Agency, Dealership and Franchise Agreements
Agency, dealership, distribution and franchise relationships are long-term relationships built on mutual investment, and their termination often gives rise to serious disputes. We set up these agreements, advise on issues that arise while the relationship continues, and represent our clients in claims such as goodwill indemnity when the relationship ends.
What is an agency agreement?
An agent is an independent merchant who, without being an employee of a business, continuously acts as intermediary for, or concludes, contracts on behalf of a merchant in a particular place or region. The Turkish Commercial Code regulates the agency agreement in detail.
Dealership, distribution and franchise are not separately regulated by law; in these relationships, the contract terms are primarily decisive. However, the Court of Cassation may apply the agency rules by analogy in situations resembling agency, particularly in exclusive relationships.
What is goodwill (portfolio) indemnity?
The goodwill indemnity claim is the amount paid to the agent when the agency agreement ends if the principal continues to derive substantial benefits after termination from the customers the agent brought in. The amount is subject to a cap based on the average annual commission over the last five years, and the claim must be notified within one year of the end of the agreement.
The Court of Cassation may also recognise this right for exclusive dealers and distributors where the conditions are met. Ending the agreement can therefore have significant financial consequences for the parties and should be planned in advance.
Scope
- Drafting agency, dealership, distribution and franchise agreements
- Structuring exclusivity, territory, target and performance provisions
- Representation on termination and in goodwill indemnity claims
- Assessing contract provisions from a competition law perspective
How We Work
- Determining the nature of the relationship and the parties’ expectations
- Choosing the contract model and drafting the agreement
- Checking non-compete, exclusivity and pricing provisions from a competition law perspective
- Advising on disputes arising while the relationship continues
- Managing the termination process, notice periods and financial consequences
Team
Frequently Asked Questions
How is an indefinite-term agency agreement terminated?
Either party may terminate the agreement by observing the notice period provided by law. If there is just cause, the agreement can also be terminated without notice; however, just cause must be proved if there is a dispute.
Can the right to goodwill indemnity be waived in the contract?
No. The goodwill indemnity claim cannot be excluded by contract before the agreement ends. The right may not arise, however, in situations such as the agent terminating the agreement itself or the agreement being terminated with just cause because of the agent's fault.
What should a franchise agreement cover?
The scope of the trade mark and know-how licence, the franchise fee and royalties, operating standards and audits, territorial exclusivity, the non-compete obligation and what happens to the business and customer data on termination should be set out clearly. Non-compete and pricing provisions should also be assessed under competition law.
What should we watch out for when ending a dealership agreement?
The termination conditions and notice periods in the agreement, whether there is exclusivity, the investments the dealer has made and the possibility of a goodwill indemnity claim should be assessed together. Planning the termination well can prevent a long and costly dispute.
Would you like to discuss this service? Schedule a meeting with us — the first meeting is free of charge.
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