How to Limit Refurbishment Costs When Buying a Franchise

When buying a franchise business, focusing on the opening budget can lead you to overlook further investment that may be required during the contract term. A new store concept, replacement kitchen equipment or a new ordering system can significantly alter your initial calculations. Maintaining consistent standards across a franchise network is valuable, but it must also be clear who will pay for those standards, when and within what limits. This guide explains how to assess mandatory refurbishment and upgrade costs before signing and make them more predictable.

1. Check every document for refurbishment obligations

An obligation to refurbish will not always appear in a clause headed “investment”. Phrases such as “compliance with the current concept”, “following head office instructions” or “maintaining operating standards” may also be used to justify new spending requirements. Ask for not only the main agreement, but also any operating manual, technical specifications and design schedules it refers to.

Before starting your review, list the following items separately:

• Changes to signage, shopfronts, furniture and interior décor.
• Replacement of production, refrigeration, ventilation and sales equipment.
• Changes to tills, ordering screens, computers and software.
• Architectural plans, installation, transport and removal of old equipment.
• Costs arising from closure or reduced capacity while work is carried out.

Distinguish between maintenance, repairs and concept updates. Repairing a broken appliance is not the same obligation as replacing a working one simply because it no longer fits the new design. If the agreement does not make this distinction, ask the brand’s representative for a written explanation with specific examples.

Record the version and date of each document on your list. An unrestricted commitment to comply with a manual that has not yet been shared, or has yet to be written, makes it difficult to estimate the scope of your investment. Establish exactly which documents form part of the agreement you will sign.

2. Understand the legal limits on the power to make changes in Türkiye

Türkiye has no dedicated franchise law governing franchise relationships. Nor is there a general requirement for a franchise disclosure document or registration on a franchise register. This does not mean that investment obligations can be imposed without limit in every situation.

The Turkish Code of Obligations, Law No. 6098, is important for contract formation, performance and standard terms. Provisions drafted in advance for use in numerous similar contracts may fall within Articles 20–25 of the Code. Article 24 is particularly relevant to clauses in contracts containing standard terms that allow the drafting party to make unilateral changes or introduce new provisions to the other party’s detriment. Such clauses are deemed not to have been written.

However, do not assume that every refurbishment demand is automatically invalid. The nature of the clause, whether it was genuinely negotiated, the scope of the demand and the circumstances of the relationship must be considered together. Signing next to a statement that “head office may make changes at any time” does not, by itself, settle every legal question either.

The provisions on commercial relationships in the Turkish Commercial Code, Law No. 6102, and the principle of good faith under the Turkish Civil Code also play a role. The Industrial Property Law, No. 6769, and the Law on the Protection of Competition, No. 4054, are relevant to trade mark use and competition aspects of the relationship. Before signing, ask your lawyer to review the refurbishment clauses alongside those allowing changes to contractual documents.

3. Calculate the true cash requirement

The equipment or refurbishment price supplied by the franchisor may not reflect the total investment required. Include design and planning fees, labour and transport, tax-related cash outflows, temporary storage and preparations for reopening. If the business will close during the work, assess ongoing costs such as rent and staffing separately.

For each item, record the following in a simple spreadsheet: estimated payment, payment date, how long the quoted price remains valid, whether alternative quotes are available and whether the expenditure can be deferred. The timing of tax deductions or expense recognition may differ from the actual payment date, so ask your accountant to calculate the cash-flow impact separately.

Ask the franchisor for sample budgets from similar businesses that have recently undergone refurbishment, with trade secrets and personal data protected. Do not simply ask existing franchisees, “How much did you spend?” Also ask:

• How much preparation time was there between the demand and implementation?
• Which items accounted for the difference between the initial estimate and the final amount paid?
• Could the business remain open, and did its operating schedule change?
• Was further investment required immediately after the refurbishment?

If you need finance, show repayments alongside the likely loss of trading income during the refurbishment period in the same spreadsheet. Get written confirmation of whether support from the franchisor is a grant, discount, deferred payment or repayable loan. Do not base your borrowing plan on the assumption that future sales growth is guaranteed.

4. Set measurable investment limits in the agreement

During negotiations, do not settle for a statement that only “reasonable investment” will be required. Ask for a clause explaining how reasonableness will be assessed. Points to discuss include:

• Frequency: A minimum interval between major concept refurbishments.
• Budget: A cap on investment required within a specified period, with written agreement needed to exceed it.
• Notice: Advance disclosure of the technical scope, estimated budget and implementation date.
• Exceptions: Clear definitions of urgent safety requirements and mandatory regulatory compliance work.
• Cost sharing: A contribution from the franchisor when usable equipment must be replaced early.

Take the remaining contract term into account too. If substantial investment is required towards the end of the term, consider phased implementation, cost sharing or a mutually agreed extension. Franchisees in Türkiye have no general automatic right to renew their agreements, so do not rely on a verbal promise that the relationship will continue in return for the investment.

Finally, establish how you can challenge an investment demand and which obligations will continue while it is being reviewed. The practical takeaway: Before signing, bring together clear details of the scope, timing, total cash requirement and decision-making authority for refurbishment. Do not treat uncertain investment requirements as a fixed budget.