How to Plan Dispute Resolution in a Franchise Agreement

When preparing to franchise your existing business, do not plan only for the days when everything runs smoothly. Support services may fall short, reports may be challenged or contractual obligations may be interpreted differently, even in well-designed relationships. The way to preserve trust within a franchise network is not to ignore disputes, but to decide in advance who will seek a resolution, using what information and at which stage. This guide helps you build a practical dispute resolution process into your first franchise agreement in Türkiye.

1. Establish the legal framework and route to resolution

Türkiye has no dedicated franchise law governing franchise agreements exclusively. Nor is there a general requirement specific to franchising to register on a public register or provide a standard pre-contractual disclosure document. This does not, however, mean that the parties have no legal responsibilities. Duties to act in good faith and provide accurate information before entering into a contract remain important.

Franchise agreements are treated as contracts that are not specifically defined by statute. General provisions apply, principally those of the Turkish Code of Obligations No. 6098 and the Turkish Commercial Code No. 6102. Depending on the subject of the dispute, the Industrial Property Law No. 6769 may apply to trade mark rights, and the Law on the Protection of Competition No. 4054 to restrictions on competition.

Simply stating that ‘Turkish law applies’ in the agreement is therefore not enough. You should also define the internal discussion process, the role of mediation and whether the final resolution will be sought through the courts or arbitration. Do not piece these options together using conflicting template clauses; have the entire agreement reviewed for consistency within a coherent legal framework.

2. Make notification and record-keeping procedures specific

Resolving a dispute often begins with an accurate account of what happened. Rather than recording a general complaint such as ‘head office is not providing support’, record which service was requested, when it was requested and which contractual obligation it relates to.

An internal notification form could include the following fields:

• Details of the business concerned and the relevant contact person.
• The date of the incident, a brief description and the relevant contract clause.
• The corrective action or clarification requested.
• Relevant correspondence, service records and other documents.
• Any urgent risks affecting continued operations.

Distinguish routine support records from formal notices intended to have legal effect. Do not assume that a message sent through a support app will always constitute a valid notice of termination. In particular, notices between merchants concerning default, termination or withdrawal from a contract must take account of the relevant provisions of the Turkish Commercial Code.

The agreement should also explain how addresses and authorised contact details are to be updated. When storing documents, restrict access according to job responsibilities, and do not add unnecessary customer or employee data to the dispute file. The processing of personal data must also be assessed under the Personal Data Protection Law No. 6698.

3. Make the internal resolution stages workable

The first stage could be a discussion between the operational managers familiar with the issue. If no resolution is reached, the matter could then be referred to representatives of each party with decision-making authority. Each stage should have a clearly identified contact, response deadline and expected outcome. These deadlines should not be presented as statutory requirements; they should be agreed in the contract to reflect the business's capacity.

For example, where it is alleged that scheduled head-office support was not provided, the parties could first compare service requests with delivery records. If a shortfall is confirmed, a written plan can identify the person responsible, the remedial action and the completion date. If the allegation is rejected, the reasons and supporting documents should be shared.

Prepare a brief written record at the end of the discussion. Set out the points agreed, the outstanding issues and the next step separately. Check representatives' authority in advance to avoid uncertainty over whether an employee's statements in a meeting create a settlement binding on the company.

Do not turn the internal discussion process into a barrier to seeking legal remedies. Consider exceptions for situations requiring urgent legal protection and for limitation periods or other deadlines after which rights expire. Continuing discussions does not automatically suspend all legal time limits.

4. Distinguish between mediation, court proceedings and arbitration

In mediation, an impartial third party helps the parties develop their own solution; they do not decide the dispute as a judge would. The basic framework for mediation in Türkiye is set out in the Law on Mediation in Civil Disputes No. 6325.

For commercial claims for payment and damages involving a sum of money that fall within Article 5/A of the Turkish Commercial Code, and for the other types of action specified in that article, applying for mediation is a prerequisite to bringing court proceedings. However, not every franchise dispute falls within the same scope: the nature of the claim and any statutory exceptions must be examined. An internal meeting required by the agreement does not replace mandatory mediation.

If you choose court proceedings, take account of the rules governing which type of court may hear the dispute and where proceedings may be brought. A court jurisdiction clause agreed by the parties does not override mandatory legal rules; the conditions governing its validity must be assessed separately.

Arbitration, by contrast, involves a dispute being decided by arbitrators. If you choose this route, consider together whether the dispute can legally be referred to arbitration, the seat of arbitration, the applicable rules, the number of arbitrators, the language and the cost. Do not assume that arbitration will always be cheaper or faster. For low-value disputes, pay particular attention to whether the cost is proportionate to the claim.

5. Test the clause against a practical scenario

Before signing, work through the draft agreement using a realistic example: the franchisee says a support service was not provided, while head office maintains that it was completed. Who will receive the notification? Where will the documents be held? Who will have authority to agree a settlement? What route will be followed if no resolution is reached?

If the sales, operations and legal teams give different answers to these questions, the clause is not yet clear enough. Revise the draft. If existing agreements need to be amended, obtain the parties' agreement in accordance with the prescribed procedure.

Practical takeaway: Before signing your first franchise agreement, prepare a one-page process map covering everything from notification to the final route for resolving the dispute. Identify the relevant contact, required records and decision-making authority at each step, then check the process against the agreement.