US Franchise Law 2026: Guide for Turkish Franchisors and Franchisees

Franchising represents one of the most structured pathways for Turkish brands to enter the US market and for Turkish entrepreneurs to acquire established US business systems. The US franchise market is the world's largest, with over 800,000 franchise establishments generating more than $800 billion in economic output annually. However, US franchise law is highly regulated and differs fundamentally from Turkish franchise practice.

The Federal Trade Commission (FTC) Franchise Rule governs the offer and sale of franchises in the United States. The Rule requires franchisors to provide prospective franchisees with a Franchise Disclosure Document (FDD) at least 14 calendar days before the franchisee signs any agreement or pays any money.

The FDD must contain 23 specific items of disclosure, including:

• The franchisor's business experience and litigation history
• Initial fees and ongoing royalties
• Estimated initial investment
• Restrictions on products and services
• Territory rights
• Renewal, termination, and transfer provisions
• Financial performance representations (if made)
• Audited financial statements

In addition to the federal FTC Rule, 14 states (including New York and California) require franchisors to register their FDD with the state before offering franchises. Registration states conduct substantive review of FDDs and can require amendments before approving registration.

New York is one of the most rigorous registration states. Turkish franchisors targeting New York must:

• Register their FDD with the New York Department of Law
• Comply with New York's specific disclosure requirements
• Renew registration annually
• File amendments when material changes occur

A Turkish brand entering the US as a franchisor must prepare a compliant FDD before offering any US franchises. Key considerations:

Audited financials: The FDD must include audited financial statements prepared in accordance with US GAAP. Turkish financial statements prepared under IFRS or Turkish accounting standards must be converted.

Litigation disclosure: All pending and prior litigation involving the franchisor, its officers, and its predecessors must be disclosed. Turkish companies with litigation history in Turkey must assess disclosure obligations.

Financial performance representations: If the franchisor makes any claims about actual or potential sales, revenues, or profits (Item 19), these must be substantiated and disclosed. Many Turkish franchisors are accustomed to sharing financial projections informally — this practice is regulated in the US.

Territory: US franchise agreements must clearly define territory rights. Turkish franchisors must decide whether to grant exclusive territories, protected territories, or no territorial protection.

Turkish franchisors entering the US typically choose between:

• Direct franchising: The Turkish franchisor grants franchises directly to US franchisees
• Master franchise: The Turkish franchisor grants a US master franchisee the right to sub-franchise in a defined territory

Master franchise arrangements reduce the Turkish franchisor's direct involvement but require careful selection of the master franchisee and robust contractual protections.

Before franchising in the US, Turkish franchisors must have US trademark registrations (or at minimum pending applications) for their brand. Franchising without US trademark protection exposes the franchisor and franchisees to significant risk.

Turkish entrepreneurs acquiring US franchise rights must carefully review the FDD. Key areas:

Item 19 — Financial Performance Representations: If the franchisor provides financial performance data, analyze it carefully. If no Item 19 is provided, ask why — and be skeptical of informal representations about earnings potential.

Item 20 — Outlets and Franchisee Information: Contact existing and former franchisees listed in Item 20. Their experiences are the most valuable due diligence you can conduct.

Item 21 — Financial Statements: Review the franchisor's audited financials for financial health. A financially weak franchisor may not be able to support its franchisee network.

Termination provisions: US franchise agreements typically give franchisors broad termination rights. Understand the circumstances under which your franchise can be terminated and what happens to your investment.

Turkish nationals who acquire US franchise rights and want to operate the business in the US need appropriate immigration status:

• E-2 Treaty Investor Visa: Available to Turkish nationals making a substantial investment in a US business. Franchise investments can qualify for E-2 status if the investment is substantial and the business is not marginal.
• L-1: If the Turkish franchisee has an existing Turkish business and is transferring to manage the US franchise
• EB-5: For larger franchise investments meeting EB-5 thresholds

Turkish franchisees should explore US financing options:

• SBA loans: The Small Business Administration guarantees loans for qualifying franchise purchases
• Franchisor financing: Some franchisors offer direct financing or have preferred lender relationships
• Turkish bank financing: Some Turkish banks with US operations may finance Turkish nationals' US franchise investments

Our franchise attorneys represent both Turkish franchisors entering the US market and Turkish franchisees acquiring US franchise rights. We prepare and register FDDs, negotiate franchise agreements, advise on territory structures, and guide Turkish franchisees through the acquisition process.

This article is for informational purposes only and does not constitute legal advice. Franchise law is complex and state-specific; please consult qualified franchise counsel before offering or acquiring a franchise.