The guidelines state that setting maximum ratios for internet sales is a severe restriction and explain that certain region-targeted online advertising can count as active sales. This matters because modern Turkish distribution disputes increasingly involve online channel control, marketplaces, and omnichannel strategies.
The guidelines also emphasize that non-compete obligations imposed on the buyer generally raise a duration issue, and the current block-exemption framework treats the five-year ceiling as central except for narrow exceptions tied to supplier-owned premises or similar specific settings.
Franchise Contracts in Turkey
The franchise model
A franchise contract in Turkey is usually a hybrid long-term commercial arrangement built around the franchisor’s trademark, know-how, business model, and ongoing technical or commercial assistance, combined with the franchisee’s operation of the business in accordance with standardized system rules and usually in return for fees. Turkish competition-law guidance expressly describes franchise agreements as containing licenses of intellectual property rights and know-how, especially trademarks and signs, together with commercial or technical assistance that forms an integral part of the franchise package. The guidance also states that the franchisor is generally paid a franchise fee and that franchising allows expansion of a uniform distribution network with limited investment.
This description matters because it captures why franchise is not simply agency and not simply distribution. A franchisee may buy and resell goods like a distributor, but it also operates within a branded, know-how-driven business system. A franchisee is not merely intermediating like an agent, but neither is it usually as free as an ordinary distributor to shape the business format independently.
IP, know-how, and vertical restraints
The Competition Authority’s guidelines explain that vertical agreements including intellectual-property rights can benefit from block exemption if the IP provisions are directly related to the use, sale, or resale of the relevant goods or services and if the purchase, sale, or resale remains the main purpose of the agreement. The same guidance states that this condition is generally fulfilled in franchise agreements, because the IP transferred to the franchisee usually supports the distribution system rather than replacing it with a pure license transaction.
The guidelines also contain a dedicated franchise section. They explain that franchise agreements usually combine several vertical restraints, such as selective distribution, non-compete obligations, exclusive distribution, or weaker variants. Importantly, the guidance states that a non-compete obligation regarding the goods or services purchased by the franchisee can fall outside the prohibition rule where it is necessary to maintain the common identity and prestige of the franchised network, and in those cases the duration of the non-compete will not create a problem so long as it does not exceed the duration of the franchise agreement itself.
This is one of the most practically useful competition-law points for franchising in Turkey. It means that some restraints that might be problematic in ordinary distribution can be more defensible in franchising when they are genuinely necessary to preserve network identity, uniformity, and know-how integrity. But that does not make every franchise restraint safe. Resale price maintenance and other hardcore restrictions remain risky, and franchise arrangements still sit inside the broader vertical-restraints framework.
Dispute Resolution and Mandatory Mediation
Agency, distribution, and franchise disputes frequently involve unpaid commissions, termination compensation, damages, penalties, debt claims, or reimbursement of money. Under Article 5/A of the Turkish Commercial Code, for commercial disputes mentioned in Article 4 and in other laws, where the subject matter is a monetary receivable or compensation claim, applying to a mediator before filing suit is a condition of action. Agency disputes are also commercial disputes under Article 4, which expressly includes the Turkish Code of Obligations provisions on commercial representatives, commercial agents, and other merchant assistants.
In practical terms, that means many agency, distribution, and franchise claims in Turkey—especially commission, damages, portfolio compensation, and other payment disputes—cannot safely be filed straight in court without checking mandatory mediation first.
Practical Drafting Lessons
A Turkish-law agency contract should address territory, customer group, authority boundaries, commission triggers, reporting, stock and collection powers, notice periods, portfolio-compensation risk, and post-term non-compete structure. Default exclusivity under Article 104 should be dealt with expressly if the parties want a non-exclusive model.
A distribution agreement should define whether exclusivity exists, how purchases and resale risk are allocated, what the online-sales rules are, how prices are recommended without crossing into resale price maintenance, what happens to customer data and goodwill on exit, and whether the relationship could trigger Article 122(5) compensation risk.
A franchise agreement should address trademark and know-how licensing, operations manuals, training and assistance, common identity obligations, network standards, confidentiality, supply restrictions, online-sales rules, fees, and termination consequences. The restraints should be drafted with the vertical-guidelines logic in mind, especially where the franchisor wants network-wide consistency and post-term protection.
Conclusion
Agency, distribution, and franchise contracts in Turkey share a common commercial purpose—market expansion through intermediated sales networks—but they sit on different legal foundations. Agency is directly and comprehensively regulated in the Turkish Commercial Code. Distribution and franchise rely more heavily on contract freedom, competition law, and the selective extension of agency-style rules such as Article 122(5) portfolio compensation to sole distributorship and similar exclusive continuing relationships.
The practical takeaway is straightforward. In Turkish law, classification is everything. A party that mislabels an agency as a distributorship, or a franchise as a simple sale-and-resale model, may misjudge commissions, termination rights, competition-law exposure, and post-term restrictions. The best contract is not the one with the broadest commercial language. It is the one whose structure matches the legal model Turkish law will actually apply.
FAQ
Is agency expressly regulated in Turkey?
Yes. Agency is expressly regulated in the Turkish Commercial Code beginning with Article 102, which defines the agent and is followed by rules on exclusivity, authority, commissions, termination, portfolio compensation, and post-term non-compete.
Are distribution and franchise contracts separately codified like agency?
Not in the same way. Turkish law expressly regulates agency, while distribution and franchise are mainly structured through contract freedom, competition law, and, for sole distributorship and similar exclusive continuous relationships, Article 122(5)’s extension of the portfolio-compensation rule unless inequitable.
Does Turkish agency law presume exclusivity?
Usually yes. Under Article 104, unless otherwise agreed in writing, the principal may not appoint multiple agents in the same place or region for the same trade line, and the agent may not represent competing enterprises in that same area.
Can an agent claim compensation after termination?
Yes, if Article 122’s conditions are met. Turkish law grants portfolio compensation where the principal continues to derive substantial benefit from customers brought in by the agent, the agent loses commission because of termination, and payment is equitable. The right generally must be asserted within one year and is capped by statute.
Can sole distributors claim agency-style goodwill compensation in Turkey?
Potentially yes. Article 122(5) extends the portfolio-compensation rule, unless inequitable, to sole distributorship and similar continuous relationships granting monopoly-type rights.
How does Turkish competition law affect distribution and franchise agreements?
They are generally treated as vertical agreements. The current block-exemption framework uses a 30% supplier market-share threshold, treats resale price maintenance as a hardcore restriction, and evaluates non-compete, territorial, customer, and online-sales restraints under the vertical communiqué and the Competition Authority’s guidelines.
Are franchise restrictions treated more flexibly than ordinary distribution restraints?
Sometimes. The Competition Authority’s guidance recognizes that franchise agreements combine IP, know-how, and assistance, and states that some restrictions—especially non-compete obligations necessary to maintain the common identity and prestige of the franchised network—may be easier to justify within the franchise model.
Do agency, distribution, and franchise disputes require mediation first in Turkey?
Often yes, where the dispute is a commercial monetary receivable or compensation claim. Article 5/A of the Turkish Commercial Code makes mediation a condition of action for those disputes, and Article 4 identifies agency-related claims as commercial disputes.
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