How to Verify Signing Authority When Buying a Franchise

During franchise negotiations, a well-known brand, an impressive presentation and a corporate email address can inspire confidence. But none of these proves that the person you are dealing with has authority to bind the company to a contract. Before joining a franchise network, you need to answer a fundamental question: which legal entity is taking on the promised obligations, and who can sign on its behalf? This check is not simply about keeping paperwork in order; it establishes which legal entity will be accountable to you for your investment.

1. Distinguish the brand name from the contracting party

The brand displayed above the premises may differ from the name of the company signing the franchise agreement. This is not necessarily a problem. What matters is that the contracting party is clearly identified and that you understand its role in the business model presented during negotiations.

Ask for the company's full registered name, address, trade registry details and, where applicable, its MERSİS number — its identifier in Türkiye's Central Registration System — as shown on the first page of the draft agreement. Compare these details with the proposal, payment instructions and other documents attached to the agreement. Do not settle for abbreviated trading names; use the company's full registered name.

Companies within the same corporate group are separate legal entities. One company may sign the franchise agreement while another sells equipment or provides services. Having the same shareholders does not automatically make one company liable for all the debts of another.

Ask the following questions during negotiations:

• Which company will take on the obligations of the franchisor?
• Will other companies provide any of the services promised in the agreement?
• If another company fails to deliver a service, who will be accountable?
• Why is the company giving the presentation different from the company signing the agreement?

Do not leave the answers in emails alone. If another company will provide a service, check how the agreement addresses the franchisor's responsibility for it. In particular, do not accept statements such as “our group will provide this” without identifying the company and its obligations.

2. Understand the legal framework in Türkiye

Türkiye has no dedicated franchise law governing franchise agreements. Nor is there a general mandatory public registration requirement specifically for granting franchises, or a requirement to provide a standard pre-contract disclosure document. A statement such as “our franchise system is officially registered” therefore does not, by itself, establish that the agreement or signing authority has been verified.

Franchise relationships are subject to the general contractual provisions of the Turkish Code of Obligations, Law No. 6098. The Turkish Commercial Code, Law No. 6102, is important for company representation and trade registry matters. The Industrial Property Law, Law No. 6769, must also be considered in relation to trade mark rights, as must the Law on the Protection of Competition, Law No. 4054, for provisions affecting competition.

Registering a business with the trade registry is not the same as registering a franchise agreement in a dedicated register. It is also incorrect to assume that all franchise agreements must be notarised or registered with the trade registry. However, particular transactions covered by the agreement, or the nature of the authority granted, may trigger specific formal requirements.

Where someone acts without authority, subsequent approval by the person or entity on whose behalf they acted may determine the agreement's legal effect. However, do not base your investment decision on the expectation that “the company will approve it later”. Having a lawyer review the scope of authority before signing is safer than facing a dispute over whether the agreement is binding afterwards.

3. Verify authority using up-to-date information, not a single document

Requesting a signature circular — a document recording authorised signatories and their specimen signatures — is a useful starting point. But seeing an old document does not mean the check is complete. Representation powers may have changed, the signatory may no longer hold office, or the company's signing arrangements may have been revised.

Review the company's current trade registry records and the relevant notices in the Turkish Trade Registry Gazette. Compare these with the individuals and signing arrangements shown in the signature document provided. Wherever possible, verify the records independently rather than relying on the explanation of the person sending the document.

Pay particular attention to these distinctions:

• Sole representation: Can the individual act on behalf of the company with their signature alone?
• Joint representation: Does the agreement require signatures from two or more authorised individuals?
• Signing under a power of attorney: If the signatory is not acting as an authorised company office-holder, what power of attorney are they relying on?
• Scope and duration: Does the authority cover the proposed transaction and, if granted for a limited period, is it still valid?

A sales manager's involvement in negotiations does not mean they can sign a franchise agreement on the company's behalf. Equally, “general manager” on a business card is not sufficient evidence on its own.

If a power of attorney is provided, have the authority of the person who granted it checked as well. Translation and authentication requirements for documents issued abroad should be assessed separately. The effect of limits on authority in relation to third parties is a technical legal issue, so do not assume that every restriction in a document has the same legal consequences.

4. Make a final cross-check before signing and paying

Even if you checked the documents at the first meeting, compare them again on the day of signing. Confirm that the contracting party's registered name has not changed in the final version, that the signatories still have authority and that all required signatures are present. A company stamp is not a substitute for an authorised signature.

The holder of the account receiving payment should also be consistent with the contractual arrangements. If you are asked to pay into another company's account, obtain written clarification of the reason, that company's authority to collect payment and whether the payment will discharge your payment obligation under the agreement. If you are directed to a personal account or bank details change at the last minute, pause the transaction and seek independent confirmation.

Keep the signed agreement, its attachments, authority documents and payment instructions together in one file. Record the date of each document. If a company will enter into the agreement on your side, apply the same authority checks to your own signatories.

Practical takeaway: Before sending money, cross-check three things: the company taking on the obligations, the signatory authorised to bind it and the account receiving payment. Do not proceed until any unexplained discrepancies have been resolved.