"If this bill is passed, it will cause serious damage to economic and trade ties," Rifat Hisarciklioglu, the head of the Union of Chambers and Commodity Exchanges of Turkey (TOBB), told AFP.
If French lawmakers pass the bill on Thursday, there was a risk of Turks boycotting French products to the detriment of the 960 French firms based in Turkey.
"It is unthinkable for TOBB to initiate such a movement, French companies are among our members and we also protect their interests ... But Turkey's population is young and boycott calls could surface on social networks," Hisarciklioglu said.
According to official figures, bilateral trade soared by 17 percent in 2010 to reach €11.6 billion euros ($15.1 billion).
Boycott calls were issued when the French parliament first passed a law to recognize the Armenian genocide in 2001. The movement was poorly heeded but French firms were snubbed for several major state tenders.
Hisarciklioglu said there was even more to lose for France now that Turkey -- which recorded a growth rate averaging 9.6 percent over the first nine months of 2011 -- was the world's 17th economy and a prime investment destination.
If the law is passed as expected, anyone in France who publicly denies the genocide could be jailed for up to a year and fined €45,000.
Armenia says up to 1.5 million of its people were killed during World War I by forces of Turkey's former Ottoman Empire.
Turkey rejects the term genocide and says between 300,000 to 500,000 Armenians, and at least as many Turks, died in combat or of starvation when Armenians rose up and sided with invading Russian forces.
Most historians agree that between 500,000 and 1.5 million Armenians died in a series of massacres and deportations from Asia Minor in the Ottoman Empire in 1915 and 1916.
Relations have also been strained by French President Nicolas Sarkozy's opposition to Turkey's bid to join the European Union.