- Introduction
At the outset, it is useful to note that the business-friendly environment in Turkey attracts quite a lot of attention from entrepreneurs. Turkish national authorities have improved more effective mechanisms by designing new mechanisms over the years. Trading facilitator mechanisms are considered as an important component in the investment system. From that sense, the available article basically aims at examining the potential role of the “direct sale mechanism” instituted by Turkey as a critical contribution to Turkish markets.
In doing this research, Chapter II will attempt to understand the circumstances requiring the need for a newly-born “direct sale mechanism”. Chapter III is intended to analyze recent developments within the jurisdiction of Turkey for the adoption of “direct sale mechanism”. Details about the said mechanism will be investigated by addressing the legal revision to the Law on Consumer Protection Numbered 6502. Core observations about the enforcement of the new system will also be made. And finally the present paper will end with concluding comments on the potential impact of new regulation.
With regard to the methodology, the available paper will completely focus on the nature and potential impact of the new legislative change in Turkey. Therefore the available article is designed as a case study rather than a comparative work.
For the purpose of the present work, “direct sale”is used to refer to selling direct goods and services to the consumer without any assistance by intermediaries.[1] It is useful to indicate at this juncture that the critical feature of direct sale mechanism is the lack of any intermediaries or distributorships between end-users and sellers. [2]
II. Historical Background for the Advancement of Direct Sale Mechanism
It is fundamental to emphasize at the beginning that there has been an ever growing interest in Türkiye [Turkey] from domestic entrepreneurs, foreign businessmen and overseas investors.[3] Indeed, emerging business opportunities[4] and the revised decisions of landmark international organizations on Türkiye [Turkey][5] has a crucial impact upon increasing the scale of such impact.Accordingly, Turkish policy and law-makers make amendments to the Turkish legal framework with the intention of meeting such growing interest in Turkey.
Recent developments in the field of investment have led to a renewed interest in increasing direct trade tools between consumers and sellers. Maximizing the profitability of sellers depends on eliminating all intermediaries and reaching out directly to buyers. A new amendment changing the Law on Consumer Protection Numbered 6502 added a new article for the establishment of a “direct sale mechanism’. The new article came into force as of October 24, 2024. The Law Numbered 7529 revising the Law on Consumer Protection Numbered 6502 came into force after the circuit of Official Gazette dated October 24, 2024.[6]
III. Potential Implications of the Implementation of Direct Sale Mechanism in Turkey
This part of the available study will highlight main points of the legal revision. New Article 47(A) of the Law on Consumer Protection mainly regulates the meaning of direct sale mechanism in Turkey. According to the said Article, direct sale mechanism implies a mechanism in which direct sellers, who are established by a direct sales company and are not employed under an employment contract, but operate as independent representatives, distributors, consultants and similar names in return for benefits such as commissions, bonuses, incentives and rewards by marketing goods or services to consumers. [7]
It is beyond doubt that such description is a comprehensive reference covering the meaning of direct sale and direct seller as well as direct sale mechanism. In addition to that, Article further goes on identifying obligations of companies and rights of consumers.
In terms of direct sale company responsibilities, it is essential to stress that the Article 47 (A) identifies all follow-up obligations for direct sale companies.[8] Indeed, first of all, only capital companies are authorized to act as a direct sale in Turkey. It means that a direct sale company can be established only as a limited liability company and|or a joint stock company.
Second of all, direct sale mechanisms shall not be established based on a pure seller profit aiming at gaining new direct sellers, but shall be based on the sale of goods or services to consumers and should comply with other principles that will be declared by the upcoming regulation.
Last but least, no fee or debt document under the names of renewal, package, fee, membership fee or similar that does not include the goods or services intended to be sold to consumers.[9] It necessarily follows that transparency will be an essential component of Turkish direct sale mechanism.[10]
In terms of consumer rights, the new Article also is intended to formulate direct sale mechanisms respecting consumer rights. First, all consumers are granted the right to be informed properly by the direct seller company for the relevant goods and services. Second, consumers are given the right to withdraw from the contract within thirty days without any reason and without paying any penalty.[11]
IV. Conclusion
Overall, the key objective of the present article was to review the inclusion of direct sale mechanisms into the Turkish regulatory ecosystem. Several attempts from academics have been made to underscore the advantages of the direct sale mechanism so far.[12] There is a growing recognition about underlying benefits of direct sale mechanism including flexibility, convenience, remote work, trade opportunities remotely and high customer satisfaction
Having regard to the above, it is beyond doubt that the revision is so new and it is too early to provide a comprehensive evaluation about all economic and social impact of direct selling mechanisms. Nonetheless, it becomes clear that the amendment is codified by seeking to strike a balance between the rights of consumers and the responsibilities of direct sellers. Additionally, our findings suggest that an upcoming Regulation will pave the way for the full alignment of the direct sale mechanism into Turkish legal framework on the way forward. The Regulation articles must be assessed carefully by all legal practitioners for the way forward.
[1] Concerning a more comprehensive definition, see Robert Peterson and Thomas Wotruba, ‘What Is Direct Selling: Definition, Perspectives, and Research Agenda’ (2013) 16 (4) Journal of Personal Selling & Sales Management 1, 1
[2] With regard to a brief evaluation of distributorship, see Kutlay Telli, Distributor Agreements in Turkey’, Kutlay Telli, ‘Distributor Agreements in Turkey’ (LegalBlog, 24 October 2023) <https://legal.com.tr/blog/genel/distribution-agreements-in-turkey/> accessed 25.10.2023
[3] Kutlay Telli, Handbook for Foreign Entrepreneurs on Turkey Investment Strategies (LEGAL, Istanbul 2023), 1
[4] For a useful evaluation on Türkiye’s investment environment, see also Kutlay Telli, ‘Guidance on Investing in Turkey’ (LegalBlog, 1 February 2023 <https://legal.com.tr/blog/genel/guidance-on-investing-in-turkey-turkiye/>accessed 18 February 2023
[5] See e.g. Kutlay Telli, ‘ Possible Implications of Türkiye’s Removal From Grey List by FATF’ (LegalBlog, 3 July 2024) >https://legal.com.tr/blog/ekonomi/possible-implications-of-turkiyes-removal-from-grey-list-by-fatf/ > accessed 5.7.2024
[6]Official Website of the Official Gazette <https://www.resmigazete.gov.tr/eskiler/2024/10/20241030-4.htm> accessed November 6, 2024
[7]Official Website of the Official Gazette <https://www.resmigazete.gov.tr/eskiler/2024/10/20241030-4.htm> accessed November 6, 2024
[8] Ibid.
[9]Official Website of the Official Gazette <https://www.resmigazete.gov.tr/eskiler/2024/10/20241030-4.htm> accessed November 6, 2024
[10] Relation to the role of direct selling mechanism in increasing transparency, see e.g. Zhongyuan Hao and Li Jiang, ‘Direct Selling by Suppliers Improves System-Wide Information Flow’, (2019) 47 (4) Operations Research Letters 305, 305
[11]Official Website of the Official Gazette <https://www.resmigazete.gov.tr/eskiler/2024/10/20241030-4.htm> accessed November 6, 2024
[12] See inter alia, Robert A. Peterson, Victoria L. Crittenden and Gerald Albaum, ‘On the Economic and Social Benefits of Direct Selling’ (2019) 3 (62) Business Horizons 373, 373.J
Dr. Kutlay Telli
Consultant||Senior Lawyer|| Researcher|| Certified Peer Reviewer
LLM Leicester University Faculty of Law, Leicester, UK
Visiting Scholar Fordham University Faculty of Law, New York, USA
After his graduation from the Faculty of Law in Ankara, he received his second master’s degree from the Leicester University Faculty of Law, UK in 2008. He delivered lectures in Fordham School of Law in the USA. He completed his dissertation research for an associate professor degree in New York. He speaks Turkish, French and English very fluently. He has extensive experience in different branches of public and private international law. He has been engaging in legal matters by working within the framework of national institutions and international organizations such as the United Nations for 20+ years.
He wrote six books and numerous articles in journals with referees (mostly in English) dedicated to effective solutions to the existing and underlying challenges facing the international community. Dr. Telli has a great capacity to produce legal documents, articles, reports and all related contents in English. He plays a considerable role in a number of leading international peer reviewed journals as referee. He also has extensive experience in
negotiation techniques and diplomacy. Dr. Telli has a great deal of knowledge about challenging legal issues particularly through his career pathways in working as a judge in Supreme Judicial Authorities before. Currently, Dr. Telli delivers legal and business consultation to foreign companies on their investment projects in Turkey. His latest book on “Financial Technologies and Law” aims at offering comprehensive observations about emerging risks and challenges associated with the e-payment financial markets.
His latest study on “Handbook for Foreign Entrepreneurs on Turkey Investment Strategies”is dedicated to identifying the key legal requirements for investing in Turkey through the franchising, agency and license agreement or the establishment and registration
of the company.