Differences Between Exclusive Distributorship And Agency: An Evaluation Under The Turkish Commercial Code

Ⅰ. Introduction

In commercial practice, various legal structures are preferred for the distribution of goods and services. Among the most commonly used models are “exclusive distributorship” and “agency”. These two models, regulated under the Turkish Commercial Code No. 6102 (“TCC”) current as of 27.02.2025, lead to different legal consequences in terms of their implementation and the rights and obligations they confer upon the parties. Therefore, selecting the appropriate model is of great importance for the parties involved. This article examines the concepts of exclusive distributorship and agency within the framework of the TCC and highlights the key differences between them.

ⅠⅠ. Concepts of Exclusive Distributorship and Agency

1. Exclusive Distributorship

Exclusive distributorship is a distribution model based on a contract between a supplier and a distributor, whereby the distributor is granted the exclusive right to sell the supplier’s products in a specific region or market. The exclusive distributor operates as an independent merchant in its own name and on its own account. The relationship between the supplier and the distributor is generally governed by a “distribution agreement”. Under this agreement, the exclusive distributor executes all sales within the designated territory and directly earns profits from such sales.

Exclusive distributorship agreements often include an exclusivity clause. This clause grants the distributor the sole right to sell the supplier’s products in a specific region or customer group, thereby transferring the sales activities in that area exclusively to the distributor. However, the duration of the agreement may be determined based on the distributor’s performance and may be subject to certain obligations.

2. Agency

Pursuant to Article 102 of the TCC, an agent is defined as a person authorized to engage in transactions concerning a commercial enterprise in a specific location or region on a continuous basis, either in the name and on behalf of a merchant or by acting as an intermediary in such transactions.

Under the TCC, agency is classified into two types:

• Intermediary Agent: Does not directly conclude contracts on behalf of the merchant but facilitates the contracting process.
• Agent Authorized to Conclude Contracts: Has the authority to conclude contracts directly in the name and on behalf of the merchant.

Agents generally earn commissions based on the transactions they facilitate; thus, they do not directly generate profit from the transactions themselves. The relationship between the merchant and the agent is long-term and continuous. Accordingly, agency agreements include mutual obligations, particularly regarding how the agent will conduct marketing activities.

3. Key Differences Between Exclusive Distributorship and Agency

The fundamental differences between exclusive distributorship and agency are illustrated in the table below:

ⅠⅠⅠ. Differences Between Exclusive Distributorship and Agency Agreements

Agency agreements, regulated under Articles 102 et seq. of the TCC, are often confused with exclusive distributorship agreements due to their similar elements.

In an exclusive distributorship agreement, the distributor purchases the goods from the supplier and sells them in its own name and on its own account. In contrast, an agent does not operate on its own account; rather, it either facilitates transactions or directly enters into contracts on behalf of the merchant. Additionally, exclusivity is a mandatory element of an exclusive distributorship agreement, whereas in agency agreements, exclusivity is not obligatory and may be excluded by contractual provisions.

Furthermore, while an agent receives a commission for its services, an exclusive distributor does not receive direct compensation from the supplier. The exclusive distributor’s profit is derived from the margin between the purchase and sale prices of the goods. Lastly, the agent’s operational freedom and independence are more restricted compared to the exclusive distributor. The merchant retains a limited right to instruct the agent, whereas the exclusive distributor acts independently in purchasing and selling goods.

According to the decision of the 19th Civil Chamber of the Turkish Court of Cassation, dated November 3, 2003 (Case No. 2003/1710, Decision No. 2003/10859):

“Unlike an agent, an exclusive distributor purchases goods manufactured by the supplier in its own name and on its own account and sells them within its designated exclusive territory. In this sense, the exclusive distributor has no right or authority to represent the supplier. In other words, the exclusive distributor cannot operate on behalf of the supplier.”

Ⅳ. Conclusion and Evaluation

Exclusive distributorship and agency are two widely used commercial models that differ significantly in terms of legal status. While an exclusive distributor acts as an independent merchant, an agent transacts on behalf of a merchant, leading to different legal responsibilities.

In an exclusive distributorship model, the distributor assumes all commercial risks, whereas in agency, the risk is largely borne by the merchant. Agents operate on a commission basis, earning a percentage from transactions, while exclusive distributors generate profit from the difference between purchase and sale prices.

The TCC explicitly regulates agency relationships, whereas it does not provide specific provisions regarding exclusive distributorship. However, in practice, exclusive distributorship relationships are governed by the TCO and distribution agreements concluded between the parties.

Ultimately, parties should determine their preferred model based on their business structure and expectations. Clearly defining obligations, particularly concerning competition law and contract termination, is crucial to preventing potential legal disputes.