Franchise Agreements in Turkish Competition Law

Under Turkish competition law, franchise agreements are considered as “atypical” agreements that combine the features/characteristics of various agreements (such as sale/purchase agreements, agency agreements, service agreements, etc.). Accordingly, pursuant to the Guidelines on Vertical Agreements, franchise agreements, which essentially provide a uniform distribution network for products, are defined as agreements containing licences of intellectual property rights and know-how relating in particular to trademarks, signs, etc., for the distribution of products or services and whereby the franchisor provides commercial or technical assistance to the franchisee in return for payment of royalty. A franchise agreement brings about a vertical supply relationship between the franchisor and franchisee. Since franchise agreements usually contain vertical restraints such as non-compete, exclusivity or information exchange provisions, they are often considered under Article 4 of Law No. 4054 on the Protection of Competition (Law No. 4054). Depending on the market share of parties of the franchise agreement, the nature of the relationship between the parties and the content of the transferred know-how, franchise agreements may fall within the scope of application of Block Exemption Communiqué No. 2008/2 on Technology Transfer Agreements, or Block Exemption Communiqué No. 2002/2 on Vertical Agreements (Communiqué No. 2002/2). These two communiqués introduce different and detailed conditions for block exemption. On the other hand, as per the Guidelines on Vertical Agreements, most of the obligations in the franchise agreements may be deemed necessary to protect intellectual property rights or maintain the common identity and product of the franchised network; therefore, they may be deemed to benefit from the protective cloak under Article 5 of Law No. 4054 and in such circumstances, fall outside the scope of Article 4 of Law No. 4054.

For more information on franchise agreements in Turkish antitrust law, please feel free to reach out to ELIG Gurkaynak at +90 212 327 1724 or through gonenc.gurkaynak@elig.com.