How to Check Equipment Ownership When Buying a Franchise

Coffee machines, refrigeration units, production equipment and till systems can account for a significant share of a franchise investment. However, paying for a set-up package does not mean you acquire ownership of every item it contains. Before joining a franchise network, distinguish between equipment you are buying, equipment you are renting and equipment you are simply entitled to use. This distinction directly affects your true investment cost, your responsibilities when equipment breaks down and the residual value of your business.

1. Break down the set-up package item by item

The brand’s offer may be presented under a single heading such as “turnkey set-up”. That phrase alone tells you nothing about ownership. The price may cover fit-out services, installation, equipment purchases, rental or a fixed-term right to use equipment. Start by asking for the legal and financial basis of each item to be specified separately.

Prepare a schedule containing the following information for each major piece of equipment:

• Equipment name, model, quantity and serial number, where available.
• The person or company selling it, renting it out or granting the right to use it.
• The equipment’s owner and the conditions under which ownership will pass to you.
• A breakdown of purchase, rental, installation and maintenance charges.
• Delivery location, delivery date and criteria for accepting the equipment as operational.
• Warranty documentation, service provider and restrictions on use.

For example, a drinks fridge installed on the premises by the brand may belong to the product supplier rather than the franchisor. Its appearance in a photograph of the package does not mean it is included in the sale price. Similarly, payments made during a rental period do not automatically count towards a purchase price unless this has been separately agreed.

Key check: Make sure the quotation, contract and delivery documents describe the same equipment under the same type of transaction. If a machine is described as a “sale” in one document and a “loan” in another, have this corrected before signing.

2. Verify ownership claims against the documents

Türkiye has no separate franchise-specific law comprehensively governing franchise agreements. Nor is there a general mandatory pre-contractual disclosure document or a dedicated franchise register. Do not therefore assume that you will automatically receive a standard official franchise file showing who owns the equipment.

For equipment transactions, the provisions on sales, rental and contracts in the Turkish Code of Obligations, Law No. 6098, are particularly relevant, as is the Turkish Commercial Code, Law No. 6102, for commercial transactions. The Turkish Civil Code, Law No. 4721, must also be considered when transferring ownership of movable property. Where financial leasing is involved, the rules under the Law on Financial Leasing, Factoring, Financing and Savings Financing Companies, Law No. 6361, should be assessed separately.

An invoice is an important document, but it does not resolve every ownership issue on its own. Review the sale agreement, delivery records and any leasing documents together. If you pay the franchisor but a different company sells the equipment, establish clearly which party is obliged to deliver it and transfer ownership.

Ask about third-party rights, particularly for high-value equipment. Is it subject to a finance lease? Has it been pledged as security? Does the seller retain ownership? Agree with your legal adviser which register searches and document checks are needed. A written statement from the franchisor is useful, but it is no substitute for independent checks where these are available.

3. Calculate usage costs separately from ownership

Owning a machine does not mean you can use it without restrictions or further expense. Mandatory maintenance, software subscriptions, consumables, calibration and remote connectivity services can all affect the total cost. Even if you buy the hardware, its operating software may only be licensed for a limited period.

Draw up a usage budget for each machine, separate from its purchase price. List recurring expenses, breakdown costs and any dismantling or transport costs at the end of use on separate lines. Ask who can change maintenance charges and how those charges will be calculated.

During contract negotiations, make sure you answer these questions in particular:

• Who will report faults and submit service requests?
• Will you handle warranty claims, or will another company that purchased the equipment do so?
• Will replacement equipment be provided during repairs, and if so, will there be a charge?
• Who will pay for transport, labour and on-site servicing?
• Will the equipment continue to work if software access is cut off?

Having a production machine repaired free of charge does not mean you will also be compensated for losses while the business is unable to operate. Response times, temporary solutions and any liability for losses should be addressed separately. Turn a sales representative’s verbal promise of service support into a written commitment from the company that will be responsible for providing it.

4. Agree delivery and return terms from the outset

Do not sign a delivery acceptance record that merely states “all goods received in full”. It should list models, serial numbers, accessories, visible damage and the operational tests carried out. Record missing or faulty parts, and discuss with your legal adviser the importance of inspection and defect notification deadlines in commercial sales.

For equipment you do not own, put the return terms in writing in advance. Specify how fair wear and tear will be assessed, how damage will be established and who will pay dismantling costs. Agree to use a jointly signed record supported by photographs when equipment is returned.

For equipment sold to you, examine the grounds on which the franchisor may demand its return or require you to sell it back. If the agreement provides for such a right, it should clearly state how the price will be set, when payment is due and the sequence of payment and handover. The accounting book value, second-hand sale value and contractual buy-back price are not the same thing.

Practical takeaway: Before paying, obtain written answers to three questions for each major piece of equipment: Who owns it, who pays the costs throughout its use, and under what conditions can it be taken back? If those answers are not documented, do not treat the equipment as an asset you definitely own when calculating your investment.