How to Assess Territorial Protection When Buying a Franchise

Being told “this territory is yours” in a franchise offer does not, on its own, guarantee that another outlet of the same brand will not open nearby. The value of territorial protection depends on its boundaries, the sales channels it covers and its exceptions being set out in writing. Before joining a franchise network, assess your territorial rights not just on a map, but across every channel through which customers can access the brand. This will help you judge whether the costs you are taking on for the location genuinely match the commercial rights you are being granted.

1. Make the territory clearly measurable

Start by asking whether the offer grants an exclusive territory, protection within a specified distance, or simply the right to operate at a particular address. These are not the same thing. The right to use a brand at one address does not automatically prevent new outlets from opening nearby.

Rather than accepting phrases such as “around Kadıköy” or “near the shop”, ask for a map with clearly defined boundaries. If neighbourhoods, streets, coordinates or a radius are used, clarify the measurement method too. Distance as the crow flies and walking distance can produce different results. You should also agree which map will apply if administrative boundaries change.

The agreement should answer the following questions:

• When does the protection begin, and how long does it last?
• Does it also cover outlets operated directly by the franchisor?
• Can other franchisees be granted rights in the same territory?
• Are shopping centres, kiosks, temporary outlets or delivery-only kitchens exceptions?
• How will the protected territory be determined if the business relocates?

Make sure the agreement explicitly states which document takes precedence if the map and the contract wording conflict. Do not treat a boundary shown only in a presentation as equivalent to a right defined in the signed agreement.

2. Check existing rights and planned openings

The absence of an outlet in your territory today does not mean that another investor has not already been granted rights there. Ask the franchisor to disclose existing outlets, businesses with signed agreements that have not yet opened, and territorial rights granted to third parties. If commercial confidentiality prevents detailed disclosure, request at least a written statement confirming whether any existing commitments conflict with the rights being offered to you.

Do not limit your checks to shops displaying the same brand name. If the brand’s products can be sold in supermarkets, petrol stations or concessions within other businesses, ask how these fit within the territorial protection. The franchisor reaching the same customer base through a different business concept could also affect your investment calculations.

Create a practical checklist showing each outlet’s address, operator, sales format and relevant contractual exception. Distinguish planned outlets from existing ones. Aim to turn this checklist into a dated document confirmed by the franchisor, so that your decision does not rest solely on verbal assurances.

3. Address online sales and delivery separately

Protection against competing physical outlets does not automatically cover online orders. Customers in your territory may be served through the brand’s website, mobile app, online marketplace store or central order line. A clause stating that “no other shop will open in the territory” may therefore not, on its own, provide the customer protection you expect.

Ask which business will receive each order and how that allocation is determined. The delivery address, customer preference, stock availability or delivery time may lead to different allocation outcomes. If another outlet fulfils orders from your territory, it should also be clear whether you will receive any payment; do not assume you are entitled to one.

Assess the following situations separately:

• Corporate and bulk sales made directly by head office.
• Orders where the customer chooses to collect from another outlet.
• Overlapping delivery areas on delivery apps.
• Digital advertising campaigns specifically targeting your territory.

Ask for order allocation rules to be put in writing and for a clear process for notifying you of changes. Agreeing access to territory-level reports that contain no personal data can make it easier to investigate incorrectly allocated orders and monitor whether your rights are being respected in practice.

4. Understand the legal limits of protection

Türkiye has no dedicated Franchise Act governing franchise agreements exclusively. Nor is there a general mandatory pre-contract disclosure document or public registration system specifically for franchising. However, this does not remove duties to provide information arising from the principle of good faith and the pre-contractual relationship.

Depending on the subject matter, the relationship is governed by the Turkish Code of Obligations No. 6098, the Turkish Commercial Code No. 6102, the Industrial Property Code No. 6769 and the Law on the Protection of Competition No. 4054. Although the scope of territorial rights can be defined by contract, freedom of contract is not unlimited.

Territorial and customer restrictions, in particular, require scrutiny under competition law. The Block Exemption Communiqué on Vertical Agreements No. 2002/2 is relevant to the current assessment; the former Block Exemption Communiqué on Franchise Agreements No. 1998/7 is no longer in force.

Active sales targeting particular customers and passive sales made in response to unsolicited customer enquiries are not treated in the same way. Do not regard absolute prohibitions such as “no sales may be made to any customer from another territory” as a safeguard. A specialist should assess the legality of online sales restrictions and territorial restrictions in light of the agreement’s specific features and the applicable exemption conditions.

5. Agree what happens if protection is breached

Alongside the protection clause, the agreement should set out how a breach will be established and what its consequences will be. Who must be notified if a new outlet opens? Which records will the franchisor examine? What steps will follow if a breach is confirmed?

Negotiate options such as remedying the breach, reducing fees, compensating losses or allowing you to exit the agreement under specified conditions. These are not rights that arise automatically in every case; their availability and enforceability depend on the contract, the circumstances and the law. Also check separately for circumstances in which protection can be withdrawn, such as failure to meet a sales target.

Practical takeaway: Before signing, prepare a one-page territory summary covering the map, included sales channels, exceptions, existing rights and consequences of a breach. If this summary does not match the agreement, resolve the differences in writing before making your investment decision.