Franchising is one of the most dynamic commercial models used to expand brands in Turkey, particularly in sectors such as food and beverage, retail fashion, fitness, education, and technology services. While the Turkish legal system does not include a stand-alone franchise law, franchise agreements in Turkey are recognized and enforceable under general principles of contract law, commercial law, competition law, and consumer protection regulations.
At ER&GUN&ER Law Firm, we advise both franchisors and franchisees on all legal aspects of setting up a franchise in Turkey. Our work includes drafting and negotiating franchise contracts, evaluating brand licensing terms, reviewing investment obligations, and resolving post-contract disputes through litigation or arbitration. As the best lawyer firm in Turkey for franchising transactions, our English Speaking Turkish Lawyers provide full legal coverage for brand expansion projects involving local or international partners.
Legal Nature of Franchise Agreements in Turkey
Although the term “franchise” is not explicitly defined in a specific Turkish statute, the concept is accepted in jurisprudence and treated as a sui generis contract governed by the principles of:
- Turkish Code of Obligations (TCO, Law No. 6098)
- Turkish Commercial Code (TCC, Law No. 6102)
- Law on Protection of Competition (No. 4054)
- Consumer Protection Law (No. 6502) – when consumer services are involved
The franchise agreement in Turkey typically contains a mix of commercial agency, license, distributorship, and service contract features. Our Turkish Law Firm prepares customized franchise agreements that reflect your brand's operational needs while maintaining enforceability under Turkish contract and trade law.
Core Clauses in a Legally Binding Franchise Agreement
To be enforceable and avoid future litigation, a franchise agreement in Turkey should include at minimum the following essential clauses:
- Brand and trademark license: Scope, territory, exclusivity terms, duration
- Initial fee and royalty terms: Payment methods, audit rights, late fees
- Operational manuals and know-how: Use obligation, updates, confidentiality
- Training and support obligations: Frequency, cost, performance targets
- Termination and renewal conditions: Notice period, default clauses, renewal rights
- Post-termination restrictions: Non-compete, non-solicitation, brand phase-out
Our English Speaking Turkish Lawyers ensure that franchise contracts not only align with Turkish legal formality requirements, but also protect intellectual property rights, investment risk, and long-term operational flexibility.
Steps to Set Up a Franchise Business in Turkey
Launching a franchise in Turkey requires not only a valid franchise agreement but also the proper legal and corporate infrastructure. Whether you are an international franchisor entering the Turkish market or a local entrepreneur seeking a master franchise or unit license, the setup process includes:
- Establishing a Turkish limited liability or joint stock company
- Registering trademarks and brand assets with the Turkish Patent and Trademark Office (TÜRKPATENT)
- Drafting and notarizing a bilingual franchise agreement
- Securing tax and social security registrations
- Preparing operational manuals, marketing policies, and performance monitoring systems
Our Turkish Law Firm manages all incorporation procedures, ensures regulatory compliance, and aligns your franchise structure with Turkish trade and tax law to minimize disputes and maximize legal security.
Differences Between Local and Foreign Franchising in Turkey
While the legal principles of franchising apply equally to both Turkish and foreign investors, foreign franchisors must account for several additional considerations:
- Foreign Currency Contracts: As of Presidential Decree No. 32, certain franchise payments may be subject to currency restrictions
- Trademark Recognition: International brands must ensure local protection and enforcement before entering into agreements
- Taxation: Withholding tax, VAT registration, and royalty reporting obligations apply for cross-border payments
- Language Requirements: Franchise agreements must be in Turkish to be legally enforceable before Turkish courts
Our English Speaking Turkish Lawyers guide international brands through localization, tax planning, and contract adaptation to fit Turkish legal requirements and court expectations.
Taxation and Royalty Obligations in Franchise Models
Franchise relationships often include royalty streams, marketing fees, and bulk product purchases that carry tax implications. Under Turkish tax law:
- Royalty payments: May be subject to 20% withholding tax if paid abroad
- Service fees: Require VAT declaration and invoice issuance
- Franchisee expenses: Must comply with business expense rules to be deductible
- Transfer pricing: May be triggered in intra-group franchise models
Our Turkish Law Firm works with CPAs and tax consultants to ensure franchise contracts are fully aligned with Turkish tax legislation, avoiding penalties and double taxation risks.
Franchise Disputes and Contract Termination in Turkey
Franchise litigation in Turkey often stems from:
- Breach of exclusivity or territorial rights
- Failure to meet revenue or performance targets
- Disputes over royalty calculation or non-payment
- Violation of brand usage policies or trade dress
Dispute resolution methods include commercial litigation in Turkish courts or arbitration under ICC or ISTAC rules. Our Turkish Law Firm represents clients in franchise lawsuits and arbitration, drafts termination notices, and negotiates mutual exit or assignment agreements. We also advise on post-termination enforcement, including collection of penalties, removal of branding, and protection against unfair competition.
FAQ: Franchise Business and Law in Turkey
- Q1: Is franchising regulated by a specific Turkish law?
No. There is no separate franchise code, but franchise agreements are enforced under general commercial and contract law. - Q2: Do I need to register my franchise agreement in Turkey?
Registration is not mandatory, but trademark registration and notarial approval are strongly advised. - Q3: Can I pay franchise fees in foreign currency?
Depends on the structure. New rules restrict FX use for Turkish-resident companies. Exceptions apply. - Q4: What taxes apply to franchise payments?
Royalties paid abroad may be subject to 20% withholding tax. VAT also applies to service components. - Q5: Can I include non-compete clauses in a Turkish franchise agreement?
Yes. They are valid if limited in scope, duration, and territory, and proportionate to business interest. - Q6: Are foreign franchisors allowed to operate without a local partner?
Yes. A foreign company can set up a Turkish subsidiary or appoint a master franchisee without residency requirements. - Q7: Can I end a franchise contract early?
Yes, if the agreement includes a unilateral termination clause or if the other party commits a material breach. - Q8: Can I use English-only franchise agreements?
No. Turkish translation is required for enforceability in Turkish courts. - Q9: What happens if the franchisee copies my brand?
Legal action for trademark infringement, unfair competition, and breach of contract may be initiated. - Q10: How can a Turkish Law Firm help?
We provide contract drafting, company formation, tax planning, litigation, and trademark protection—all under one roof.
Build Your Franchise in Turkey with Legal Protection from a Turkish Law Firm
Turkey’s expanding consumer market, dynamic urban centers, and increasingly brand-driven middle class make it a fertile ground for franchise investment. Whether you're an international brand entering Turkey or a local entrepreneur replicating a business model, your franchise success depends on solid legal planning, compliance with Turkish commercial law, and enforceable contractual protections.
At ER&GUN&ER Law Firm, our English Speaking Turkish Lawyers assist franchisors and franchisees at every step: legal structuring, agreement drafting, brand licensing, tax planning, compliance, and dispute resolution. As the best lawyer firm in Turkey for franchise law and business formation, we ensure that your franchise strategy is both commercially sound and legally resilient in the Turkish market.