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Termination
The franchise agreement may be drafted for a definite or an indef-
inite term. Under a franchise agreement for an indefinite term, the
agreement may be terminated either (i) by giving a “reasonable notice
period” or (ii) upon the occurrence of a just cause (for instance the
franchisee’s breach of the contract and failure to remedy it within a
reasonable cure period). In the absence of a contractual arrangement
between the franchisor and the franchise dealing with the termination,
the relevant party shall provide an “appropriate” notice period before
the effective date of any contemplated termination. As per the Turkish
doctrine, there is a tendency to apply, by reference; provisions of the
TCC on termination of agency agreements to franchise agreements.
The Turkish Court of Cassation’s decisions are silent on the “reason-
able notice period”. Generally accepted period for prior termination
notice in case of agency contracts with indefinite term is three months.
However, there are also scholars indicating that termination notice for
a franchise agreement should not be less than 6 months
3
.
Franchise agreement with a definite term, shall automatically ter-
minate upon lapse of the contractual term, unless the parties agree on
an automatic renewal system. In any case, any party may rely on occur-
rence of
“just cause”
to immediately terminate the franchise agree-
ment.
If one of the parties terminates the agreement without a just cause,
the other party may request the compensation of its tangible (e.g. direct
damages, loss of profit, return of the products remain in stock, etc.)
and/or intangible damages (e.g. loss of commercial reputation), which
he can prove.
Even though the Turkish Court of Cassation’s decisions are silent
on compensation of royalty fee and portfolio compensation; doctrine
recognize that in case of an unjust termination by the franchisor, a fran-
chisee may, depending on the circumstances, claim the compensation
of the advance royalty fee he paid and the portfolio compensation
4
.
288
NEWSLETTER 2012
3
GÜRZUMAR
, p. 169-172; DURUKAN Tülin; Franchising Systems and the Turkish Practice,
Asil Yayımları, Istanbul – 2006; p. 127-128.
4
GÜRZUMAR
, p. 176
et seq
.