Arbitration of Distribution, Agency and Franchise Disputes in Turkey

Arbitration of distribution, agency and franchise disputes in Turkey has become increasingly important for manufacturers, exporters, brand owners, commercial agents, exclusive distributors, franchise networks and multinational businesses operating in the Turkish market.

These commercial relationships are usually intended to continue for several years. The local party may invest substantial amounts in market entry, personnel, warehouses, stores, advertising, training, customer acquisition and regulatory compliance. The foreign or domestic supplier may provide products, trademarks, know-how, operating systems and commercial support.

When the relationship breaks down, the dispute rarely concerns only one unpaid invoice.

The parties may disagree about:

• Whether the agreement was an agency, distributorship or franchise contract;
• Whether a party was entitled to terminate immediately;
• Whether contractual notice periods were respected;
• Whether the distributor achieved minimum purchase targets;
• Whether the principal underpaid commissions;
• Whether the local party is entitled to goodwill or portfolio compensation;
• Whether exclusivity was breached;
• Whether the supplier lawfully appointed another distributor;
• Whether resale-price instructions violated Turkish competition law;
• Whether online and passive sales could be restricted;
• Whether the franchisee may continue using the trademark after termination;
• Whether the supplier must repurchase remaining stock;
• Whether post-termination non-compete obligations are enforceable;
• Whether customer data and local market information must be transferred;
• Whether urgent injunctive relief is required.

Arbitration can provide an effective forum for these disputes because the parties may select a neutral seat, an appropriate language and arbitrators experienced in commercial contracts, competition law, intellectual property and accounting.

Arbitration may also provide a more confidential environment than ordinary litigation. This is especially valuable where the dispute concerns pricing policies, franchise manuals, sales data, customer lists, supplier margins and confidential know-how.

However, the effectiveness of arbitration depends heavily on correct contractual classification.

An agreement described as an “agency agreement” may function economically as a distributorship. A document titled “distribution agreement” may give the local party authority to conclude contracts in the supplier’s name. A franchise agreement may combine trademark licensing, exclusive distribution, supply, technical assistance and ongoing operational control.

Turkish law looks beyond the title of the agreement and examines the parties’ actual rights, obligations, financial risks and commercial conduct.

This article explains the legal framework governing distribution, agency and franchise arbitration in Turkey, with particular emphasis on termination, commissions, goodwill indemnity, non-compete clauses, competition law, interim measures and enforcement of arbitral awards.

Why These Disputes Are Suitable for Arbitration

Distribution, agency and franchise disputes frequently involve international parties and long-term commercial relationships.

A foreign manufacturer may appoint a Turkish distributor to develop the local market. A Turkish company may act as the exclusive agent of a European supplier. An international restaurant, hotel, education or retail brand may grant franchise rights for Türkiye.

The dispute may require the tribunal to examine:

• Several years of sales data;
• Commission statements;
• Annual business plans;
• Market-development investments;
• Customer-acquisition records;
• Brand and advertising guidelines;
• Minimum-purchase targets;
• Transfer-pricing structures;
• Competition-law restrictions;
• Trademark and know-how provisions;
• Termination correspondence.

Arbitration allows the parties to appoint arbitrators with experience in these areas and to determine the procedural language. It also permits the tribunal to use accounting, valuation, market and competition experts where necessary.

The Istanbul Arbitration Centre provides institutional arbitration services for domestic and foreign parties. Its official model clause allows parties to refer disputes arising out of or connected with a contract to arbitration under the ISTAC Arbitration Rules and to add provisions concerning the seat, language, number of arbitrators and law applicable to the merits.

Turkish Legal Framework

The principal legal sources may include:

• Turkish Commercial Code No. 6102;
• Turkish Code of Obligations No. 6098;
• International Arbitration Law No. 4686;
• Code of Civil Procedure No. 6100;
• Law No. 4054 on the Protection of Competition;
• Industrial Property Code No. 6769;
• Law No. 5718 on Private International Law and International Civil Procedure;
• Applicable sector-specific legislation;
• The parties’ agreement.

Agency agreements are expressly regulated in Articles 102 to 123 of the Turkish Commercial Code.

Distribution and franchise agreements are not governed by one dedicated statutory chapter containing a complete set of rules. Their legal consequences are determined by the contractual wording, the general principles of the Turkish Code of Obligations, commercial-law rules, intellectual-property provisions, competition law and, where appropriate, the analogous application of rules governing similar continuous commercial relationships.

The absence of a dedicated statutory heading does not make these agreements legally uncertain or unenforceable. It makes careful drafting and accurate classification particularly important.

Difference between an Agent and a Distributor

The distinction between an agent and a distributor is fundamental.

Commercial Agent

Article 102 of the Turkish Commercial Code defines an agent as an independent person who, without being an employee or dependent commercial representative, continuously negotiates or concludes contracts concerning a commercial enterprise within a specified area or territory.

An agent typically:

• Acts on behalf of the principal;
• Introduces or negotiates customer contracts;
• May conclude contracts if specially authorised;
• Receives commission;
• Does not ordinarily purchase and resell the products as owner;
• May bear limited commercial risk.

Article 107 provides that an agent requires specific written authority to conclude contracts in the principal’s name. Documents granting that authority must be registered and announced by the agent.

Distributor

A distributor typically:

• Purchases products from the supplier;
• Resells them in its own name and for its own account;
• Bears stock, resale, credit and market risk;
• Earns a resale margin rather than commission;
• Contracts directly with customers;
• May receive an exclusive territory.

The distributor is usually an independent commercial undertaking rather than an intermediary representing the supplier.

This distinction affects:

• Commission rights;
• Accounting obligations;
• customer ownership;
• termination rights;
• goodwill indemnity;
• competition-law analysis;
• liability to end customers.

Competition-Law Classification of Agency

The title “agency agreement” is not decisive for competition law.

The Turkish Competition Authority’s Vertical Agreements Guidelines state that the critical issue is whether the agent bears significant financial or commercial risks connected with the transactions negotiated or concluded on behalf of the principal.

Where the agent does not bear such risks, its sales activity may be treated as part of the principal’s activities and restrictions imposed by the principal may fall outside Article 4 of Law No. 4054. Where the purported agent bears substantial investment, stock, customer-credit or transaction risks, the relationship may require the same competition analysis as an independent vertical agreement.

A contract may therefore qualify as an agency agreement under commercial law but still require careful competition-law analysis because of the risks allocated to the intermediary.

What Is a Franchise Agreement?

A franchise agreement generally allows the franchisee to operate a business using the franchisor’s commercial identity and business system.

The arrangement commonly includes:

• Trademark rights;
• Trade name and visual identity;
• Know-how;
• Operating manuals;
• Technical and commercial assistance;
• Training;
• Quality standards;
• Approved products or suppliers;
• Franchise and royalty fees;
• Continuing supervision.

The Competition Authority describes franchise arrangements as involving licences concerning trademarks, signs and know-how together with ongoing commercial or technical assistance. It also recognises that franchise agreements often combine selective distribution, non-compete obligations and exclusive distribution mechanisms.

A franchise agreement is therefore more than a simple trademark licence.

The franchisor provides a complete or substantial business method, while the franchisee operates an independent commercial enterprise under the agreed system.

Arbitrability of Distribution, Agency and Franchise Claims

Most private commercial disputes arising from these agreements are suitable for arbitration.

These include claims concerning:

• Unpaid commissions;
• Unpaid invoices;
• Royalty calculations;
• Breach of exclusivity;
• Minimum-purchase obligations;
• Wrongful termination;
• Failure to provide products;
• Customer diversion;
• Goodwill indemnity;
• Repurchase of stock;
• Trademark use;
• Confidentiality;
• Non-compete obligations;
• Damages.

These matters concern economic rights over which commercial parties may generally dispose.

However, a tribunal cannot replace a public authority in matters such as:

• Imposing a competition-law administrative fine;
• Cancelling a trademark registration;
• Annulment of an administrative decision;
• Exercising compulsory enforcement powers against third parties;
• Binding a non-signatory that never consented to arbitration.

The tribunal may decide the contractual consequences between the parties, while registry, regulatory and compulsory enforcement matters may require court or administrative action.

Scope of the Arbitration Clause

The clause should cover the entire relationship.

A narrow clause referring only to “payment disputes under this agreement” may not capture:

• Statutory goodwill indemnity;
• Competition-law invalidity;
• Post-termination trademark infringement;
• Confidentiality claims;
• Disputes under related supply or licence agreements;
• Customer-data transfer.

A broader clause should cover disputes arising out of or relating to:

• Formation;
• Interpretation;
• Performance;
• Breach;
• Termination;
• Validity;
• Commissions;
• Indemnity;
• Competition-law compliance;
• Intellectual-property use;
• Post-termination obligations.

Related agreements should contain compatible arbitration provisions.

A franchise transaction may include:

• Master franchise agreement;
• Trademark licence;
• Supply agreement;
• Software agreement;
• Lease;
• Personal guarantee.

Incompatible clauses may force the parties to litigate connected issues before different tribunals and courts.

Agency Commission Disputes

Commission disputes are among the most common agency claims.

Article 113 of the Turkish Commercial Code permits an agent to claim remuneration for transactions concluded through its efforts and for transactions concluded with customers previously acquired through the agent’s efforts.

Where a specific territory or customer group has been allocated to the agent, the agent may also be entitled to commission on transactions concluded with customers in that territory even without direct involvement in each individual transaction.

An agent may also retain commission rights for certain transactions concluded after termination where:

• The agent negotiated the transaction;
• The transaction resulted substantially from the agent’s work;
• It was concluded within an appropriate period after termination; or
• The customer’s offer reached the agent or principal before termination.

A commission arbitration may require analysis of:

• Customer identity;
• Order dates;
• Delivery dates;
• Payment dates;
• Returns;
• Discounts;
• Cancellation;
• Direct sales by the principal;
• Online sales;
• Sales by affiliates;
• Transactions completed after termination.

Right to Information and Accounting Records

The agent must have access to information necessary to verify commission.

Article 116 requires commission to be paid no later than three months after it arises and, in all cases, upon termination of the agency relationship.

The principal must provide information relevant to the commission calculation. The agent may request copies of relevant accounting records and, where justified doubts exist, may examine the relevant books personally or through an expert. Contractual provisions excluding these protections to the agent’s disadvantage are ineffective.

In arbitration, the tribunal may order production of:

• Customer invoices;
• Sales ledgers;
• Delivery records;
• Credit notes;
• Affiliate sales;
• Commission reports;
• Electronic transaction records.

Where the supplier operates through several group companies, the agreement should explain whether commissions apply to sales by affiliates.

Exclusive Agency Rights

Unless otherwise agreed in writing, Article 104 establishes a form of mutual exclusivity.

The principal may not appoint more than one agent for the same commercial field in the same territory, while the agent may not represent competing enterprises in that area.

Disputes may arise where:

• The principal appoints a second agent;
• The principal begins direct online sales;
• A group company sells into the territory;
• The agent represents a competing brand;
• The allocated territory is reduced;
• Key customer accounts are removed.

The contract should define whether exclusivity applies to:

• Direct sales;
• E-commerce;
• Public tenders;
• Existing customers;
• Global accounts;
• Affiliate sales;
• Cross-border orders.

Termination of Agency Agreements

Article 121 provides that either party may terminate an indefinite-term agency agreement by giving three months’ notice.

A fixed-term agreement may be terminated at any time for just cause. If the parties continue performing a fixed-term agreement after expiry, it becomes indefinite.

A party terminating without just cause or without respecting the notice period may be required to compensate the other party for losses arising from unfinished transactions.

A termination arbitration may require the tribunal to determine:

• Whether the breach was sufficiently serious;
• Whether a cure notice was required;
• Whether the terminating party acted promptly;
• Whether previous conduct amounted to waiver;
• Whether proportionality was respected;
• Whether the notice period applied;
• Whether damages resulted from incomplete transactions.

A general allegation of “loss of confidence” may not be sufficient where the contract and evidence do not identify a material breach.

Goodwill or Equalisation Indemnity

Article 122 of the Turkish Commercial Code establishes the agent’s equalisation claim, commonly described as goodwill or portfolio compensation.

The agent may claim appropriate compensation where:

1. The principal continues to obtain substantial benefits from new customers introduced by the agent;
2. The agent loses commission that it would have earned from business with those customers if the agreement had continued; and
3. Payment is equitable in light of the circumstances.

The amount cannot exceed the average annual commission or other remuneration received during the agent’s final five years. Where the relationship lasted less than five years, the average for the actual period applies.

The agent cannot claim equalisation where:

• It terminated without conduct by the principal justifying termination; or
• The principal terminated for just cause because of the agent’s fault.

The right cannot be waived in advance and must be asserted within one year following termination.

Equalisation Claims by Exclusive Distributors

Article 122 expressly provides that its equalisation rule may also apply, where equity permits, to exclusive distributorships and similar continuous agreements granting monopoly rights.

This does not mean that every distributor automatically receives compensation.

The tribunal should examine whether:

• The distributor developed a stable customer base;
• The supplier retained access to that customer base after termination;
• Customer information was transferred to the supplier;
• The supplier continued benefiting from local market development;
• The distributor lost future profit or commission-like income;
• The distributor acted as an integrated part of the supplier’s distribution organisation;
• Compensation is equitable.

A distributor that simply purchased goods opportunistically for resale may present a weaker claim than an exclusive distributor that created the market, submitted customer records and became deeply integrated into the supplier’s commercial organisation.

Equalisation Claims in Franchise Relationships

A franchisee may also seek equalisation or goodwill compensation in appropriate circumstances.

The claim is not automatic merely because the agreement was long term or exclusive.

Relevant factors may include:

• Whether the franchisee created a transferable customer base;
• Whether the franchisor continues benefiting from the location and customer network;
• Whether the franchisee was required to transfer customer data;
• Whether the franchisor or replacement franchisee took over the business location;
• Whether the franchisee operated as an independent local business;
• Whether the brand itself, rather than the franchisee’s efforts, generated the customers;
• Whether an analogous application of Article 122 is equitable.

The existence of substantial brand recognition may reduce the extent to which customer goodwill can be attributed exclusively to the franchisee.

The tribunal should separate:

• Compensation for wrongful termination;
• Reimbursement of investments;
• Lost profits;
• Statutory or analogous equalisation compensation.

These claims may overlap factually but have different legal elements.

Post-Termination Non-Compete Obligations for Agents

Article 123 regulates post-termination non-compete agreements involving agents.

The restriction must:

• Be in writing;
• Be contained in a document signed by the principal and delivered to the agent;
• Last no longer than two years;
• Be limited to the agent’s former territory or customer group;
• Concern the type of contracts handled by the agent;
• Provide appropriate compensation to the agent.

Contractual provisions contrary to these requirements are ineffective to the agent’s disadvantage.

A tribunal should not enforce an unlimited worldwide restriction merely because it appears in the agency agreement.

Distribution Agreement Disputes

Distribution arbitrations often concern:

• Exclusive territory;
• Minimum purchase;
• Sales forecasts;
• Failure to supply;
• Late delivery;
• Product defects;
• Price increases;
• Appointment of another distributor;
• Direct sales;
• Online sales;
• Customer allocation;
• Termination;
• Remaining stock;
• Warranty obligations.

The contract should distinguish binding purchase commitments from non-binding forecasts.

A distributor may provide a sales forecast for production planning without guaranteeing that it will purchase every forecasted unit.

The agreement should also define whether failure to reach a target results in:

• Loss of exclusivity;
• Price adjustment;
• Termination;
• Damages;
• No consequence unless the shortfall is material.

Remaining Inventory after Termination

One of the most commercially important issues is the treatment of unsold inventory.

The agreement should state whether:

• The supplier must repurchase stock;
• Repurchase is optional;
• Only current and saleable products qualify;
• Obsolete or damaged goods are excluded;
• Repurchase occurs at purchase price or a reduced amount;
• The distributor receives a sell-off period;
• Trademark use is permitted during sell-off;
• Spare parts and warranty stock must be retained.

Without clear wording, the distributor may be left with unusable branded inventory, while the supplier may argue that the distributor voluntarily assumed stock risk.

Franchise Fee and Royalty Disputes

Franchise payments may include:

• Initial entry fee;
• Continuing royalty;
• Advertising contribution;
• Software fee;
• Training charge;
• Supply margin;
• Renewal fee;
• Transfer fee.

The agreement should define the royalty base.

A percentage of “gross revenue” may produce disputes concerning:

• VAT;
• Discounts;
• Refunds;
• Delivery charges;
• Marketplace commissions;
• Gift cards;
• Sales by affiliated channels;
• Promotional products.

The franchisor should have proportionate audit rights, while the franchisee should receive confidentiality protection for financial and customer information.

Franchise Standards and Operational Control

Franchisors commonly require compliance with:

• Store design;
• Product specifications;
• Approved suppliers;
• Uniforms;
• Service standards;
• Software systems;
• Advertising;
• Training;
• Health and safety;
• Quality inspections.

These obligations protect the network’s common identity and reputation.

The Competition Authority recognises that certain franchise restrictions may be justified where they are necessary to protect transferred know-how and the common identity or reputation of the franchise system.

However, quality control should not become a pretext for unlawful price fixing, discriminatory treatment or arbitrary termination.

The contract should distinguish:

• Material brand-standard breaches;
• Correctable operational failures;
• Minor non-compliance;
• Immediate health, safety or reputational risks.

Post-Termination Trademark and Know-How Use

After termination, the franchisee may be required to:

• Stop using trademarks;
• Remove signs;
• Return manuals;
• Stop using software;
• Transfer telephone numbers or domain names;
• Return confidential information;
• De-identify the premises;
• Stop presenting itself as part of the network.

Continued use may constitute both contractual breach and intellectual-property infringement.

The arbitration clause should expressly cover post-termination conduct.

Where urgent use must be stopped immediately, the franchisor may seek emergency arbitral relief or a court injunction.

Turkish Competition Law and Vertical Agreements

Distribution and franchise contracts are generally vertical agreements because they are concluded between undertakings operating at different levels of the production or distribution chain.

The Competition Authority defines vertical agreements as arrangements between two or more undertakings operating at different levels for the purchase, sale or resale of particular goods or services. Its guidelines also explain that franchise agreements may fall within the vertical block-exemption framework where the intellectual-property provisions support the distribution of the relevant goods or services.

The current general market-share threshold under the Vertical Agreements Block Exemption framework is 30%.

The supplier’s market share is generally decisive. In agreements containing an obligation to supply only one buyer, the buyer’s market share becomes relevant.

Falling outside the block exemption does not automatically make the agreement unlawful. It means that an individual assessment under Article 5 of Law No. 4054 may be necessary.

Resale Price Maintenance

A supplier or franchisor must be careful when influencing the resale prices charged by an independent distributor or franchisee.

The Competition Authority treats restrictions preventing the buyer from determining its own resale price as serious restrictions.

Examples of indirect resale-price maintenance include:

• Fixing the distributor’s margin;
• Limiting the discount from a recommended price;
• Granting benefits only if recommended prices are respected;
• Delaying supply when the distributor discounts;
• Threatening termination for price deviations.

A genuinely recommended or maximum resale price must remain non-binding in practice.

An arbitral tribunal should not enforce a penalty imposed because an independent distributor reduced its prices if the underlying obligation violates mandatory competition law.

Territorial Restrictions and Online Sales

Exclusive territories are not automatically prohibited.

The distinction between active and passive sales is important.

Active sales may include directly targeting customers in another distributor’s exclusive territory. Passive sales generally include responding to unsolicited customer requests.

The Competition Authority’s Guidelines state that internet sales are generally treated as passive sales. Preventing a distributor from operating its own website or terminating transactions solely because the customer is outside the allocated territory may remove the agreement from block-exemption protection.

The agreement should therefore distinguish:

• Targeted advertising in another exclusive territory;
• Unsolicited internet orders;
• Marketplace sales;
• General online advertising;
• Customer-specific email campaigns;
• Physical sales outlets.

A clause prohibiting every sale outside a territory may create competition-law risk.

Non-Compete Obligations during Distribution

The vertical framework generally gives more favourable treatment to non-compete obligations that do not exceed five years and satisfy the applicable market-share and other conditions.

An obligation exceeding five years may fall outside the block exemption and require individual analysis. The official Guidelines also explain that duration and market foreclosure become increasingly important as the restriction becomes longer.

This does not mean that every five-year clause is automatically valid.

The tribunal should also consider:

• Market share;
• Product scope;
• Territory;
• Access to alternative suppliers;
• Investment protection;
• Know-how;
• Market foreclosure;
• Proportionality.

Competition Restrictions in Franchise Agreements

Franchise agreements require a more nuanced analysis because uniformity and know-how protection are essential to the franchise system.

The Competition Authority states that a non-compete obligation may fall outside Article 4 where it is necessary to preserve the network’s common identity and reputation and does not extend beyond the duration of the franchise agreement.

The necessity of the restriction should still be demonstrated.

A clause prohibiting the franchisee from operating any unrelated business anywhere in Türkiye may be more difficult to justify than a clause preventing operation of a directly competing business from the franchised premises.

Evidence in Arbitration

Relevant evidence may include:

• Signed agreements and amendments;
• Sales and commission records;
• Customer lists;
• Purchase orders;
• Invoices;
• Business plans;
• Territory maps;
• Advertising materials;
• Franchise manuals;
• Inspection reports;
• Audit records;
• Online sales data;
• Termination notices;
• Customer correspondence;
• Competition-law compliance documents;
• Trademark licences;
• Stock records.

The parties should preserve electronic evidence once a dispute becomes foreseeable.

Messaging applications, customer-management systems, sales platforms and accounting software may contain evidence of:

• Direct sales;
• Price pressure;
• customer diversion;
• commission calculations;
• territory breaches;
• termination reasons.

Calculation of Damages

Potential damages may include:

• Unpaid commissions;
• Lost distribution margin;
• Lost franchise profit;
• Wasted advertising expenditure;
• Unrecovered market-entry investment;
• Value of unusable inventory;
• Rebranding costs;
• Customer-transfer value;
• Contractual penalties;
• Goodwill indemnity.

The claimant must distinguish past loss from future loss.

A claim for lost profits should account for:

• Avoided costs;
• Market changes;
• Alternative business;
• Customer attrition;
• Competition;
• Contractual termination rights;
• Duty to mitigate.

A damages expert may be necessary where several years of sales data and alternative scenarios must be analysed.

Interim Measures

Urgent relief may be required where a party is:

• Continuing to use the brand after termination;
• Diverting customers;
• Disclosing know-how;
• Appointing a competing distributor;
• Withholding access to customer data;
• Destroying sales records;
• Disposing of inventory;
• Violating a valid exclusivity clause.

International Arbitration Law allows parties to seek interim injunctions or attachments from courts without waiving arbitration. An arbitral tribunal may also grant interim protection between the parties.

However, a tribunal cannot issue measures requiring compulsory enforcement by public bodies or directly binding third parties. Court assistance may therefore be needed for seizure, registry action or measures against banks and unrelated persons.

Interim relief should be proportionate.

A request to close an entire franchise business may be excessive where limited de-branding, preservation of records or temporary payment security would provide adequate protection.

Setting Aside and Enforcement

A Turkish-seated international award is not subject to an ordinary appeal on the merits.

The losing party cannot obtain a complete rehearing merely because it disagrees with the tribunal’s interpretation of the contract or calculation of goodwill compensation.

A limited setting-aside application may be available under International Arbitration Law No. 4686 on grounds such as:

• Invalid arbitration agreement;
• Irregular constitution of the tribunal;
• Excess of jurisdiction;
• Serious procedural violation;
• Lack of equal treatment;
• Non-arbitrability;
• Conflict with public policy.

Competition-law issues may become relevant to public-policy review. An award ordering performance of an unlawful resale-price or market-allocation obligation may face greater risk than an award awarding damages for a normal contractual breach.

Foreign and non-domestic awards may benefit from the New York Convention framework. UNCITRAL explains that the Convention establishes common standards for recognising arbitration agreements and for court recognition and enforcement of foreign and non-domestic arbitral awards.

Sample Arbitration Clause

“Any dispute, controversy or claim arising out of or relating to this Agreement, including its formation, existence, validity, interpretation, performance, breach, termination or enforcement, shall be finally resolved by arbitration administered by the Istanbul Arbitration Centre in accordance with the ISTAC Arbitration Rules.

The seat of arbitration shall be Istanbul, Türkiye. The tribunal shall consist of three arbitrators. The language of arbitration shall be English. This Agreement and the arbitration agreement contained in this clause shall be governed by Turkish law.

The tribunal shall have jurisdiction over disputes concerning commissions, royalties, exclusivity, minimum purchases, sales targets, customer allocation, territory, online sales, competition-law compliance, goodwill or equalisation indemnity, inventory, trademark and know-how use, confidentiality, non-compete obligations, termination, post-termination conduct and damages.

The tribunal may determine the private-law consequences of mandatory competition-law provisions between the Parties but shall not exercise administrative powers reserved for the Turkish Competition Authority or another public body.

Nothing in this clause prevents a Party from requesting interim or conservatory relief from an emergency arbitrator or a competent court. Such an application shall not constitute a waiver of arbitration.”

The clause should be repeated or incorporated consistently into related supply, trademark, software, guarantee and franchise documents.

Practical Checklist

Before commencing arbitration, counsel should determine:

• Whether the relationship is genuinely agency, distribution or franchise;
• Who bears stock and customer-credit risk;
• Who contracts with end customers;
• Whether the local party acts in its own name;
• Whether exclusivity exists;
• Whether commissions or resale margins apply;
• Whether notice requirements were followed;
• Whether just cause existed;
• Whether equalisation compensation is available;
• Whether the one-year assertion period applies;
• Whether remaining stock must be repurchased;
• Whether a sell-off period exists;
• Whether post-termination trademark use continues;
• Whether non-compete clauses satisfy commercial and competition rules;
• Whether online sales restrictions are lawful;
• Whether urgent court or emergency relief is needed;
• Where the award will be enforced.

Frequently Asked Questions

Can distribution disputes be arbitrated in Turkey?

Yes. Commercial disputes concerning exclusivity, minimum purchases, invoices, termination, stock, goodwill and damages may generally be arbitrated under a valid arbitration agreement.

Can agency disputes be arbitrated?

Yes. Commission, accounting, termination, equalisation and post-termination non-compete claims may generally be determined by arbitrators.

What is the main difference between an agent and a distributor?

An agent ordinarily negotiates or concludes contracts for the principal and receives commission. A distributor purchases and resells products in its own name and bears resale risk.

Does the contract title determine its classification?

No. The parties’ actual obligations, authority and allocation of commercial risk are more important than the label.

How much notice is required to terminate an indefinite agency agreement?

Article 121 provides a three-month notice period, subject to just-cause termination and the specific facts of the agreement.

What is goodwill or equalisation indemnity?

It is compensation potentially payable where the principal continues benefiting from customers created by the agent while the agent loses future remuneration and payment is equitable.

What is the maximum equalisation amount?

The statutory ceiling is the average annual commission or other remuneration received during the final five years, or the actual shorter period where the relationship lasted less than five years.

Can the agent waive equalisation compensation in advance?

No. Article 122 provides that the right cannot be waived in advance. It must be asserted within one year following termination.

Can an exclusive distributor claim equalisation compensation?

Potentially. Article 122 allows analogous application to exclusive distributorships and similar continuous monopoly relationships where equity permits.

Can a franchisee claim goodwill indemnity?

Potentially, depending on the structure, integration, transfer of customers and equitable circumstances. It is not automatic.

Can the principal restrict an agent after termination?

A post-termination restriction must satisfy Article 123, including written form, a maximum two-year duration, appropriate territorial and subject-matter limits and payment of appropriate compensation.

Can a supplier determine the distributor’s resale prices?

Binding fixed or minimum resale-price control presents serious Turkish competition-law risk. Recommended or maximum prices must remain genuinely non-binding.

Can online sales be prohibited?

A broad prohibition on online sales may be treated as a restriction on passive sales and may remove the agreement from block-exemption protection.

Is every exclusive territory unlawful?

No. Exclusive distribution may be lawful, but active and passive sales restrictions, market shares and the relevant exemption conditions must be analysed.

What is the current general block-exemption market-share threshold?

The current general threshold for vertical agreements is 30%, subject to the structure of the agreement and other conditions.

Can the franchisor stop trademark use immediately after termination?

The franchisor may seek arbitral or judicial interim relief where the licence has ended and continued use creates serious harm. The requested measure must be proportionate and enforceable.

Can an arbitral tribunal impose a competition-law fine?

No. It may determine contractual invalidity and damages between the parties but cannot exercise the Competition Board’s administrative powers.

Can a foreign award be enforced in Turkey?

A qualifying foreign award may be recognised and enforced under the New York Convention and Turkish private international law, subject to limited refusal grounds.

Conclusion

Arbitration of distribution, agency and franchise disputes in Turkey requires careful legal classification before any claim is calculated.

Agency, distributorship and franchise agreements may all create long-term market relationships, but they allocate authority and commercial risk differently.

An agent generally acts for the principal and receives commission.

A distributor buys and resells products for its own account.

A franchisee operates an independent business using the franchisor’s brand, know-how and commercial system.

This classification affects commission rights, exclusivity, competition-law treatment, termination and equalisation compensation.

Agency law provides significant protections.

Agents may be entitled to commission on direct and indirect transactions, access to accounting information, notice before termination and equalisation compensation after the relationship ends.

The equalisation rule may also extend to exclusive distributors and similar continuous monopoly relationships where the conditions and equitable considerations justify it.

Franchise claims require a separate examination.

A franchisee may have invested heavily in the location, network and customer base, but part of the goodwill may derive from the franchisor’s existing brand. Compensation must therefore be assessed through evidence rather than assumption.

Competition law must be considered throughout the relationship.

Fixed resale prices, excessive territorial restrictions, broad online sales prohibitions and long non-compete obligations may create serious enforceability problems. Franchise restrictions necessary to protect know-how and the network’s common identity may receive different treatment from ordinary distribution restrictions.

Termination letters should be drafted with precision.

The terminating party should identify the contractual and factual basis, notice or cure provisions, effective date and consequences for commissions, stock, data, branding and confidentiality.

Evidence should be preserved immediately.

Commission statements, customer records, online sales, audit reports, business plans and termination communications may determine both liability and damages.

The arbitration clause should cover statutory and post-termination claims and should be consistent across every related agreement.

A narrow or contradictory clause can fragment a single commercial dispute into several proceedings.

When the contractual structure, competition-law limits and remedial strategy are addressed properly, arbitration can provide an efficient, confidential and internationally enforceable resolution of complex distribution, agency and franchise disputes connected with Turkey.

Legal Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Distribution, agency and franchise disputes depend on the contractual wording, allocation of commercial risk, market structure, competition rules, intellectual-property rights, arbitral seat and intended enforcement jurisdiction. Case-specific Turkish commercial, competition and arbitration advice should be obtained before terminating an agreement or commencing proceedings.