Your Turkish distributor is not a middleman. It’s an asset the law protects against you.

Many foreign companies enter Turkey the easy way: find a good local distributor, hand over exclusivity, and let the relationship grow.

It works. For years, sometimes.

Then the day comes when strategy changes. Buying back the network, switching to a direct subsidiary, changing partners: the reason often has nothing to do with the distributor’s performance.

That is the exact moment companies discover a reality they should have read in the contract, not in a notice of default.

Turkish law protects the distributor, not the supplier.

Article 122 of the Turkish Commercial Code, originally designed for commercial agents, also applies to exclusive distribution agreements and to any continuous contractual relationship granting similar rights. In practice, this means an exclusive distributor in Turkey is entitled to goodwill compensation at the end of the contract, even when it is the supplier who decides to terminate it.

Three conditions trigger this right: the termination is not justified by a fault of the distributor, the supplier continues to benefit from the clientele the distributor built, and payment of the compensation is consistent with equity. In Turkish practice, these three conditions are met more often than companies expect, particularly the third one, which leaves courts wide discretion.

The amount can reach up to five years of profit.

The compensation is capped at the distributor’s average annual profits on the relevant products over the last five years of the contract, or the actual term if shorter. For a distributor who has built a network over ten or fifteen years in a fast-growing market, this cap is anything but theoretical.

The three-month notice period is not negotiable the moment you need it.

Turkish legal practice applies the same notice period to indefinite-term distribution agreements as it does to commercial agency contracts: three months. Terminating faster, without a demonstrable serious cause, exposes the supplier to damages on top of the goodwill compensation.

What actually protects a foreign company is not avoiding these rules. It’s anticipating them when drafting the contract.

A well-drafted post-contractual non-compete clause, a precise and documented definition of what constitutes “transferred” clientele, contractual performance indicators that can later prove a termination for legitimate cause: all of this is negotiated at signature, never after the fact.

Companies that structure their market exit before entering the market don’t pay less when the relationship ends. They know, from day one, what that termination will cost — and they budget for it instead of absorbing it as a shock.

At Bosphorus Transition Partners, we help foreign companies structure their commercial relationships in Turkey, from partner selection through to exit, when exit becomes necessary.