I. Economic data

A. Macro-economic data
 
- General data[1]
 
Population 2021: 85,372,377 inhabitants
Area: 774,815 km2
Density: 98 inhabitants/km2
GDP (nominal) 2022: $907.12 bn[2]
GDP/capita 2022: $10,674.5[3]
GDP (PPP) 2022: $3,182 bn[4]
GDP (PPP)/capita 2022: $37,445.2[5]
2021 growth rate: 5.5%[6]
GNI/capita (PPP) 2021: $30,290
HDI 2021: 0.838
Literacy rate: 97%[7]
Life expectancy 2022: 78.5 years

- Policy[8]
 
Türkiye is a parliamentary Republic made up of 81 provinces[9]. Since 2014, the President has been Recep Tayyip Erdogan.
 
In 2017, Mr. Erdogan organized a constitutional referendum. The result was in favor, so now most of the Prime Minister's executive powers have been transferred to the President[10].
 
Türkiye became a member of the Council of Europe in 1949 and NATO in 1952. In addition, Türkiye was a member of the UN Security Council in 2009 and 2010.
 
Türkiye officially applied to join the European Union, and became a candidate country in 1999[11]. However, at the time of writing, negotiations between the European Union and Türkiye have not reached a conclusion, and Türkiye is not a member of the European Union.
 
Türkiye faces tensions with some of its neighbors, particularly Greece, over the status of islands in the Aegean and the delimitation of maritime zones; Cyprus, as Türkiye refuses to recognize the Republic of Cyprus; and Armenia, as the borders between Armenia and Türkiye have been completely closed since 1993.
 
- Economic development
 
Türkiye is a member of the OECD and the WTO and is the 20th largest world power.
 
Türkiye has a high inflation rate of 19.6%. The unemployment rate reached 13.4% in 2021[12].
 
In 2021, the Turkish currency lost 44% of its value against the dollar[13].
 
Nevertheless, the Turkish economy coped with the health crisis caused by Covid-19 without going into recession in 2020 and experienced a growth rate of 5.5% for the year 2021[14].
 
Recently, the Turkish economy has suffered a further shock from the earthquake of February 6, 2023, causing $34bn of damage[15].
 
- Resources[16]
 
Türkiye’s main resources are agricultural (wheat, barley, cotton, olives, dried fruit and citrus fruits, rice), mining (coal, lignite, chromium, iron, zinc) and industrial (automobiles, textiles)[17].
 
Agriculture accounts for 5.5% of GDP, mining and industry 31.1%, and services 63.4%.
 
The tourism sector generated $13.7 billion in 2020.
 
- Population
 
77% of the Turkish population is urban. 22% of the population is under 15, 68% between 15 and 65 and 10% over 65[18].
 
Türkiye’s five most populous cities are Istanbul (15,462,452 inhabitants), Ankara (5,663,322 inhabitants), Izmir (4,394,694 inhabitants), Bursa (3,101,833 inhabitants) and Antalya (2,548,308 inhabitants)[19].
 
- Foreign investment[20]

In 2021, foreign direct investment inflows to Türkiye reached $12.5 bn, an increase of 60.2% on 2020.

60% of foreign direct investment inflows come from European countries, 23% from Asia and 16% from America.

Foreign investment is focused on finance (31.6%), manufacturing (24.2%), energy (10.6%), information and communication technologies (8.8%), wholesale and retail trade (8.4%) and transportation and warehousing (4.7%).

In 2020, exports of goods generated $224 bn for Türkiye. Imports reached $253 bn[21].

B. Economic data specific to franchising
 
- Historical background
 
The first franchise to open in Türkiye was McDonald's in 1985. Subsequently, other fast-food franchises opened in Türkiye, such as KFC and Pizza Hut[22].
 
Franchising has won over some 60 business sectors in Türkiye[23].
 
- Institution
 
Türkiye has its own association specifically devoted to the franchising sector: the Turkish Franchise Association (UFRAD)[24], founded in 1991. At the time of writing, 130 companies are members of UFRAD.
 
- Trade shows[25]
 
UFRAD organized the Franchise Istanbul Expo from February 6 to 10, 2024. The show brought together different sectors operating in franchising and enabled the conclusion of several business relationships.
 
The Be My Franchise Trade Show for the non-food franchising sectors will take place from April 18 to 21, 2024[26].
 
- Statistics
 
There are no official statistics on the franchising sector in Türkiye.
 
In 2020, it was estimated that the Turkish franchise sector consisted of 3,500 outlets and around 65,000 branches of franchise chains[27].
 
The best-performing franchise sectors in Türkiye are clothing (33% of total franchise activity), retail (27%) and food (24%)[28].
 
In January 2024, Türkiye recorded 1,759 corporate bankruptcies[29]. According to the Turkish Banking Association, 399 indebted companies (their total debt amounted to around $4.4 bn) were able to benefit from financial restructuring[30].
 
- Contract content
 
Franchise fees vary from one franchise to another. On average, franchise fees range from $2,000 to $60,000[31].
 
- Economic impact
 
In 2020, the franchise sector employed around 250,000 people and generated $43 billion[32].
 
- International
 
Some 205 Turkish franchise brands have established themselves abroad[33]. In 2014, 24% of franchises established in Türkiye were foreign brands[34].
 
II. Legal information
 
A. Legal information directly related to franchising
 
- Applicable legislation
 
There is no specific franchise legislation in Türkiye. Franchises are governed by the Civil Code[35], the Code of Obligations[36] and the Commercial Code.[37]
 
UFRAD defines franchising as the result of an ongoing, long-term business relationship, during which the franchisor grants the franchisee the right to use its sign, brand and, more broadly, its intellectual property rights. The franchisor provides its know-how to the franchisee for the management and organization of the business for a certain period and under certain conditions, in return for the payment of a sum of money[38].
 
According to Section 1 of the Code of Obligations, a contract is validly concluded when the parties exchange their intention to enter into the contract. The expression of intent may be explicit or implicit.
 
The Turkish Civil Code specifies that any person of full age, discerning and not incapacitated is deemed to possess full legal capacity. The age of majority is 18 (Sections 10 and 11).  
 
Section 12 of the Code of Obligations specifies that the form of contracts is free, unless otherwise specified by special laws[39]. However, under the Compulsory Use of the Turkish Language by Economic Enterprises Act, Turkish companies are obliged to draw up their contracts in Turkish (Section 1). Foreign companies are not obliged to draw up their contracts in Turkish, but they must use Turkish for their transactions, communications and documents sent to the Turkish authorities (Section 2).
 
- Pre-contractual information
 
The franchisor has no pre-contractual information obligation towards the franchisee.
 
- Contract performance
 
The Code of Obligations specifies that contracts must be performed in good faith. In the absence of a specific provision governing franchise agreements, the parties’ agreement governs mutual obligations, in particular the duration of the agreement, non-competition and confidentiality duties, conditions for early termination, interest on arrears, and dispute settlement procedures (choice of competent jurisdiction or either Turkish or international arbitration body).
 
- Jurisdiction and applicable law
 
Türkiye has ratified the New York Convention[40] facilitating the recognition and enforcement of foreign arbitral awards.
 
Türkiye has also ratified the Vienna Convention governing contracts for the international sale of goods[41]. This Convention has been signed by 89 countries and applies exclusively to contracts for the sale of goods for professional use (Section 2 of the Convention). Only the rights and obligations of the seller and buyer under the international sales contract and its formation are governed by this Convention. The Vienna Convention supersedes national law when the parties have their place of business in States party to the Convention.
 
- Trademarks
 
Trademark law in Türkiye is governed by the Industrial Property Code[42], which came into force in 2017.
 
Application for trademark registration must be made to the Turkish Patent and Trademark Office. Trademark registration provides protection against the use of any sign identical to the trademark on goods or services falling within the scope of the registration. Trademarks will also be protected against the use of any sign identical or similar to a registered trademark and covering goods or services identical or similar to a registered trademark, and therefore likely to create a likelihood of confusion in the mind of the public, including the likelihood of association between the sign and the trademark. Finally, trademarks will be protected against the use of any sign identical or similar to a registered trademark, whether for identical, similar or different goods or services, where the use of such a sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character.
 
Under Section 23 of the Turkish Industrial Property Code, once registered, a trademark is protected for 10 years from the date of application. Protection is indefinitely renewable.
 
However, if the trademark has not been used for 5 consecutive years, protection will be suspended (Section 9 of the Turkish Industrial Property Code).
 
Türkiye is a member of the Madrid System, enabling companies to obtain trademark protection in up to 130 countries by filing a single international application, in a single language, with the World Intellectual Property Organization (WIPO). Under Article 6 of the Madrid Agreement, trademark registration is valid for 20 years.

Türkiye has also signed up to the Paris Convention for the Protection of Industrial Property, which specifies that each contracting State shall grant the same protection in respect of intellectual property to nationals of other contracting States as it grants to its own nationals.

In Turkey, trademark applications can be handled both nationally and through WIPO. Examinations include both formal and substantive aspects. Turkey allows multi-class trademark registrations. Trademarks must be used within five years from the registration date to avoid cancellation.  To develop a franchise in this country, it is advisable to cover "Business assistance relating to franchising" and "retail services" which are both accepted under class 35 by the trademark office, with retail services requiring explicit specification of the goods. Recording a franchising agreement is not compulsory, but franchising agreements can be recorded if they include licensing of the trademark.

B. Peripheral legal data

- Competition law
 
Turkish competition law is governed by the Protection of Competition Act[43].
 
The law on the protection of competition prohibits restrictive practices which have the aim or effect of restricting competition on the market for the goods and services concerned.
 
With regard to contracts, Section 4 of the aforementioned law prohibits:
 
- product price fixing;
- compartmentalizing of goods or services markets and the sharing or control of all types of resources or market elements;
- controlling the volume of supply or demand for goods or services;
- applying different conditions to people of the same standing for equal rights, obligations and acts (except in the case of exclusivity agreements);
- linking the sale of a good or service to the purchase of another good or service.
 
The Turkish Competition Authority has issued a statement on the exemptions applying to vertical agreements[44]. Exempted from the prohibition laid down in the aforementioned Section 4 are agreements entered into by two or more undertakings, operating at different levels of the production or distribution chain, with a view to the purchase, sale or resale of particular goods or services, if they meet the following conditions:
 
- the supplier must not hold more than 30% of the market share in the market in which it supplies the goods and/or services covered by the contract;
- in the case of an exclusive supply contract, the buyer's market share may not exceed 30% when purchasing the goods and/or services covered by the contract;
- vertical agreements enabling the transfer of intellectual property rights will be exempt provided that the intellectual property rights directly concern the use, sale or resale, by the purchaser or the purchaser's customer, of the goods and services constituting the subject matter of the contract, and that the said transfer of intellectual property rights is not the main subject matter of the contract;
- in all cases, to qualifyfor exemption, agreements may not contain provisions imposing the sale price on the purchaser, prohibiting passive sales, or specifying a non-competition obligation for an indefinite period, or exceeding five years.
 
- Personal data
 
The Personal Data Protection Act[45] regulates the use and processing of personal data in Türkiye.
 
Section 3 of the Personal Data Protection Act defines personal data as all identifying or identifiable information relating to a natural person.
 
Personal data must be processed in good faith and updated where necessary. Furthermore, the processing of personal data must be relevant and limited to the purpose of the processing (Section 4).
 
In order to process personal data, the data controller must first obtain the consent of the data subject. However, the consent of the data subject will not be required in the following cases[46]:
 
- legal obligation to process data;
- when the life of the person concerned is at stake;
- where processing is necessary for entering into or performance of a contract to which the data subject is party;
- when the processing is necessary for the controller to fulfil its legal obligations;
- where processing is necessary for the legitimate interests of the controller, provided that such processing does not infringe the fundamental rights and freedoms of the data subject.
 
In particular, the data subject has the right to request correction of his or her personal data, where applicable, and to request the destruction or deletion of his or her personal data (Section 11 of the Personal Data Protection Act).
 
Türkiye has set up the Personal Data Protection Authority to ensure compliance with the Personal Data Protection Act.
 
- Special provisions for foreign investments
 
Foreign investment law is governed by the Foreign Direct Investment Act[47].
 
Section 2 of the Foreign Direct Investment Act defines a foreign investment as the creation by a foreign investor of a company or branch of a foreign company, or the acquisition of shares in a company established in Türkiye.
 
For example, Section 3 of the Foreign Direct Investment Act states that, subject to any exceptions, foreign investors are free to make foreign direct investments in Türkiye, and that they must be treated in the same way as domestic investors.
 
They may also freely transfer abroad:
- net income;
- dividends;
- proceeds from the sale or liquidation of all or part of an investment;
- compensation payments;
- amounts arising from licensing agreements;
- management and other similar agreements, as well as repayments and interest payments arising from foreign loans granted through banks or special financial institutions.

Main websites

- Turkish Franchise Association: https://ufrad.org/en/homepage/;
- Personal data: https://www.kvkk.gov.tr/en/;
- Competition: https://www.rekabet.gov.tr/en;
- Intellectual property: https://www.turkpatent.gov.tr/;
- Legislation: https://www.lawsturkey.com/law/;
- Official statistics institute: https://www.tuik.gov.tr/;
- World Bank data: https://donnees.banquemondiale.org/.

 
[1] Atlas socio-économique des pays du monde, Larousse, 2024 edition
[2] https://donnees.banquemondiale.org/indicator/NY.GDP.MKTP.CD?locations=TR
[3] https://donnees.banquemondiale.org/indicator/NY.GDP.PCAP.CD?locations=TR
[4] https://donnees.banquemondiale.org/indicator/NY.GDP.MKTP.PP.CD?locations=TR
[5] https://donnees.banquemondiale.org/indicator/NY.GDP.PCAP.PP.CD?locations=TR
[6] https://donnees.banquemondiale.org/indicator/NY.GDP.MKTP.KD.ZG?locations=TR
[7] https://donnees.banquemondiale.org/indicator/SE.ADT.LITR.ZS?locations=TR
[8] Unless otherwise stated, the information below is taken from https://www.diplomatie.gouv.fr/fr/dossiers-pays/turquie/presentation-de-la-turquie/
[9] Atlas socio-économique des pays du monde, Larousse, 2024 edition
[10] https://www.touteleurope.eu/pays/turquie/
[11] https://www.touteleurope.eu/pays/turquie/
[12] Atlas socio-économique des pays du monde, Larousse, 2024 edition
[13] https://www.lemonde.fr/economie/article/2022/11/20/en-turquie-l-economie-sur-une-pente-dangereuse_6150780_3234.html
[14] Atlas socio-économique des pays du monde, Larousse, 2024 edition
[15] https://www.la-croix.com/Economie/Turquie-deja-fragile-leconomie-secouee-seisme-2023-03-01-1201257265
[16] Unless otherwise stated, the information below is taken from the Atlas socio-économique des pays du monde, Larousse, 2024 edition.
[17] Unless otherwise stated, the information below is taken from https://www.larousse.fr/encyclopedie/divers/Turquie_activit%C3%A9s_%C3%A9conomiques/187041
[18] Atlas socio-économique des pays du monde, Larousse, 2024 edition
[19] https://data.tuik.gov.tr/Bulten/Index?p=The-Results-of-Address-Based-Population-Registration-System-2020-37210&dil=2
[20] https://www.btrade.ma/fr/observer-les-pays/turquie/investir?url_de_la_page=%2Ffr%2Fobserver-les-pays%2Fturquie%2Fpresentation&
[21] Atlas socio-économique des pays du monde, Larousse, 2024 edition
[22] https://www.observatoiredelafranchise.fr/dossier-franchise/ubifrance-analyse-le-marche-de-la-franchise-en-turquie-750.htm#:~:text=This is%20the%20brand%20of,(KFC)%20and%20Pizza%20Hut.
[23] https://ufrad.org/en/about-the-franchise/
[24] İnönü Caddesi No:40 Florya, Istanbul, Turkey, tel: +90 532 405 28 83, e-mail: info@ufrad.org.tr
[25] https://www.franchiseistanbulexpo.com/en/
[26] Postal address: Yenikapı Avrasya Gösteri ve Sanat Merkezi, Istanbul
[27] https://thefranchisetalk.com/franchise-news/impressive-growth-of-turkeys-franchise-sector/
[28] https://topfranchise.com/international-franchise-opportunities/asian/franchises-in-turkey/
[29] https://fr.tradingeconomics.com/turkey/bankruptcies
[30] https://www.nortonrosefulbright.com/en/knowledge/publications/2a5a6ec4/doing-business-in-turkey-financial-insolvency-and-restructuring
[31] https://topfranchise.com/international-franchise-opportunities/asian/franchises-in-turkey/
[32] https://www.franchise.org/sites/default/files/2022-09/2023%20Franchise%20-%20Turkey.pdf
[33] https://thefranchisetalk.com/franchise-news/impressive-growth-of-turkeys-franchise-sector/
[34] https://www.hg.org/legal-articles/franchising-in-turkey-36507
[35] Law n°4721
[36] Law no. 6098
[37] Law n°6102
[38] https://ufrad.org/en/about-the-franchise/
[39] Law n°805
[40] 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards
[41] United Nations Convention on Contracts for the International Sale of Goods signed at Vienna on April 11, 1980
[42] Law n°6769
[43] Law n°4054
[44] Press release n°2002/2
[45] Law n°6698
[46] Article 5 of the Personal Data Protection Act
[47] Law n°4875