How to Assess Territorial Protection When Buying a Franchise

Finding a good location is not enough when joining a franchise network. Another outlet of the same brand opening nearby, or online orders being routed to a different outlet, could change the economics of your investment. You should therefore turn the promise of an ‘exclusive territory’ into a clearly defined contractual right, complete with a map and any exceptions. This guide explains which documents to review and which questions to ask about territorial protection before buying a franchise in Türkiye.

1. Understand the legal basis for territorial protection

Türkiye has no dedicated franchise law governing franchise agreements. Nor is there a general requirement specific to franchising to provide a pre-contractual disclosure document or register on a franchise register. General requirements, such as commercial registration, tax obligations and business premises permits, still apply separately.

The contractual relationship is governed primarily by the Turkish Code of Obligations No. 6098, the Turkish Commercial Code No. 6102 and the Law on the Protection of Competition No. 4054. The Industrial Property Law No. 6769 is also relevant to trade mark use. The principle of good faith and general rules of contract law bind the parties despite the absence of dedicated franchise legislation.

Territorial exclusivity does not arise automatically simply because you pay a franchise fee. The agreement should clarify whether the franchisor may open its own outlet in the same area or grant rights to another franchisee. The absence of a statutory disclosure format does not mean misleading statements have no consequences. However, documenting the scope of protection at the outset is safer than trying to resolve a dispute later.

From a competition law perspective, the Block Exemption Communiqué on Vertical Agreements No. 2002/2 and the relevant guidelines should also be considered. Territorial protection does not make every restriction on customers or sales lawful.

2. Define the protected area using a map and outlet types

Statements such as ‘the district is yours’ or ‘no branches will open nearby’ are open to different interpretations. District boundaries may change, and a shopping centre outlet may be treated as a separate sales channel from a high-street outlet. First define the protected area, then establish which activities are restricted within it.

Look for the following in a schedule to the agreement:

• Precise boundaries: A list of addresses, coordinates or a clearly marked map.
• Distance measurement: If protection is defined by a radius, whether distance is measured as the crow flies or by road.
• Outlets covered: The brand’s company-owned shops, other franchised outlets, kiosks and temporary sales points.
• Special locations: How shopping centres, airports, campuses and similar sites are treated.
• Existing exceptions: Previously granted rights, operating outlets and outlets already approved for opening.

Do not rely solely on a map of existing shops. Ask the franchisor to disclose in writing any rights granted to third parties within the protected area that have not yet been exercised. You can offer to receive this information subject to confidentiality obligations.

For example, if your high-street shop is protected but the brand retains unrestricted rights to open outlets in a nearby shopping centre, your protection may be narrower than you think. Assess how this exception could affect your access to customers when choosing your location.

3. Examine online orders and delivery areas separately

Protection for a physical outlet does not automatically mean online sales are reserved for you. The brand’s website, mobile app and third-party ordering platforms may serve a customer at the same address through different outlets.

Record the answers to these questions in a separate worksheet: Which outlet will prepare orders from your territory? Will orders be allocated according to the delivery address, capacity or the customer’s choice? Will you receive any share of the revenue from an order allocated to another outlet? Who will bear the cost of cancellations, returns and customer complaints?

Where the system allows delivery areas to be changed, establish who has permission to make those changes. If the franchisor can update them unilaterally, the grounds for doing so, the notification method and the objection process should be specified. Access to order allocation records will make it easier to monitor whether your rights are being respected.

Do not confuse territorial protection with an absolute ban on sales. Competition law treats active sales targeted at particular customer groups or territories differently from passive sales made in response to unsolicited customer requests. Have any clauses that broadly prohibit internet use or sales in response to requests from outside the territory reviewed by a lawyer experienced in competition law.

4. Check when protection can be reduced

Some agreements make territorial protection conditional on an opening date, the number of outlets, service standards or sales targets. The main risk is not so much the existence of a condition as uncertainty about how compliance is measured.

For each condition, the measurement period, data source, authority to assess compliance and procedure for objections should be specified. If an opening is delayed because of the franchisor’s project approval process or equipment it must supply, clarify whether that delay can count against you.

Rather than allowing protection to be withdrawn immediately after a missed target, negotiate written notice and a reasonable period to remedy the shortfall. If protection is to be reduced, clarify how the new boundaries will be drawn and how this will affect your existing outlet’s delivery area.

Also check whether changes to the operations manual can alter the territorial rights set out in the agreement. A right defined on a map should not be made uncertain by a general power to ‘update the system’.

5. Prepare a workable set of documents before signing

At the final review, the agreement, territory map, list of exceptions and online order rules should all be consistent. Specify the date and version of each schedule, and have the documents state which takes precedence if there is a conflict. Do not leave promises made during sales discussions solely in presentation slides.

The agreement should also set out the notification channel, review period and corrective action in the event of a breach. If damages or a contractual penalty clause are being considered, obtain a legal assessment of their enforceability: including them in the agreement does not guarantee automatic recovery in every case.

Practical takeaway: Before making a payment, obtain written confirmation of three things: where you are protected, which sales fall outside that protection and the conditions under which your rights can change. If these points cannot be explained clearly, do not treat the promise of a territory as a firm safeguard for your investment.