Dealership and Distribution Agreements

Dealership and distribution agreements are among the "unnamed" contract types not separately regulated by law; it is therefore essential that the contract text fully governs the relationship between the parties.

The Nature of the Dealership/Distribution Relationship

Under these agreements, a manufacturer or supplier grants the dealer or distributor the right to market its products in a specific territory. Unlike an agency agreement, the dealer/distributor acts in its own name and for its own account, and does not hold authority to represent the manufacturer.

Exclusivity Provisions

The contract should clearly set out whether the dealer is granted exclusive sales rights in a specific territory and, if so, whether the manufacturer may work with another dealer in that territory. Exclusivity provisions may also need to be assessed under Law No. 4054 on the Protection of Competition.

Non-Compete Obligations and Minimum Sales Targets

The dealer's obligation not to sell competing products (non-compete) during the term of the contract and for a specified period afterwards, and the sanctions applicable if minimum sales targets are not met, are among the provisions that most frequently give rise to disputes in practice.

The Compensation Risk on Termination

Turkish case law accepts that, where a dealership or distribution agreement is terminated unjustly or before its term, a compensation similar to the goodwill (portfolio) indemnity may be claimed by analogy with the provisions on agency (TTK Art. 122 et seq.). The conditions for this compensation depend on criteria such as the customer base built up by the dealer during the contract term and whether the manufacturer continues to benefit from it afterwards.

Practical Recommendations

Clearly setting out the contract's termination provisions from the outset (notice period, grounds for termination for cause, and whether a post-termination compensation right exists) significantly reduces the risk of later compensation disputes. Before entering into a long-term dealership relationship, it is advisable to have the contract reviewed by a lawyer.

This article is for informational purposes only and does not constitute legal advice. Please contact our team regarding your specific situation.