Distribution, Agency and Franchise Agreements in Türkiye: A Foreign Supplier's Guide

If you are a foreign supplier appointing a Turkish partner to sell your products, the single most important point to understand is this: even when your contract is governed by foreign law, a Turkish agent — and often a Turkish distributor — may still claim a goodwill (portfolio) compensation when the relationship ends. This payment, called denkleştirme tazminatı in Turkish, is set out in the Turkish Commercial Code No. 6102 (Türk Ticaret Kanunu, "TTKTTKTurkish Commercial Code No. 6102The statute that governs merchants, companies, commercial paper, insurance and carriage — the framework a foreign business actually operates inside.Glossary →"), and Turkish courts treat it as a protective rule that cannot simply be signed away in advance. This guide explains the three main ways to enter the Turkish market — commercial agency, distributorship, and franchise — and walks you through the three risks that catch foreign suppliers most often: termination, exclusivity, and end-of-contract compensation.

The three structures: agency, distributorship, and franchise

Before you sign anything, it helps to know which of the three structures you are actually using, because Turkish law treats them differently.

Commercial agency (acentelik)

A commercial agent (acente) is an independent business that, on a continuous basis, either brings in customers for your products or concludes contracts in your name, in return for commission. The agent does not buy your goods to resell them; it works for you. This is the only one of the three that the Turkish Commercial Code No. 6102 regulates in detail, in its provisions on agency starting around art. 102.

Distributorship (distribütörlük / tek satıcılık)

A distributor buys your products and resells them in its own name and for its own account, taking the commercial risk of resale. Turkish law does not have a dedicated chapter for distributorship; it is an innominate contract (a contract type not separately named in the statute), governed mainly by the general rules of the Turkish Code of Obligations No. 6098 and by Court of Cassation (Yargıtay) case law.

Franchise

A franchise lets a Turkish franchisee operate a business using your brand, know-how, and system, usually against entry and ongoing fees. Like distributorship, franchise is an innominate contract built on the Turkish Code of Obligations No. 6098, combined with intellectual-property and competition rules.

Risk 1 — Termination: how and when you can exit

Termination is where most disputes start. The right notice and the right grounds protect you; getting them wrong can turn a clean exit into a damages claim.

Fixed-term vs open-ended contracts

A fixed-term contract ends on its own date. An open-ended contract (no end date) can be ended by either side with reasonable advance notice. For commercial agency, the Turkish Commercial Code No. 6102 sets out notice rules for ordinary termination of open-ended agency contracts, and these notice periods are intended to give the agent time to adjust.

Termination for just cause

Both sides can usually end the contract immediately for just cause (haklı sebep) — a serious breach or circumstance that makes continuing the relationship unreasonable, such as non-payment or a damaging breach of the brand. Ending without just cause before a fixed term expires can expose you to a claim for the other side's lost profit.

Practical drafting points

• State the term clearly, and whether it renews automatically.
• Set a defined notice period and the method of notice (often a Turkish notary notice, ihtarname, is wise for proof).
• List, as examples, the breaches that count as just cause for immediate termination.
• Address what happens to stock, samples, and customer data on exit.

Risk 2 — Goodwill compensation (denkleştirme tazminatı)

This is the risk most foreign suppliers underestimate. When an agency relationship ends, the Turkish agent may be entitled to a goodwill or portfolio compensation (denkleştirme tazminatı) under the Turkish Commercial Code No. 6102, art. 122 — a payment for the lasting customer base the agent built up, which you continue to benefit from after they are gone.

When can the agent claim it?

Broadly, the agent must have brought you new customers (or significantly expanded business with existing ones), you must keep deriving substantial benefit from those relationships after termination, and the payment must be equitable in the circumstances. The right generally does not arise where the agent ended the contract without your fault, or where you ended it for a just cause caused by the agent's conduct.

It cannot be waived in advance

Under the Turkish Commercial Code No. 6102, the agent cannot give up the goodwill-compensation right before the contract ends. A clause in your standard terms saying "the agent waives any termination compensation" will generally not be enforced by a Turkish court.

How much is it?

The statute sets a method and an upper limit tied to the agent's earlier earnings, rather than a single fixed figure, and the actual amount turns on the evidence in each case. We do not state a number or a formula here because the calculation is fact-specific and the controlling figures must be checked against the current statutory text. A Turkish lawyer should model your likely exposure before you sign and again before you terminate.

Risk 3 — Exclusivity, territory, and competition law

Exclusivity is attractive — your partner is motivated, and you have one clear point of contact — but it cuts both ways and it draws regulatory attention.

Define exactly what "exclusive" means

Spell out the territory, the product range, and whether you are also barred from selling directly or appointing others. An undefined exclusivity clause is a frequent source of disputes, and an exclusive distributor who is squeezed out is often the one most likely to raise a goodwill-compensation claim on exit.

Minimum targets are your lever

If you grant exclusivity, tie it to minimum purchase or sales targets, and state clearly that missing them lets you withdraw exclusivity or terminate. Without measurable targets, you can be locked into an underperforming partner.

Turkish competition law applies

Exclusive distribution, territorial restrictions, and especially any attempt to fix or control your partner's resale prices are reviewed under the Act on the Protection of Competition No. 4054, enforced by the Turkish Competition Authority (Rekabet Kurumu). Resale price maintenance is treated strictly. Vertical arrangements can benefit from block-exemption conditions, but these have thresholds and limits that must be checked for your specific setup.

Governing law, jurisdiction, and dispute resolution

Foreign suppliers often assume that choosing English, Swiss, or German law and a foreign court or arbitral seat will keep them out of Turkish rules. It helps, but it is not a complete shield.

Choice of law has limits

Turkish private international law, the Act on Private International Law and Procedural Law No. 5718 (MÖHUKMÖHUKTurkish Private International Law Act No. 5718The Turkish statute that decides which country's law applies to a cross-border matter, and how foreign judgments are recognised and enforced here.Glossary →), generally respects a genuine choice of foreign law in a commercial contract. However, Turkish courts may still apply certain mandatory protective provisions of Turkish law — and the agent's goodwill compensation is frequently argued to be one of them. So a foreign-law clause does not guarantee that an art. 122-type claim disappears.

Arbitration

You can agree to arbitration. Arbitration seated in Türkiye is governed by the International Arbitration Act No. 4686 where there is a foreign element; domestic court procedure otherwise follows the Code of Civil Procedure No. 6100 (HMKHMKCode of Civil Procedure No. 6100The rulebook for how a civil case actually runs in Türkiye — which court, which steps, which deadlines, and what evidence counts.Glossary →). Türkiye is a party to the New York Convention, so a foreign arbitral award can in principle be enforced here, subject to the Convention's grounds for refusal.

Litigation and enforcement

Commercial disputes are handled by the commercial courts of first instance. For quick recovery of undisputed receivables, the payment-order procedure under Law No. 7155 may be relevant. Whatever forum you choose, write the clause clearly — a vague dispute-resolution clause can itself become the first thing you litigate.

A practical checklist before you sign

You do not need a perfect contract on day one, but you do need to make conscious choices on the points that decide the hard cases later.

• Structure: Are you appointing an agent, a distributor, or a franchisee — and does the drafting match the reality of who sells in whose name?
• Term and notice: Fixed or open-ended? What notice period, and in what form?
• Just cause: Have you listed the breaches that let you exit immediately?
• Goodwill compensation: Have you modelled likely exposure under the Turkish Commercial Code No. 6102, art. 122, knowing it cannot be waived in advance?
• Exclusivity and targets: Is exclusivity defined and tied to measurable minimums?
• Competition law: Have pricing, territory, and exclusivity terms been checked against Law No. 4054?
• Governing law and forum: Is your choice of law and dispute-resolution clause realistic about Turkish mandatory rules?
• Exit mechanics: Stock, samples, IP, brand use, and customer data on termination?

Frequently asked questions