Buying a Franchise: How to Secure Stock Returns on Exit

When assessing a franchise investment, it is easy to focus on opening stock. The question often overlooked is what will happen to the products on your shelves when the agreement ends. You may still hold saleable stock when your right to use the brand expires, but you should not assume you can return it. Before joining a franchise network in Türkiye, defining which stock will be covered on exit, how it will be valued and how it will be handed over helps you understand the cost of closing out your investment.

1. Do not assume you have an automatic right to return stock

Türkiye has no standalone franchise law specifically governing franchise relationships. Nor is there a general mandatory pre-contract disclosure document or public registration system specifically for granting franchises. However, general business registration, licensing and tax obligations still apply. The absence of franchise-specific regulation does not mean there is no legal protection.

The Turkish Code of Obligations No. 6098 applies to contracts and obligations, while the Turkish Commercial Code No. 6102 governs commercial relationships. The Industrial Property Law No. 6769 is also relevant when the right to use a trade mark ends, as is the Law on the Protection of Competition No. 4054 in relation to sales and distribution restrictions.

This framework does not impose a general, automatic obligation on franchisors to buy back all stock at the end of every agreement. Any right to return stock or require a buyback depends on the contract, the condition of the products and the circumstances in which the relationship ends. Rights relating to defective products are a separate matter from the buyback of sound but unsold goods.

Also check who actually sells you the products. If an independent supplier issues the invoice, a verbal promise from the franchisor to accept returns does not automatically bind that supplier. Put in writing who is responsible for the buyback, who will make payment and, where necessary, how the supplier will formally become a party to the arrangement.

2. Define eligible stock by product category

The phrase “saleable products will be bought back” is not sufficiently clear on its own. Unless the agreement specifies who decides whether goods are saleable, using which criteria and at what date, a substantial amount of stock could be excluded when you leave. Before signing, ask the franchisor to explain the terms using a sample stock list.

At a minimum, assess these categories separately:

• Standard products: Undamaged goods in unopened packaging that remain on the current product list.
• Time-sensitive products: Products approaching their use-by or best-before date.
• Promotional products: Goods purchased for a particular promotion that has since ended.
• Brand-specific materials: Branded packaging, disposable serving supplies and printed promotional materials.
• Orders in transit: Products that have been paid for or firmly ordered but have not yet been delivered.

For each category, record the acceptance criteria, any minimum remaining shelf life, required documentation and exclusions. If only products sourced from a particular warehouse qualify, that restriction should also be clear in advance.

Pay particular attention to stock left over because of a promotion or product change required by the franchisor. Being left to bear the full cost when the brand withdraws old packaging is a different risk from an ordinary sales forecasting error. Ask for a contractual provision that distinguishes between the two.

3. Agree the buyback price and payment timetable

A buyback commitment offers limited certainty for budgeting if the price calculation is unclear. The original invoice amount, the net purchase price after discounts and the current supply price can produce different results. Make sure the agreement clearly states which method will apply and who will bear transport and inspection costs.

Test the proposed calculation against an actual product invoice. If there are period-end rebates, bulk purchase discounts or promotional support payments, ask how these affect the buyback price. Rather than accepting open-ended wording such as “necessary expenses will be deducted”, ask for the types of deduction and their calculation methods to be specified.

The operational timetable matters just as much as the price:

• When will the joint stocktake take place?
• Who will sign the stocktake record?
• Where will the products be handed over, and who will bear the risk during transport?
• When will you be notified of rejected products and the reasons for rejection?
• What will trigger payment, and how long after that must it be made?

If the franchisor can set off other amounts owed to it against the buyback payment, have the scope of that right reviewed. Negotiate a process that prevents a disputed charge from holding up payment for all your stock indefinitely. Seek advice from your accountant on returns documentation, invoicing and tax treatment; do not treat the physical handover and the financial close-out as the same thing.

4. Test different exit scenarios

Expiry of the agreed term, departure by mutual agreement and termination for breach may not have the same consequences. Check whether the contractual buyback provision applies only to a narrowly defined type of exit. Also ask what happens if the franchisor ceases trading or discontinues a product range.

Prepare a brief close-out calculation for three scenarios: a planned exit, an unexpected early termination and a brand-led product change. For each, show the stock value, expected buyback proceeds, transport costs and time until payment. This will allow you to compare the actual cash-flow impact of the buyback promise.

If a limited sell-off period is allowed for products that are not bought back, this needs its own provisions. Permitted sales channels, use of the brand and signage, continuing fees and the final sales deadline should all be clear. Owning stock does not mean you can continue presenting yourself as an authorised franchise business after the agreement ends. Ask your lawyer to review this arrangement from both trade mark and competition law perspectives.

Practical takeaway: Before signing, test the stock list, buyback calculation and exit timetable together. If it is unclear who will take which products, at what price and when, do not build your investment budget on the assumption that buyback proceeds are guaranteed.