Franchise Agreement Legal Framework

A franchise agreement is a type of contract not regulated by law. When examining disputes related to franchise agreements, the elements of the contract should be examined separately from the parties' statements, and the contract should be characterized accordingly. Indeed, in practice, different terms such as agent, distributor, and distributor are often used together in this context, leading to errors.

Franchise Agreement

A contract is a framework agreement that creates continuous obligations for both parties. In a dealership agreement, the manufacturer sends all or part of its services or goods to the dealer for sale. The manufacturer receives a certain amount of money from the dealer's profit. The dealer, in turn, sells the service or products in their own name and on their own behalf, acting with the aim of increasing sales.

Franchise Agreement Parties

A dealer can be a wholesaler, intermediary, or retailer. In some cases, for example, a dealer who has a dealership agreement with the manufacturer or supplier may act as the main dealer and, in this case,
may also be on the manufacturer/supplier side in terms of dealership agreements that they will make with sub-dealers.

Franchise Agreement Specifications

• The franchise agreement established between the parties is a contract that creates continuous obligations
• The dealership agreement serves as a framework agreement
• It enables the dealer to act in their own name and on their own behalf
• The contract enables the manufacturer to integrate with the distribution network and engage in activities to increase sales.

In a dealership agreement, the manufacturer may place multiple dealers in the contracted region, send goods to these dealers, and simultaneously impose an exclusive purchasing obligation on these dealers through the contract; however, the manufacturer may also commit to not selling in the contracted region.

Termination Conditions of the Franchise Agreement

A franchise agreement terminates in two ways. The first is through automatic termination. The situations that lead to automatic termination of the agreement are as follows:

• Termination of the contract due to its expiration,
• The contract is terminated due to death, bankruptcy, or loss of legal capacity.

Another situation that terminates a contract is its termination due to a legal transaction. Accordingly, the circumstances under which a contract may be terminated due to a legal transaction are as follows:

• Termination of the contract by mutual agreement,
• Cancellation of the contract,
• Termination of the contract by ordinary termination,
• This is the termination of the contract through extraordinary termination.

You can consult with Attorney Ferhat Kule to get answers to all the details and questions you may have