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Legal Focus
JANUARY 2013
Franchising System turkey
Turkey’s economy is growing at a rapid pace, and this has helped to significantly expand franchising in the country over recent years, with an increasing number of franchisees and franchise agreements being concluded in the past year. However, Turkish law does not specifically regulate franchise agreements, instead they are governed by various pieces of legislation. This of course raises many varying issues, and to find out more, Lawyer Monthly speaks to Mr. Şafak Herdem, founding and managing partner of Turkish law firm, HERDEM&Co.
What are the most common types of case you work on?
HERDEM&Co. focuses on assisting foreign companies in their expansion into Turkey and can offer the finest support in all aspects of setting up business and other international projects. As we believe that the counter party of a commercial transaction is expected to ask the question of “How can we increase the trust?” The significance of this wording for anyone in business world who needs to deal with trusted relationship shall be formed or directed with successful advisory services for successful commercial transactions. We actually do not care about daily business transactions awareness; we just focus on how to remove the obstacles beforehand for setting the true way in client’s daily business. That leads us to involve less litigation matters that neither party wishes to take a part of it.
an increasing number of franchisees and franchise agreements have been concluded in turkey recently. to what do you attribute this?
In fact, we have been involved more than EUR 10-15 millions agreements here in Turkey, but the main problem within Turkish companies is that they are not well-equipped to know the differences between distributorship and franchising agreements. Especially in some agreements, the master franchisees are also expected to make
production in Turkey however they do not know how they will produce. This is quite important for foreign companies, especially those who wish to use Turkey as HUB in the future.
can you give me an overview of the franchise system in turkey and compliance requirements?
It is mostly based on contractual terms and conditions. My only recommendation to foreign companies is to find the right person and to make their long term business plans for Turkey. Not only in financial or economical growth wise, also for structuring the business in Turkey. For many years we experienced situations in which a foreign company is satisfied from the sales in Turkey then a quick decision to set up the own organization in Turkey may create bigger problems especially in terms of the reputation of the trademark. Besides, it is also quite important to be sure that your franchisee works with right people and is capable of finding local contacts in the process, from marketing to collecting the money.
What restrictions apply to foreign investors?
There is equal treatment between Turkish companies and foreign companies running their business in Turkey. That is why in 2011 the foreign investment raised surprisingly to USD 15.9 billion.