Distributor Agreement

Unlike the commercial agent, the distributor (Turkish: distribütör) is not expressly regulated under the Turkish Commercial Code (TCC). Instead, it is considered an atypical contract type shaped by case law, legal doctrine, and contractual practice. In a distribution agreement, the distributor assumes the sale of the manufacturer’s or supplier’s products or services at its own risk.

Contents

• What is a Distributor?
• What are the characteristics of a Distributor?
• What are the obligations of a Distributor?
• What are the rights of a Distributor?
• When is the use of a Distributor economically beneficial?

What is a Distributor?

A distributor is an independent legal or natural person who purchases goods or services from a manufacturer or supplier in its own name and on its own account in order to resell them within a specific territory or market segment.

Unlike a commercial agent, the distributor does not mediate contracts in the name of the company but acts as a contracting party directly towards the end customers.

What are the characteristics of a Distributor?

The main characteristics of a distributor are as follows:

1. Contractual basis: The relationship is based on a distribution agreement, largely subject to the principle of party autonomy. Since distributors are not regulated by law, unlike commercial agents, concluding a written contract is particularly crucial.
2. Own risk and account: The distributor purchases products from the manufacturer/supplier in its own name and on its own account and bears the risk for sales, storage, and default of payment.
3. Independence: The distributor is not an employee but an independent entrepreneur.
4. Territorial allocation and exclusivity: Distribution agreements often include territorial assignments and, where applicable, exclusivity rights for distribution in a specific region.
5. Long-term cooperation: Distribution agreements are typically intended for continuous and long-term cooperation.

What are the obligations of a Distributor?

The obligations of the distributor arise from the distribution agreement, but the typical obligations are generally as follows:

• Purchase and sales obligations: The distributor usually commits to purchasing minimum quantities and actively promoting sales in the distribution territory as per the manufacturer’s/supplier’s requirements.
• Information obligations: In practice, distributors are typically required to regularly inform/ report the manufacturer/supplier about market conditions, customer demands, and competitive developments.
• Non-compete obligation: Agreements often include clauses prohibiting the distributor from selling competing products without the manufacturer’s/supplier’s consent.
• Advertising measures: Distributors are frequently required to conduct advertising and marketing activities for the products.
• Payment obligations: The distributor is obliged to properly pay for the purchased goods and bear the economic risk of their resale.

What are the rights of a Distributor?

The rights of the distributor also arise from the distribution agreement, but typically include:

• Right of distribution in the territory: The distributor receives an exclusive or non-exclusive right to distribute in a specific area.
• Profit margin: Since the distributor sells products in its own name and on its own account, it is entitled to the margin between the purchase and resale price.
• Right to information and support: The distributor may request that the manufacturer/supplier provide all necessary information, product documentation, and, where applicable, training and marketing support.
• Compliance with agreed terms: The distributor has the right to insist on agreed conditions regarding pricing, delivery deadlines, and warranties.
• Exclusivity: If contractually agreed, the supplier may not appoint additional distributors in the same territory.
• Compensation claim for exclusive distributors upon termination: Article 112 TCC, which regulates the compensation claim of commercial agents, also applies to exclusive distributors under paragraph 5 of this provision. Accordingly, upon termination of the agreement, the exclusive distributor has a compensation claim if (i) the manufacturer/supplier continues to benefit substantially from customers acquired by the distributor even after termination, (ii) the distributor loses the right to remuneration for transactions with such customers that would have been concluded if the contract had continued, and (iii) under the circumstances, the payment of compensation is equitable. However, the claim does not apply if the distributor terminates the contract without cause attributable to the manufacturer/supplier, or if the manufacturer/supplier terminates the agreement for just cause due to the distributor’s fault.

When is the use of a Distributor economically beneficial?

Working with a distributor is particularly beneficial when a company:

• wishes to distribute its products in Türkiye without setting up its own personnel or infrastructure locally,
• seeks strong, long-term market presence with the distributor’s own sales and service infrastructure,
• does not want to bear market risks (storage, financing, sales risks) itself,
• aims to benefit from local networks, customer relationships, and market knowledge,
• requires a flexible and scalable sales structure with minimal administrative effort,
• wants to “test” the market before establishing its own branch or subsidiary.

Legal support on Distributor Agreement in Türkiye
 

The points above provide only an overview in the field of distributorship. For individual advice, please contact our law firm directly. 

Do you have another concern in the area of corporate law? Find out more about our corporate services portfolio.