How to Assess Owner-Operator Requirements When Buying a Franchise

Buying a franchise does not necessarily mean you can manage the business remotely. Some brands expect investors to be directly involved in day-to-day operations, while others require an approved manager to be appointed. Clarifying these expectations before joining a franchise network helps you understand not only your working arrangements but also the true cost of the investment. The key question is: does the agreement require your capital, your labour or both?

1. Define the scope of the owner-operator obligation

A statement such as “the franchisee shall personally manage the business” is not sufficiently clear on its own. Does it require regular attendance, responsibility for daily decisions or actually working on site throughout opening hours? Check that any flexible management model described during discussions is reflected in the agreement.

Ask the brand for written answers to the following questions:

• Can the person required to be on site be the investor, a shareholder or an appointed manager?
• How are the weekly working arrangements and expectations for physical attendance defined?
• If there are several shareholders, which of them must take an active role?
• Is the investor allowed to hold another job or manage another business?
• Does the requirement for intensive involvement during the launch period change later?

If a company will be signing the agreement, pay particular attention to obligations tied to the personal work of a named shareholder. An obligation owed by the company is not the same as a commitment undertaken personally by a shareholder. It should be clear who is assuming each obligation and in what capacity.

At this stage, map out your own weekly schedule too. Do not accept an involvement requirement you cannot meet alongside family responsibilities, travel time and your existing job simply because the brand is appealing.

2. Understand the legal framework in Turkey

Turkey has no standalone franchise law specifically governing franchise agreements. Nor is there a general requirement for a franchise-specific pre-contractual disclosure document or registration on a franchise system register. This does not, however, mean that the relationship falls outside the law.

Franchise agreements are treated as contracts not specifically regulated by statute. The general contractual provisions of the Turkish Code of Obligations No. 6098 and the Turkish Commercial Code No. 6102 are the principal rules that apply. The Law on the Protection of Competition No. 4054 and the Industrial Property Code No. 6769 are also relevant to particular aspects of the relationship. The business remains subject to general obligations relating to trade registration, tax and operating permits.

The scope of an investor’s obligation to be present at the business therefore depends primarily on the agreement. Do not assume that the law requires every franchisee to be on site throughout opening hours. Equally, do not assume that providing capital automatically entitles you to remain an entirely passive investor.

Unclear or onerous clauses in a standard-form agreement may need to be assessed under the provisions on standard terms in the Turkish Code of Obligations. However, it is safer to define the obligation clearly in advance than to sign in the expectation that a clause will not be enforceable.

3. Make the right to appoint a manager workable

A provision stating that “a manager may be appointed” may describe a right you cannot exercise without the brand’s approval. Examine how the approval process will work. Selection criteria, such as training, experience and working arrangements, should be clear in advance, as should the documents required and the person to whom an application must be submitted.

Aim to clarify the following points in the agreement or in a written arrangement accepted by both parties:

• The minimum qualifications required of a proposed manager.
• The time allowed for the brand to assess the application and respond.
• Written reasons for any refusal.
• The procedure for appointing temporary cover if the manager leaves.
• The time allowed for a new manager to take up the role.

These are not specific statutory rights that automatically apply to all franchise agreements in Turkey; they are safeguards to negotiate. A workable balance is needed between the brand’s need to maintain quality and the business’s ability to manage staffing changes.

Approval of a manager by the brand does not automatically transfer the franchisee’s contractual responsibilities. Set out separately who will handle day-to-day operations and who will remain responsible for compliance with the agreement. Likewise, distinguish approval of the manager from employment contracts, pay and other employer obligations.

4. Include your own labour in the investment calculation

Treating your own work as free when calculating profitability makes it harder to compare different brands. A model requiring your full-time presence is not the same investment for you as one that can be run through a manager, even if both have the same projected turnover.

Prepare two separate calculations. In the first, assume you will manage the business yourself and clearly identify the personal income you expect in return. In the second, include the salary of a manager performing the same role, associated employer costs and cover during periods of leave. This comparison is for financial decision-making; discuss separately with your accountant whether the cost of your own labour can be recognised as an expense in the accounts.

Ask the brand whether its sample financial figures for an outlet include management costs. Do not directly compare a result that excludes the owner-operator’s labour with one that includes the cost of a professional manager. The aim is to understand not just whether the business makes money, but what the investment delivers after allowing for payment for your work.

5. Agree arrangements for absence and breach in advance

Illness, leave or a manager’s unexpected departure should not leave the business without management. Discuss in advance how temporary absences must be reported, who will provide cover and under what conditions the brand will give approval. Be wary of provisions that treat routine leave in the same way as a prolonged lack of management.

Check the procedure that will apply if the requirement to manage the business personally is breached. Ask for written notice, an opportunity to provide an explanation and a reasonable period to remedy any issues that can be put right. Review with your legal adviser any ambiguity that could cause every brief absence to be treated automatically as a serious contractual breach.

Practical takeaway: Before signing, prepare a one-page management plan: who will work in the business, who will cover for them, what must the brand approve and how much will these arrangements cost? If your plan does not match the agreement, resolve the discrepancy first.