Franchise Joint Ventures in Turkey

on July 21, 2026

Introduction

A franchise joint venture combines the franchisor’s brand, business model and operational know-how with the local partner’s capital, market knowledge, business relationships and operational capacity.

The structure is commonly used where a foreign franchisor wants to enter or expand in Türkiye but does not wish to rely solely on an independent master franchisee. It may also be used where a Turkish brand wishes to develop a new business line together with an investor, property owner, distributor or experienced multi-unit operator.

Instead of granting the local operator a conventional franchise licence and remaining outside the operating business, the parties jointly own or control the company conducting the franchise activities.

A typical franchise joint venture may involve:

A foreign brand owner contributing trademark rights, know-how and technical support;
A Turkish partner contributing capital, management, premises or market access;
A jointly owned Turkish company operating franchise outlets;
A development programme requiring the joint venture to open a defined number of locations;
A separate franchise or trademark licence agreement between the brand owner and the joint venture company;
A shareholders’ agreement regulating control, financing, deadlock and exit.

This structure can align the interests of the franchisor and local investor more closely than a conventional franchise relationship.

The franchisor participates directly in the economic success of the business. The local partner gains access not only to a contractual franchise right but also to an ownership interest in the operating company.

However, the joint venture structure is substantially more complex than an ordinary franchise agreement.

The parties must regulate two related but legally distinct relationships:

Their relationship as shareholders or joint venture partners;
The relationship between the brand owner and the company operating the franchise system.

The shareholders’ agreement cannot replace the franchise agreement. Likewise, the franchise agreement cannot regulate every corporate governance, funding, transfer and exit issue affecting the joint venture company.

Franchise joint ventures in Türkiye are not governed by one dedicated statute. The applicable framework depends on whether the parties create a contractual joint venture, an ordinary partnership or a Turkish commercial company. The Turkish Code of Obligations, Turkish Commercial Code, Industrial Property Code, Competition Law, Foreign Direct Investment Law and sector-specific legislation may all become relevant.

This guide explains how franchise joint ventures in Turkey should be structured, governed, financed and terminated.

What Is a Franchise Joint Venture?

A franchise joint venture is a cooperative business structure in which two or more parties combine resources to establish or operate a franchised business.

The participants usually contribute different elements.

The franchisor may contribute:

Trademark rights;
Business format;
Confidential know-how;
Operations manuals;
Training;
Product specifications;
Technology;
International purchasing relationships;
Brand development.

The local partner may contribute:

Capital;
Local management;
Commercial premises;
Supplier relationships;
Distribution capacity;
Government and regulatory knowledge;
Human resources;
Existing outlets or customer channels.

The joint venture may be formed for:

Launching the brand in Türkiye;
Operating flagship outlets;
Developing a national network;
Managing a regional area;
Acting as master franchisee;
Creating a production and distribution platform;
Acquiring an existing franchise business.

The parties should define whether the joint venture may operate outlets only or whether it may also appoint independent sub-franchisees.

Authority to operate franchised outlets is not the same as authority to grant sublicences or sub-franchises.

Contractual and Corporate Joint Ventures

Franchise joint ventures may be structured contractually or through a separate company.

Contractual Joint Venture

The parties may cooperate under an agreement without establishing a new capital company.

Depending on its terms, the arrangement may constitute an ordinary partnership under Articles 620 to 645 of the Turkish Code of Obligations.

Article 620 defines an ordinary partnership as a contract under which two or more persons undertake to combine their labour and property to achieve a common purpose. A partnership that does not possess the defining characteristics of another legally regulated company form is subject to the ordinary partnership provisions.

A contractual joint venture may be suitable for:

A limited pilot project;
A temporary flagship operation;
A defined marketing or development project;
Preparatory cooperation before company formation.

An ordinary partnership does not itself create a separate legal entity comparable to a joint-stock or limited liability company. The partners must therefore regulate ownership, representation, liabilities, bank accounts, employees, permits and contracting authority carefully. Official Ministry materials also recognise that an ordinary partnership does not create separate legal personality.

This structure may expose the partners more directly to joint venture liabilities and may be operationally difficult for a long-term retail or service network.

Corporate Joint Venture

The parties may establish a Turkish company that owns the assets, employs personnel, signs leases and operates the franchise outlets.

Joint-stock companies and limited liability companies are the corporate forms most commonly used for Turkish investments. International investors may establish the company forms available under the Turkish Commercial Code, and Türkiye’s foreign investment framework is based on equal treatment between foreign and domestic investors.

A corporate joint venture creates clearer separation between:

The joint venture company’s assets and liabilities;
The shareholders’ assets and liabilities;
Shareholder governance;
Franchise operations;
Third-party contracts.

For most long-term franchise investments involving several outlets, employees, leases and substantial capital expenditure, a corporate structure will ordinarily provide greater legal and operational clarity.

Joint-Stock Company or Limited Liability Company?

The parties will commonly choose between a joint-stock company, known as an Anonim Şirket or A.Ş., and a limited liability company, known as a Limited Şirket or Ltd. Şti.

The appropriate choice depends on:

Number and identity of investors;
Planned share transfers;
Governance structure;
Future financing;
Exit strategy;
Sector-specific requirements;
Possibility of admitting new investors;
Preference for different share classes.

The current statutory minimum capital is TRY 250,000 for newly established joint-stock companies and TRY 50,000 for newly established limited liability companies. A non-public joint-stock company adopting the registered-capital system must have at least TRY 500,000 in initial capital.

These minimum amounts should not be confused with the actual investment required for a franchise joint venture.

A business opening several outlets may need considerably more capital for:

Franchise fees;
Lease deposits;
Fit-out works;
Equipment;
Inventory;
Payroll;
Marketing;
Working capital;
Technology;
Professional services.

The joint venture agreement should be based on the genuine funding requirement rather than the statutory minimum capital.

Joint-Stock Company Structure

A joint-stock company may be preferable where the parties expect:

Multiple investment rounds;
Different share classes;
Institutional investors;
Easier share transfers;
Complex governance;
Eventual sale or public offering;
Issuance of debt instruments.

Its statutory organs are the general assembly and board of directors.

The shareholders’ agreement may provide each principal shareholder with rights to nominate directors, subject to mandatory corporate-law limitations and the company’s articles of association.

A joint-stock company may also be more suitable where the franchisor wishes to maintain a minority investment while protecting strategic rights through board representation and reserved matters.

Limited Liability Company Structure

A limited liability company may be suitable for a closely held joint venture involving a small number of partners.

Its management and representation are exercised through one or more managers.

The structure may be simpler for a small or medium-sized operating business, but the parties should examine:

Share transfer formalities;
General assembly approval;
Manager responsibilities;
Public debt exposure;
Exit flexibility;
Restrictions in the articles.

The parties should not select a limited liability company solely because the minimum capital requirement is lower.

The expected ownership changes and exit strategy should be considered from the beginning.

Foreign Ownership

A franchise joint venture may be wholly or partly owned by a foreign investor.

The Foreign Direct Investment Law applies an equal-treatment principle, and foreign investors may generally establish Turkish companies or acquire shares under the same company-law framework applicable to domestic investors.

However, equal treatment does not mean that every business sector is unrestricted.

Sector-specific approvals, licences or ownership rules may apply in regulated fields such as:

Banking;
Insurance;
Payment services;
Broadcasting;
Aviation;
Energy;
Education;
Healthcare;
Tourism.

The parties should investigate the intended franchise sector separately.

Foreign investment status may also create reporting, tax, foreign-exchange and international payment issues requiring specialist review.

The Principal Transaction Documents

A franchise joint venture normally requires several coordinated agreements.

These may include:

Joint venture or shareholders’ agreement;
Articles of association;
Franchise agreement;
Trademark and know-how licence;
Development agreement;
Supply or distribution agreement;
Technology and software agreement;
Share subscription or share purchase agreement;
Shareholder loan agreements;
Guarantees and security documents;
Property leases;
Management or support agreements.

The documents should not contradict one another.

For example, the shareholders’ agreement should not promise the local partner a ten-year exclusive development right while the franchise agreement allows the franchisor to terminate the licence after two years without a serious breach.

Similarly, the franchise agreement should not require the joint venture to undertake substantial investment without corresponding funding obligations in the shareholders’ agreement.

Relationship Between the Articles and Shareholders’ Agreement

The articles of association govern the company’s formal corporate structure and are registered with the trade registry.

The shareholders’ agreement regulates contractual rights between the shareholders.

Important rights should be reflected in both documents where legally possible.

These may include:

Share classes;
Board nomination rights;
Representation;
Meeting and voting rules;
Share transfer restrictions;
Privileges;
Capital structure.

A contractual shareholders’ agreement does not automatically bind future shareholders or third parties who have not assumed it.

The agreement should therefore require every permitted transferee to sign a deed of adherence before acquiring shares.

The parties should also understand that provisions in a shareholders’ agreement cannot override mandatory rules of Turkish corporate law.

Business Purpose and Scope

The joint venture’s business purpose should be defined clearly.

The company may be authorised to:

Operate franchise outlets;
Develop new locations;
Conduct e-commerce;
Import and distribute products;
Manufacture approved products;
Grant sub-franchises;
Provide training;
Manage national marketing;
Hold local intellectual property;
Offer delivery or catering services.

The parties should distinguish activities that the joint venture may conduct independently from activities requiring franchisor approval.

A broad corporate purpose does not necessarily grant contractual authority to use the trademark for every permitted company activity.

Territorial Rights

The franchise agreement should define the territory granted to the joint venture.

The rights may be:

Exclusive;
Conditionally exclusive;
Non-exclusive;
Limited to selected cities;
Limited to specified outlet formats;
Subject to development milestones.

The agreement should identify reserved channels such as:

International e-commerce;
Airports;
Hotels;
Travel retail;
National accounts;
Supermarkets;
Delivery-only outlets;
Institutional sales.

The joint venture partners should understand the commercial value of the territory before determining their capital contributions and ownership percentages.

Capital Contributions

The parties may contribute cash or assets to the joint venture.

Possible contributions include:

Cash;
Equipment;
Existing outlets;
Inventory;
Vehicles;
Real property;
Lease rights;
Registered intellectual property;
Technology;
Distribution infrastructure.

The parties should distinguish a true capital contribution from a contractual service.

Know-how, management assistance or future labour may be economically important but cannot always be treated in the same manner as cash or a legally transferable asset for company-capital purposes.

Where assets are contributed in kind, the parties should examine:

Ownership;
Valuation;
Transferability;
Existing encumbrances;
Regulatory approvals;
Tax consequences;
Registration requirements.

The joint venture agreement should state what happens if an agreed contribution cannot be transferred.

Valuing Brand and Know-How Contributions

A franchisor may argue that its trademark and franchise system justify a large equity interest even where the local partner provides most of the cash.

The parties should avoid double counting.

The franchisor may receive value through:

Equity;
Initial franchise fee;
Continuing royalty;
Supply margin;
Technology fee;
Advertising fee;
Management fee.

If the franchisor receives substantial equity for contributing the brand, the parties should assess whether full market-rate franchise and management fees remain commercially justified.

This does not mean that equity and royalties cannot coexist.

They compensate different rights and risks, but the overall structure should be economically transparent.

Funding Obligations

The shareholders’ agreement should contain a detailed funding plan.

It should address:

Initial capital;
Construction budgets;
Working capital;
Future capital calls;
Shareholder loans;
External borrowing;
Guarantees;
Emergency funding;
Cost overruns.

A vague provision stating that shareholders will fund the company “as needed” creates serious disputes.

The agreement should determine:

Who prepares the budget;
How funding is approved;
Whether contributions follow ownership percentages;
Consequences of a shareholder’s failure to fund;
Whether another shareholder may cover the shortfall;
Whether failure causes dilution, debt or default.

Shareholder Loans

Shareholder loans may provide flexibility where temporary funding is required.

The loan documents should specify:

Amount;
Currency;
Interest;
Maturity;
Subordination;
Repayment priority;
Security;
Conversion rights.

Related-party financing should be reviewed for transfer-pricing, tax and foreign-exchange compliance.

A shareholder loan should not be used indefinitely to avoid agreed equity obligations or create an undisclosed priority over the other shareholder.

Governance Structure

Governance is the core of a franchise joint venture.

The franchisor may wish to protect:

Brand standards;
System strategy;
Intellectual property;
Product quality;
Network reputation.

The local investor may wish to control:

Daily operations;
Local hiring;
Site negotiations;
Supplier relationships;
Turkish regulatory matters;
Cost management.

The agreement should allocate authority among:

General assembly;
Board of directors or managers;
Chief executive officer;
Senior management;
Shareholders.

The governance structure should allow efficient daily operation while requiring shareholder consent only for genuinely strategic matters.

Board Composition

The parties should determine:

Number of directors or managers;
Nomination rights;
Chairperson;
Meeting frequency;
Quorum;
Voting thresholds;
Casting vote;
Removal and replacement;
Observer rights.

A 50/50 joint venture may provide equal board representation.

However, equal representation creates deadlock risk where the parties disagree.

Giving one party a permanent casting vote may solve operational deadlock but may also give that party single control for competition-law purposes.

The governance terms should therefore be analysed both contractually and under merger-control rules.

Reserved Matters

Reserved matters are decisions that cannot be taken without the approval of specified shareholders or directors.

They may include:

Annual budget;
Business plan;
Opening or closing outlets;
Borrowing above a threshold;
Major investment;
Capital increase;
Appointment of senior management;
Related-party agreements;
New business lines;
Material litigation;
Sale of substantial assets;
Change of trademark;
Amendment of the franchise agreement;
Dividend distribution;
Company sale or liquidation.

Reserved matters should be limited to strategic issues.

Requiring unanimous consent for ordinary purchases, employee decisions or small expenses may make daily management impossible.

Joint Control Under Competition Law

Corporate voting rights can create joint control for Turkish merger-control purposes.

The Turkish Competition Authority’s 2026 Control Guidelines state that joint control exists where two or more parties must reach agreement on important decisions concerning the joint venture.

Equal voting rights or equal rights to appoint members of decision-making bodies may establish joint control.

Strategic veto rights concerning the budget, business plan, senior management or major investments may also create joint control. By contrast, minority protections limited to amendments of the articles, capital changes or liquidation will not necessarily create joint control on their own.

The parties should not assume that a 51/49 shareholding automatically means the 51% shareholder has sole control.

A 49% shareholder may hold joint control through strategic veto rights.

Full-Function Joint Ventures

A jointly controlled franchise company may qualify as a concentration where it performs the functions of an independent economic entity on a lasting basis.

The Competition Authority’s 2026 Guidelines describe a full-function joint venture as one with operational economic independence, adequate management, financial and personnel resources, access to assets and the ability to perform the functions normally carried out by undertakings in the relevant market.

A company limited to one narrow function of its parents, without real market access or sufficient resources, may not qualify as full-function.

A franchise joint venture is more likely to be considered full-function where it:

Operates outlets in its own name;
Employs management and staff;
Holds leases and licences;
Purchases or imports products;
Bears commercial risk;
Maintains its own budget;
Deals with customers;
Operates on a lasting basis.

A shell company that merely invoices services between the parent companies may require a different analysis.

Merger-Control Notification

Formation of a full-function joint venture under joint control may require prior notification to the Turkish Competition Authority if the applicable turnover thresholds are exceeded.

The thresholds were amended in February 2026. The principal thresholds now include a combined Turkish turnover of more than TRY 3 billion together with Turkish turnover exceeding TRY 1 billion for at least two transaction parties, or Turkish turnover exceeding TRY 1 billion for the relevant acquired business or party together with worldwide turnover exceeding TRY 9 billion for at least one other transaction party. Special rules apply to qualifying technology undertakings.

For a newly formed joint venture with no existing turnover, the controlling parent companies are treated as the relevant undertakings for threshold analysis. The newly created company itself is not treated as a relevant undertaking merely because it has been incorporated without turnover.

Where notification is required, the parties should not implement the joint venture before clearance.

The transaction documents should contain an appropriate competition-clearance condition precedent.

Coordination Between Parent Companies

Even where a joint venture qualifies as a concentration, competition analysis does not end with the formation of the company.

The Competition Authority’s 2026 amendments expressly address the risk that the joint venture may coordinate the competitive behaviour of its parent companies.

This risk may arise where the parent companies:

Compete in the same market;
Exchange sensitive information;
Allocate customers or territories;
Coordinate retail prices;
Use the joint venture to standardise their commercial strategies.

The joint venture should adopt information barriers where necessary.

Access to competitively sensitive information should be limited to personnel who genuinely need it for the joint venture’s operation.

Trademark Licensing

The joint venture company should receive an express licence to use the franchise trademarks.

The licence should identify:

Marks covered;
Goods and services;
Territory;
Outlet formats;
Online use;
Company name use;
Domain names;
Duration;
Quality control;
Termination;
Sublicensing.

The Industrial Property Code allows trademark licensing, but a licensee should not assume that it may transfer the licensed rights or grant a sublicense without the trademark owner’s authorisation. TÜRKPATENT guidance identifies licence and sublicense holders as persons using a trademark with the owner’s permission.

Where the joint venture will appoint franchisees, the brand owner must grant explicit sublicensing authority.

Ownership of Local Intellectual Property

The joint venture may create local assets such as:

Turkish-language marketing materials;
Local recipes;
Packaging designs;
Websites;
Domain names;
Customer applications;
Software integrations;
Market research;
Social-media accounts.

The documents should state who owns these assets.

Possible structures include:

Joint venture ownership;
Franchisor ownership;
Automatic assignment to the franchisor;
Joint venture ownership with a perpetual franchisor licence;
Separate ownership according to the creator.

The issue becomes critical when the joint venture ends.

The brand owner may need continued access to local materials, while the local partner may argue that it financed their development.

Franchise Fees and Related-Party Transactions

The joint venture may pay the franchisor:

Initial franchise fees;
Royalties;
Advertising contributions;
Technology fees;
Training fees;
Product charges;
Management fees.

Because the franchisor is also a shareholder, these payments are related-party transactions.

The governance documents should establish:

Approval procedure;
Pricing basis;
Invoicing;
Currency;
Review mechanisms;
Conflict-of-interest controls;
Transfer-pricing compliance.

The franchisor-appointed directors should not treat every payment to the franchisor as automatically beneficial to the joint venture company.

Transactions should have a genuine business basis and should be documented.

Supply Arrangements

The franchisor or one of its affiliates may supply products to the joint venture.

The supply agreement should address:

Product categories;
Prices;
Currency;
Delivery terms;
Minimum purchases;
Alternative sourcing;
Product defects;
Shortages;
Recall;
Supplier rebates.

The parties should evaluate whether the joint venture can operate commercially if the brand owner remains the sole supplier and also receives royalty and equity returns.

A supply dispute should not automatically become a shareholder deadlock.

Clear contractual service levels and remedies reduce the need to resolve ordinary supplier issues through corporate governance mechanisms.

Development Obligations

The joint venture may undertake to open a defined number of outlets.

The development programme should regulate:

Territory;
Site approval;
Opening deadlines;
Store formats;
Required investment;
Extensions;
Consequences of missed targets.

The shareholders’ agreement should allocate funding obligations consistently with the development agreement.

The local partner should not be solely responsible for missed openings where the franchisor:

Delays site approval;
Fails to provide designs;
Fails to supply equipment;
Withholds training;
Changes the format materially.

Business Plan and Budget

The initial business plan should be attached to the transaction documents.

It may include:

Number of outlets;
Opening schedule;
Capital expenditure;
Sales assumptions;
Royalty payments;
Supply costs;
Staffing;
Working capital;
Marketing;
Financing.

The parties should state whether the plan is:

Binding;
Indicative;
Subject to annual approval;
Capable of amendment by board vote;
A reserved matter.

An unrealistic business plan may create repeated funding and deadlock disputes.

Profit Distribution

The shareholders should agree on a dividend policy.

The joint venture may need to retain earnings to fund:

New outlets;
Renovation;
Inventory;
Debt service;
Technology;
Regulatory compliance.

One shareholder may prefer rapid distributions, while the other prefers expansion.

The agreement should establish:

Minimum reserves;
Debt restrictions;
Solvency conditions;
Development funding priority;
Dividend approval thresholds.

A shareholder should not be able to force distributions that leave the company unable to comply with franchise or lease obligations.

Management and Personnel

The parties should define responsibility for appointing:

Chief executive officer;
Finance director;
Operations director;
Development director;
Marketing director;
Compliance officer.

The franchisor may require approval of senior operational personnel to protect brand standards.

The local partner may require authority over Turkish labour, payroll and regulatory issues.

The joint venture company should remain the actual employer where it hires the personnel.

Brand training and operational supervision should not blur employment responsibilities unnecessarily.

Confidentiality and Know-How

Both shareholders may receive highly sensitive information.

The agreement should protect:

Franchise manuals;
Recipes;
supplier prices;
Development strategy;
Customer information;
Financial information;
Technology;
Business plans.

Confidentiality obligations should apply:

During negotiations;
Throughout the joint venture;
After a shareholder exits;
Following termination of the franchise licence.

The agreement should distinguish the franchisor’s proprietary know-how from information developed independently by the joint venture.

Non-Compete Obligations

The parties may agree that the local partner will not operate a competing concept during the joint venture.

The franchisor may also agree not to develop the same brand outside the joint venture within the protected territory.

The restrictions should define:

Restricted activity;
Territory;
Duration;
Affiliates covered;
Passive investments;
Existing businesses;
Post-exit period.

Competition-law and proportionality issues should be assessed.

A restriction that is necessary to protect the joint venture’s investment and know-how may be more defensible than a broad prohibition preventing the local investor from conducting any activity in the food, retail or service industry.

Data and Customer Relationships

A franchise joint venture may process customer information through:

Loyalty programmes;
Mobile applications;
E-commerce;
Delivery platforms;
Reservations;
Customer support;
Digital marketing.

The documents should determine:

Who acts as data controller;
Who determines processing purposes;
Which parties receive customer data;
Whether the foreign franchisor receives data abroad;
Security obligations;
Retention;
Data subject requests;
Post-termination treatment.

Ownership language alone does not resolve personal data obligations.

The company and shareholders must comply with the applicable data protection framework according to their actual roles.

Leases and Operating Licences

The joint venture company will commonly sign commercial leases and obtain workplace licences.

The parties should verify that the company—not one shareholder informally—holds the operational rights required for the business.

The documents should regulate:

Site approval;
Lease term;
Landlord consent;
Fit-out works;
Franchise termination;
Step-in rights;
Lease transfer;
Licence transfer;
De-branding.

If the franchise licence ends while the leases continue, the joint venture may remain liable for rent without the right to use the brand.

This risk should be addressed through transfer, alternative-use, purchase or termination mechanisms.

Deadlock

Deadlock is one of the greatest risks in a jointly controlled company.

It may arise where the parties cannot approve:

Budget;
Business plan;
New financing;
Senior management;
New outlets;
Franchise agreement amendments;
Related-party fees;
Sale of the business.

The agreement should define a deadlock carefully.

Not every failed vote should trigger a shareholder exit.

A deadlock may require:

Repeated failed meetings;
Failure to approve a reserved matter;
Material threat to business continuity;
Completion of negotiation and escalation procedures.

Deadlock Escalation

A staged procedure may include:

Board-level negotiation;
Referral to senior representatives of the shareholders;
Cooling-off period;
Independent expert determination for technical or valuation issues;
Mediation;
Buy-sell or exit process.

Technical disagreements concerning accounting, valuation or product compliance may be appropriate for expert determination.

Strategic disputes concerning whether to continue the investment cannot always be resolved by an expert.

Buy-Sell Mechanisms

Possible deadlock solutions include:

Russian roulette;
Texas shoot-out;
Sealed bid;
Put option;
Call option;
Sale to a third party;
Orderly liquidation.

A Russian roulette clause allows one shareholder to offer either to buy the other’s shares or sell its own shares at the same price per share.

This may encourage a realistic price but can favour the shareholder with greater financial resources.

A buy-sell mechanism should regulate:

Price calculation;
Funding evidence;
Completion timetable;
Regulatory approvals;
Franchise licence;
Guarantees;
Default at closing.

The mechanism should not force the local shareholder to acquire a franchise company without assurance that the brand licence will continue.

Share Transfer Restrictions

The shareholders’ agreement may include:

Lock-up period;
Franchisor consent;
Right of first offer;
Right of first refusal;
Tag-along right;
Drag-along right;
Prohibited transferees;
Competitor restrictions.

A franchisor may reasonably object to a competitor acquiring the local partner’s shares and accessing confidential know-how.

The local investor should have a workable route to realise the value of its investment.

An absolute permanent transfer prohibition can make the equity economically illiquid.

Tag-Along and Drag-Along Rights

A tag-along right allows a minority shareholder to join a sale by the majority shareholder on equivalent terms.

A drag-along right may require minority shareholders to sell where a qualifying sale of the complete company is approved.

The provisions should regulate:

Threshold;
Same terms;
Consideration;
Non-cash payments;
Warranties;
Liability caps;
Franchise licence continuity;
Competition clearance.

The local shareholder should not be required to give extensive business warranties for matters controlled solely by the franchisor.

Call and Put Options

A call option may allow the franchisor to acquire the local partner’s shares following:

Material breach;
Change of control;
Insolvency;
Brand misuse;
Deadlock;
Termination.

A put option may allow the local investor to sell its shares following:

Franchisor breach;
Loss of trademark rights;
Unjustified licence termination;
Change of brand ownership;
Failure to provide support.

The agreement should specify:

Trigger;
Exercise period;
Price;
Valuation;
Discounts;
Payment terms;
Security.

A punitive nominal price following every minor breach may create serious disputes.

Valuation

Valuation methods may include:

Fair market value;
Multiple of EBITDA;
Discounted cash flow;
Net asset value;
Independent expert valuation;
Formula based on invested capital.

The method should account for the franchise licence.

A joint venture company whose principal asset is the right to use the brand may have a very different value depending on whether the licence:

Continues after the share sale;
Is renewed;
Ends immediately;
Can be transferred;
Is subject to new fees.

A valuation should not assume continued franchise rights where the brand owner retains an unrestricted right to terminate them.

Franchise Termination

The franchise agreement and shareholders’ agreement should identify separate termination events.

Franchise termination may result from:

Unpaid royalties;
Brand-standard failure;
Trademark misuse;
Insolvency;
Unauthorised transfer;
Development default.

The effect on the joint venture company must be stated.

Possible outcomes include:

Franchisor call option;
Local partner put option;
Sale of the company;
Conversion to another business;
Liquidation;
Transfer of outlets to the franchisor;
De-branding.

Termination of the licence does not automatically dissolve the company.

The company may continue to exist while losing the right to conduct its principal business.

Shareholder Default

The agreement should distinguish among:

Funding default;
Confidentiality breach;
Competition breach;
Unauthorised transfer;
Fraud;
Insolvency;
Management obstruction.

Available remedies may include:

Cure notice;
Suspension of nomination rights;
Default interest;
Dilution;
Call option;
Damages;
Termination.

Automatic forfeiture of shares should not be assumed to be enforceable merely because it appears in the shareholders’ agreement.

Corporate procedures and mandatory rules must be observed.

Exit and Post-Exit Rights

An exiting shareholder may remain bound by:

Confidentiality;
Non-compete;
Non-solicitation;
Guarantee obligations;
Indemnities;
Pending litigation;
Data deletion;
Intellectual property return.

The agreement should also address:

Release of bank guarantees;
Replacement of personal guarantees;
Share pledges;
Director resignation;
Access to records;
Final accounts;
Tax clearances.

A share sale does not automatically release an outgoing shareholder from separate guarantees given to landlords, banks or suppliers.

Written releases should form part of completion.

Dispute Resolution

Franchise joint ventures may generate:

Corporate disputes;
Franchise disputes;
Intellectual property disputes;
Funding claims;
Valuation disputes;
Competition issues;
Lease claims.

The transaction documents should use coordinated dispute resolution provisions.

The parties may choose:

Turkish courts;
Domestic arbitration;
International arbitration;
Expert determination;
Mediation.

The arbitration clause should identify:

Institution or ad hoc rules;
Seat;
Language;
Number of arbitrators;
Interim relief;
Confidentiality;
Consolidation;
Joinder.

Not every company-law issue can necessarily be resolved or implemented in the same manner through arbitration, especially where trade registry actions, third-party rights or mandatory corporate procedures are involved.

The drafting should distinguish arbitrable contractual disputes from matters requiring corporate or judicial procedures.

Commercial Mediation

Monetary receivable and compensation claims classified as commercial disputes may require mandatory mediation before proceedings in Turkish courts.

A mediation process may be particularly useful for:

Shareholder loans;
Unpaid fees;
Funding defaults;
Damages;
Reimbursement claims.

However, urgent injunctive or intellectual property relief may require immediate action through the competent court or arbitral mechanism.

Franchise Joint Venture Due Diligence

Before creating the joint venture, each party should review the other.

The local partner should investigate:

Trademark ownership;
Existing franchise network;
Financial condition;
Litigation;
Product supply;
Registered intellectual property;
International performance;
Franchise termination history.

The franchisor should investigate:

Local partner’s ownership;
Financial capacity;
Existing businesses;
Regulatory history;
Litigation;
Competitor relationships;
Management team;
Source of funds.

The joint venture itself should also receive a complete rights package rather than relying on informal assurances from its shareholders.

Drafting Recommendations for Franchisors

A franchisor should ensure that:

Trademark rights remain protected;
Sublicensing is granted only where intended;
Strategic brand matters are reserved;
Local management authority is defined;
Funding obligations are enforceable;
Development milestones are realistic;
Related-party payments are transparent;
Competitors cannot acquire shares;
Exit preserves brand continuity;
Franchise termination and share transfer are coordinated.

The franchisor should avoid retaining so much control that the local partner bears the investment risk without meaningful corporate participation.

Drafting Recommendations for Local Partners

A local investor should negotiate:

Long-term licence security;
Objective termination grounds;
Territorial protection;
Funding limits;
Transparent royalties and supply margins;
Board representation;
Access to financial information;
Protection against dilution;
Tag-along rights;
Put rights after franchisor breach;
Release from guarantees on exit;
Fair valuation.

The investor should calculate the total value transferred to the franchisor through equity, royalties, product margins and other fees.

Franchise Joint Venture Checklist

Before establishing a franchise joint venture in Turkey, the parties should confirm that:

The structure is contractual or corporate.
The company type is suitable.
Foreign ownership restrictions have been reviewed.
Capital requirements are identified.
Each contribution is valued.
Brand value is not counted twice unintentionally.
Funding obligations are precise.
Shareholder loans are documented.
The articles and shareholders’ agreement are coordinated.
Board composition is clear.
Reserved matters are limited to strategic issues.
Daily management authority is workable.
Joint control has been analysed.
Full-function status has been assessed.
Merger-control thresholds have been reviewed.
Competition clearance is a condition precedent where required.
Parent-company coordination risks are controlled.
Trademark ownership has been verified.
The licence covers every intended use.
Sublicensing authority is express.
Local intellectual property ownership is regulated.
Royalties and related-party fees are transparent.
Supply obligations contain service levels.
The development schedule matches the funding plan.
Dividend and reserve policy is clear.
Senior management appointments are regulated.
Confidentiality applies before and after closing.
Non-compete restrictions are proportionate.
Data roles and international transfers are addressed.
Leases and licences are held by the correct entity.
Deadlock is defined.
Escalation and buy-sell procedures are workable.
Transfer restrictions include an exit route.
Tag-along and drag-along rights are coordinated.
Put and call option prices are fair and calculable.
Franchise termination consequences are explicit.
Shareholder default remedies comply with company law.
Guarantees are released on exit.
Dispute clauses are consistent across all documents.
A complete legal, financial and operational due diligence has been conducted.

Conclusion

Franchise joint ventures in Turkey provide an effective method of combining an established brand with local capital, management and market knowledge.

They are also structurally more complex than conventional franchise agreements.

The parties must regulate both their shareholder relationship and the joint venture company’s franchise relationship with the brand owner.

A corporate joint venture will generally use a Turkish joint-stock or limited liability company. A contractual joint venture may instead fall within the ordinary partnership rules of the Turkish Code of Obligations.

The choice should reflect the intended duration, investment level, liability structure, financing and exit plan.

Governance is the central legal issue.

The agreement should balance the franchisor’s legitimate interest in protecting the brand with the local investor’s right to participate meaningfully in the business it finances.

Reserved matters should protect genuinely strategic interests without making ordinary management impossible.

The parties must also examine whether their voting, board and veto rights create joint control for Turkish competition-law purposes.

A full-function joint venture operating independently on a lasting basis may require prior Competition Authority clearance if the current turnover thresholds are exceeded.

The company must receive an express and durable trademark licence. Sublicensing, online use, local intellectual property and post-termination rights should not be left to implication.

Funding provisions should specify the amount, timing and consequences of capital calls. A shareholder that refuses to fund should not be permitted to paralyse the complete business, but dilution and default mechanisms must remain legally and commercially proportionate.

Deadlock and exit mechanisms should be designed before disagreement occurs.

A buy-sell clause is useful only where both parties can finance the transaction and where the franchise licence will continue after the share transfer.

Finally, termination of the franchise agreement must be coordinated with the corporate structure.

The joint venture company may remain responsible for employees, leases, suppliers and customers after losing the right to use the brand.

A successful franchise joint venture is therefore not created by establishing a company and dividing its shares.

It requires an integrated structure covering ownership, governance, intellectual property, competition, funding, operation, deadlock and exit.

Frequently Asked Questions

What is a franchise joint venture?

It is a structure in which a franchisor and another investor jointly own or control a business operating under the franchise brand.

Is a joint venture a separate company under Turkish law?

It may be. A corporate joint venture uses a commercial company, while a contractual joint venture may operate without a separate capital company.

What is an ordinary partnership?

It is an agreement under which two or more persons combine labour or property to achieve a common purpose under Article 620 of the Turkish Code of Obligations.

Does an ordinary partnership have separate legal personality?

No. It does not create a separate legal entity comparable to a joint-stock or limited liability company.

Which company type is commonly used?

Joint-stock and limited liability companies are the most common corporate forms.

Can a foreign franchisor own shares in the Turkish joint venture?

Generally yes, subject to sector-specific restrictions and approvals.

Must the Turkish partner hold a majority?

There is no general rule requiring a Turkish majority in ordinary unregulated sectors.

What is the minimum capital for a joint-stock company?

The current minimum is TRY 250,000 for newly established joint-stock companies.

What is the minimum capital for a limited liability company?

The current minimum is TRY 50,000.

Is the statutory minimum sufficient for a franchise joint venture?

Usually not. Actual capital should reflect development, leases, equipment, payroll, inventory and working capital.

Is a shareholders’ agreement enough?

No. The articles of association, franchise agreement and related documents must also be coordinated.

Can the franchisor receive both shares and royalties?

Yes, but the complete economic package should be transparent and commercially justified.

Who owns the trademark?

The brand owner normally retains ownership and grants the joint venture a contractual licence.

Can the joint venture appoint sub-franchisees?

Only if the franchisor grants express authority to sublicense and enter sub-franchise agreements.

What are reserved matters?

They are strategic decisions requiring special shareholder or board approval.

What is joint control?

It exists where two or more parties must agree on strategic decisions concerning the joint venture.

Can a minority shareholder have joint control?

Yes. Strategic veto rights may create joint control even without equal share ownership.

Does every veto right create joint control?

No. Protective rights concerning fundamental shareholder interests may not be sufficient, while vetoes over budget, business plan, management and major investment may create joint control.

What is a full-function joint venture?

It is a joint venture with sufficient resources and operational independence to perform the functions of an independent economic undertaking on a lasting basis.

Is Competition Authority approval required?

It may be required where a full-function joint venture creates a concentration and the applicable turnover thresholds are exceeded.

Whose turnover is considered for a newly established joint venture?

The turnover of the jointly controlling parent companies is generally relevant because the newly formed joint venture has no existing turnover.

What is a deadlock?

It is a continuing inability to approve an essential strategic decision under the agreed governance structure.

How can deadlock be resolved?

Methods include escalation, mediation, expert determination, put or call options, buy-sell procedures, third-party sale and liquidation.

What is a Russian roulette clause?

It allows one shareholder to name a price at which it will either buy the other shareholder’s shares or sell its own shares.

Can the local partner sell its shares freely?

Usually not. Consent rights, rights of first refusal, lock-ups and competitor restrictions may apply.

What is a tag-along right?

It allows a minority shareholder to join a share sale by the majority shareholder.

What is a drag-along right?

It allows a qualifying majority to require other shareholders to participate in a sale of the company.

What happens if the franchise agreement ends?

The company may lose the right to use the trademark but may continue to exist with leases, employees and liabilities. The agreements must regulate the resulting exit or conversion.

Does selling shares release personal guarantees?

No. Separate written releases from banks, landlords, suppliers and other beneficiaries may be required.

Can joint venture disputes be arbitrated?

Many contractual disputes can be arbitrated, but mandatory corporate procedures and third-party matters require separate analysis.

Is legal due diligence necessary?

Yes. Both the franchisor and local investor should investigate ownership, finances, intellectual property, litigation, licences, management and investment capacity before closing.

This article provides general legal information as of July 2026 and does not constitute legal, tax, competition, investment or financial advice. Franchise joint ventures should be structured according to the parties, sector, ownership model, intellectual property, funding plan and current Turkish legislation.

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