Turkish franchisees may pay franchise, trademark, royalty, marketing and management fees to foreign brands. Learn when these payments can increase the customs value of imported goods and create additional customs duty exposure.

International franchise structures frequently involve several payments between a Turkish franchisee and a foreign brand owner.

A Turkish company may pay:

• Initial franchise fee;
• Continuing franchise fee;
• Trademark royalty;
• Percentage of turnover;
• Marketing contribution;
• Technology fee;
• Management fee;
• Training fee.

At the same time, the Turkish franchisee may import branded products, equipment, ingredients, packaging or merchandise from the franchisor or an approved foreign supplier.

This creates an important customs valuation question:

Must the franchise payments made to the foreign brand be added to the customs value of imported goods?

The answer is not automatically yes or no.

Under the Turkish customs valuation framework, royalties and licence fees not already included in the price may be added to customs value where they relate to the imported goods and must be paid, directly or indirectly, as a condition of sale. Additions must also be based on objective and quantifiable data.

The correct approach is therefore to analyze each payment separately rather than treating the entire franchise relationship as one customs-value item.

1. The Name “Franchise Fee” Does Not Determine Customs Treatment

A payment does not automatically fall outside customs value merely because the agreement calls it a:

“Franchise Fee.”

Likewise, it does not automatically become dutiable simply because it is paid to the foreign brand owner.

Customs will examine the economic substance.

The critical questions include:

What right or service does the payment cover?

Does it relate to the imported goods?

Is payment required as a condition for obtaining those goods?

2. Separate the Different Franchise Payments

A franchise agreement may contain several economically distinct payments.

For example:

Initial franchise fee: EUR 500,000

Trademark royalty: 5% of turnover

Marketing contribution: 2%

IT fee: EUR 50,000 annually

Training fee: EUR 25,000.

Do not assume that all five payments receive identical customs treatment.

Each should be analyzed independently.

3. Trademark Royalties Create Particular Customs Risk

Suppose a Turkish franchisee imports branded merchandise from the foreign franchisor and pays 5% of Turkish sales for the right to use the same trademark.

This arrangement requires careful customs valuation analysis.

Current Ministry guidance contains specific rules concerning trademark-related royalties, including the relationship between the royalty, the imported merchandise and the buyer’s ability to obtain such goods from suppliers unrelated to the seller.

4. Ask Whether the Fee Relates to Imported Goods

This is the first major test.

Suppose the franchise fee gives the Turkish company rights to:

• Use the foreign trademark;
• Operate stores;
• Use business systems;
• Receive training;
• Access software;
• Receive marketing support.

Only part of the fee may have a connection with imported merchandise.

That distinction matters.

5. Ask Whether Payment Is a Condition of Sale

The second major issue is whether the Turkish franchisee must make the payment in order to purchase the imported goods.

Ask:

Could the Turkish company purchase these goods without entering into the franchise or licence arrangement?

If not, Customs may argue that the payment is connected with the sale of the imported goods.

6. Review the Franchise Agreement and Supply Agreement Together

Do not review only the franchise contract.

Analyze:

Franchise agreement

Trademark licence

Supply agreement

Approved supplier agreement

Distribution agreement

together.

The commercial relationship may become clear only when all documents are read as a package.

7. Cross-Termination Clauses Can Be Important

Suppose the franchise agreement states:

If the franchise agreement terminates, the Turkish company can no longer purchase branded goods.

That contractual link may become relevant when Customs considers whether franchise or royalty payments constitute a condition associated with the sale of imported goods.

8. Mandatory Sourcing Creates Greater Risk

Many franchise systems require franchisees to purchase:

• Ingredients;
• Packaging;
• Uniforms;
• Equipment;
• Branded products;

from the franchisor or approved suppliers.

The more closely the franchise payment and mandatory sourcing system are connected, the more carefully the customs valuation consequences should be examined.

9. Sourcing Freedom Can Be Important

Current Ministry guidance gives particular attention, in the trademark context, to whether the buyer is free to obtain the relevant goods from suppliers unrelated to the seller.

Therefore, determine whether the Turkish franchisee genuinely has alternative sourcing rights.

10. “Approved Supplier” Does Not Always Mean Independent Sourcing

A contract may technically allow purchases from other suppliers.

But ask:

• Who approves them?
• Can approval be refused?
• Are approved suppliers related to the franchisor?
• Does the franchisor control product specifications?
• Can the franchisee realistically source elsewhere?

Customs may examine commercial reality rather than contractual wording alone.

11. Initial Franchise Fees Require Separate Analysis

An initial franchise fee may cover:

• Market entry;
• Territorial rights;
• Business model;
• Operating manuals;
• Training;
• Store-opening assistance;
• Trademark rights.

It should not automatically be added to imported goods.

The company should determine which rights and services the initial payment actually purchases.

12. Avoid Treating a Mixed Franchise Fee as One Item

Suppose a EUR 1 million initial fee covers:

40% territorial rights

20% trademark licence

20% training

20% store-opening services.

If Customs valuation relevance exists only for a portion of the payment, the possibility of a supported allocation should be examined rather than automatically adding the entire EUR 1 million.

13. Allocation Requires Objective Evidence

Customs-value additions should be based on objective and quantifiable information.

Therefore, any allocation should be supported by evidence such as:

• Contractual schedules;
• Separate pricing;
• Cost calculations;
• Independent valuations;
• Accounting records;
• Comparable agreements.

Artificial percentages created only after an audit begins are much weaker.

14. Continuing Franchise Fees Need Careful Review

A recurring franchise fee may be calculated as:

6% of Turkish turnover.

The fee might compensate the franchisor for an entire business system rather than simply for imported products.

The company should determine whether and to what extent the fee relates to imported merchandise.

15. Turnover-Based Fees Are Not Automatically Dutiable

A payment calculated according to sales revenue does not automatically become part of customs value.

The legal nature and commercial purpose of the payment remain important.

However, a sales-based calculation can attract Customs’ attention where the franchisee also imports the branded products generating that revenue.

16. Imported Merchandise and Locally Sourced Goods Should Be Separated

Suppose a Turkish franchise restaurant pays 5% of total sales to the foreign franchisor.

Its products contain:

• Imported branded ingredients;
• Locally purchased vegetables;
• Domestic meat;
• Locally produced packaging.

It would be inappropriate to assume automatically that the entire franchise fee relates exclusively to imported merchandise.

A detailed allocation analysis may be necessary.

17. Locally Manufactured Products Also Matter

A retail franchise may sell:

Imported products: 30%

Products manufactured in Turkey: 70%.

A royalty calculated on total sales should not automatically be allocated entirely to imported goods.

The customs analysis should identify the portion genuinely connected with the imports.

18. Marketing Contributions Should Be Analyzed Separately

Franchisees frequently contribute to a global or regional advertising fund.

A marketing payment may finance:

• Advertising campaigns;
• Social media;
• Sponsorships;
• Brand development;
• Promotional materials.

Do not automatically treat such expenditure as a royalty.

Determine the contractual and economic substance.

19. The Buyer’s Own Marketing Activities May Be Excluded

Current Ministry guidance states that activities undertaken by the buyer on its own account, including certain marketing activities, are not treated merely as indirect payments to the seller and are not automatically added to customs value.

This distinction can be important in franchise structures.

20. Management Fees Need Their Own Analysis

A foreign franchisor may charge annual management fees for:

• Operational consulting;
• Reporting;
• Store supervision;
• Human-resources systems;
• Financial management.

A genuine management service should not automatically be treated as consideration for imported goods.

But the company should maintain evidence that the service actually exists and is separately priced.

21. Training Fees May Be Independent

Training may concern:

• Store employees;
• Managers;
• Customer-service procedures;
• Health and safety;
• Brand standards.

Where genuine training is independently provided, its customs treatment should be analyzed separately from payments connected with imported goods.

22. Technology and Software Fees Can Be Different Again

Modern franchise systems often require payment for:

• Reservation systems;
• Point-of-sale software;
• Mobile applications;
• Inventory systems;
• Customer databases.

Do not automatically include these payments in imported-goods value merely because the technology is supplied by the franchisor.

The connection with the imported merchandise must be established.

23. Equipment Imports Can Create a Separate Valuation Issue

A franchisee may be required to import:

• Kitchen machinery;
• Retail fixtures;
• Signage;
• Specialist equipment.

Determine whether any franchise or licence payment relates specifically to that equipment.

A payment relating to the overall business system should not automatically be allocated entirely to imported machinery.

24. Branded Packaging Can Also Create Questions

Franchise systems frequently require branded:

• Boxes;
• Bottles;
• Cups;
• Bags;
• Labels.

If these are imported, Customs may examine whether trademark payments relate to those goods.

Product-specific analysis is preferable to broad assumptions.

25. Payments to the Franchisor and Seller May Be Closely Connected

The highest-risk scenario may involve:

Foreign franchisor = intellectual-property owner = seller of imported goods.

In that structure, Customs may scrutinize whether the franchise or royalty payment forms part of the economic consideration for obtaining the goods.

26. A Different Royalty Recipient Does Not Automatically Remove the Risk

Suppose:

Company A: foreign franchisor.

Company B: related foreign supplier.

Company C: Turkish franchisee.

The Turkish company pays Company A a franchise royalty and Company B for imported products.

The fact that the payments go to different group companies does not automatically determine the customs result.

The contractual and control relationships should be examined.

27. Payments to Unrelated Third Parties Require Different Analysis

Current Ministry guidance addresses royalties paid to third parties and considers whether the seller or a person related to the seller requires the buyer to make the payment.

Therefore, third-party arrangements should not simply be treated as if the payment were made directly to the foreign seller.

28. Distribution and Resale Rights Are Particularly Important

The customs valuation rules distinguish certain payments made for distribution or resale rights.

Where such payment is not a condition of the sale for export to Turkey, Ministry guidance states that it is not added merely as a royalty or licence payment.

This can be particularly relevant to master franchise and territorial arrangements.

29. Reproduction Rights Receive Different Treatment

Payments for the right to reproduce imported goods in Turkey are also treated separately under the customs valuation framework.

Companies should therefore identify the exact intellectual-property right being licensed rather than using the general expression “franchise rights.”

30. Timing of Payment Does Not Resolve the Question

A franchise fee may be paid:

• Before importation;
• Monthly;
• Quarterly;
• Annually;
• After year-end.

Timing alone does not establish whether the payment belongs in customs value.

The underlying relationship with the imported goods is more important.

31. What If the Fee Becomes Known Only After Importation?

This commonly occurs where royalties are calculated as a percentage of sales.

Ministry guidance states that where an includable royalty or licence fee becomes determinable only after importation, the exceptional value declaration mechanism under the Customs Regulation may be relevant.

Companies with recurring franchise imports should consider this issue prospectively.

32. Do Not Wait for a Customs Audit

A franchisee should review customs valuation when the franchise structure is established, not years later when Customs discovers the payments in accounting records.

This is particularly important for recurring percentage-based fees.

33. Customs Can Discover Franchise Payments From Accounting Records

During a post-clearance review, Customs may identify accounts such as:

Franchise Fees

Trademark Royalties

Licence Expenses

Brand Fees

Management Fees.

The authority may then compare those payments with historical import declarations.

34. Prepare a Payment Matrix

For every payment to the foreign brand, identify:

Payment	Recipient	Purpose	Imported Goods Connection
Franchise fee	Franchisor	Business system	Review
Trademark royalty	Brand owner	Trademark use	High relevance
Marketing fund	Franchisor	Advertising	Separate analysis
IT fee	Technology company	Software	Separate analysis
Training fee	Franchisor	Staff training	Separate analysis

This makes the customs review manageable.

35. Map Imported Goods Against Each Payment

Identify which payments potentially relate to:

• Branded finished goods;
• Ingredients;
• Equipment;
• Packaging;
• Spare parts;
• Locally sourced products.

One franchise fee may have different implications for different categories.

36. Develop a Defensible Allocation Methodology

Where a payment partly relates to imported goods and partly to other rights or activities, the Ministry’s royalty guidance permits appropriate allocation based on objective and concrete data.

Possible allocation measures include:

• Imported-goods turnover;
• Product-specific sales;
• Number of imported units;
• Contractually separated rights;
• Independently valued services.

37. Avoid Double Counting

A royalty or brand fee may already be incorporated into the supplier’s product price.

Before making any customs-value addition, determine whether the economic amount has already been included.

The same value should not be counted twice.

38. Review Related-Party Pricing Too

Many franchise structures involve related parties.

If the Turkish franchisee purchases goods from a group company at a discounted price while paying substantial franchise fees to another group company, Customs may examine the entire structure.

The company should therefore coordinate:

Transaction-value analysis

with

royalty/franchise-fee analysis.

39. Historical Exposure Can Become Significant

Suppose a Turkish franchisee imported EUR 50 million of branded merchandise over five years while paying substantial annual royalties that were never analyzed for customs purposes.

A later audit can create material exposure.

Prepare a year-by-year review rather than waiting for individual assessments.

40. Calculate Exposure Declaration by Declaration

Where a payment is determined to affect customs value, allocate it appropriately and review:

• Relevant customs declaration;
• GTIP;
• Origin;
• Customs duty;
• Additional customs duty;
• Other value-dependent import charges.

Different imported products may generate different consequences.

41. Do Not Automatically Correct Every Historical Declaration

Discovery of franchise payments does not establish that every payment should have been included.

First determine:

what the payment covers

→ whether it relates to imported goods

→ whether it is a condition of sale

→ whether allocation is required

→ whether it was already included.

Only then should correction strategy be considered.

42. Penalties Require Separate Analysis

Even where Customs concludes that a franchise-related payment should increase customs value, the administrative penalty should be examined independently.

Relevant issues may include:

• Contractual structure;
• Information available when declarations were filed;
• Whether the amount was determinable;
• Whether the payment was disclosed;
• Whether the dispute concerns genuine legal characterization.

Additional duty and penalty should not simply be treated as one question.

43. Protect Formal Objection Deadlines

If Customs issues an additional assessment or penalty, immediately record:

• Notification date;
• Amount;
• Valuation methodology;
• Legal basis.

Do not wait for the foreign franchisor to approve the response before protecting the Turkish importer’s procedural rights.

44. Build a Franchise Customs Compliance File

The file should contain:

• Franchise agreement;
• Trademark licence;
• Supply agreement;
• Approved supplier arrangements;
• Royalty calculations;
• Marketing agreements;
• Management-service agreements;
• Payment records;
• Accounting entries;
• Imported-product lists;
• Customs declarations;
• Allocation methodology.

This allows the company to respond rapidly during a customs audit.

45. Immediate Action Plan for Foreign Franchise Structures

When a Turkish franchisee imports goods and makes payments to a foreign brand:

List every payment

→ identify what each payment purchases

→ identify the recipient

→ review franchise and supply agreements together

→ identify imported goods connected with the payment

→ test whether payment is a condition of sale

→ review sourcing restrictions

→ separate royalties from marketing, management and technology services

→ separate imported from locally sourced goods

→ develop objective allocations

→ check whether amounts were known at importation

→ review exceptional value procedures

→ calculate historical exposure

→ analyze penalties separately

→ protect challenge deadlines.

25-Point Franchise Customs Valuation Checklist

1. Franchise agreement.
2. Trademark licence.
3. Supply agreement.
4. Approved supplier agreement.
5. Initial franchise fee.
6. Continuing franchise fee.
7. Trademark royalty.
8. Marketing contribution.
9. Management fee.
10. Technology fee.
11. Training fee.
12. Payment recipient.
13. Relationship with seller.
14. Mandatory sourcing clauses.
15. Alternative sourcing rights.
16. Cross-termination provisions.
17. Imported product list.
18. Locally sourced product list.
19. Royalty calculation.
20. Accounting records.
21. Bank payments.
22. Allocation methodology.
23. Historical customs declarations.
24. Additional customs exposure.
25. Penalty and objection analysis.

Frequently Asked Questions

1. Are all franchise fees included in customs value in Turkey?

No. Each payment must be analyzed according to its substance. For royalties and licence fees, the connection with the imported goods and whether payment is a condition of sale are central requirements.

2. Is a trademark royalty paid to the foreign franchisor automatically dutiable?

No. Trademark royalties are subject to specific conditions. Among the relevant considerations are whether the imported goods are marketed under the trademark and whether the buyer has genuine freedom to source the goods from unrelated suppliers.

3. What if the franchise fee covers training and business know-how as well as trademark rights?

The different components should be identified. Where only part relates to imported goods, a defensible allocation based on objective evidence may be appropriate.

4. Are marketing fees automatically included?

No. Genuine marketing payments require separate analysis. Ministry guidance also distinguishes certain activities undertaken by the buyer on its own account from payments forming part of customs value.

5. What if the Turkish franchisee must buy products from the foreign franchisor?

Mandatory sourcing can strengthen the connection between the licence arrangement and the imported goods and should therefore be analyzed carefully.

6. What if the franchisee can buy from unrelated suppliers?

That can be particularly relevant in the trademark royalty analysis. The contractual right should also reflect genuine commercial sourcing freedom.

7. What if the franchise fee is calculated after importation?

Later calculation does not automatically exclude an otherwise includable payment. Where the relevant royalty amount becomes known only after importation, exceptional value procedures may be relevant.

8. Are territorial distribution rights included in customs value?

Not automatically. Payments for distribution or resale rights are treated differently where they are not a condition of the sale for export to Turkey.

9. Can Customs investigate earlier franchise imports?

Yes. Franchise and royalty payments identified during a post-clearance review can lead Customs to examine historical import declarations, subject to the applicable procedural framework.

10. What should an international franchise system do before importing into Turkey?

Map the entire payment structure before the first import. The company should distinguish franchise rights, trademark royalties, marketing, technology, management and training payments; identify which payments relate to imported goods; review mandatory sourcing arrangements; and establish an objective customs valuation methodology before substantial historical exposure develops.

Client-Focused Legal Support for Franchise Customs Valuation in Turkey

International franchise customs matters can involve:

Franchise fees

Trademark royalties

Foreign brand payments

Mandatory sourcing

Customs valuation

Related-party imports

Exceptional value declarations

Post-clearance audits

Additional customs duties

and customs penalties.

Fırat Fesih Kaya Law Office assists international franchisors, foreign brand owners, multinational groups and Turkish franchisees where franchise, trademark or licence payments may affect the customs value of imported goods in Turkey.

Lawyer Fırat Fesih Kaya provides legal assistance in reviewing franchise and supply agreements, analyzing foreign brand payments, determining whether royalties and licence fees should be included in customs value, developing allocation methodologies, reviewing historical declarations, and challenging additional customs assessments and penalties.

Phone: +90 312 434 22 22
Mobile: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey