Selling a franchised business involves more than finding a buyer and agreeing on a price.
The business sale, franchise transfer, franchisor approval and any lease arrangements generally need to work together so the buyer can take over the business and operate within the franchise system.
This guide explains how to sell a franchise business in Australia, including the transfer process, franchisor consent, sale documentation and some of the requirements under the current Franchising Code.
Table of Contents
- What Are You Actually Selling?
- Start With the Franchise Agreement
- How the Franchising Code Applies to a Transfer
- Franchisor Consent
- Choosing and Preparing the Buyer
- The Business Sale Agreement
- Lease and Premises Arrangements
- Preparing for Buyer Due Diligence
- Coordinating Completion
What Are You Actually Selling?
The first question is what transaction is actually taking place.
This guide deals with a franchisee selling an existing franchised business to a buyer. It is different from a franchisor selling an entire franchise system.
A franchised business sale may involve:
- business assets;
- goodwill;
- stock;
- equipment;
- intellectual property used by the business;
- employees;
- a lease or right to occupy premises;
- supplier or service contracts; and
- the buyer obtaining the right to operate under the franchise system.
Buying the business assets does not automatically give the buyer the right to operate as a franchisee.
The franchise agreement and franchisor’s transfer process therefore need to be considered alongside the business sale.
Start With the Franchise Agreement
Before agreeing to sell, review the existing Franchise Agreement and any variations.
In particular, check provisions dealing with:
- transfer or assignment;
- franchisor consent;
- change of control;
- buyer eligibility;
- training requirements;
- transfer fees;
- amounts that must be paid before transfer;
- existing breaches;
- personal guarantees;
- restraints;
- lease arrangements; and
- documents the incoming franchisee must sign.
The sale structure can also make a difference.
An asset sale and a sale of shares in the franchisee company are legally different transactions. A change in company ownership may still trigger change-of-control provisions under the Franchise Agreement.
You can read more about Rise Legal’s franchise legal services.
How the Franchising Code Applies to a Transfer
Australian franchising is regulated by the Competition and Consumer (Industry Codes—Franchising) Regulations 2024.
The current version is Compilation No. 1, compiled on 21 October 2025.
The process depends partly on how the incoming franchisee will take over.
Transfer of the Existing Franchise Agreement
If the existing Franchise Agreement is being transferred to the buyer and the buyer is not entering into a new Franchise Agreement with the franchisor, section 24 of the Code applies.
The franchisor must give the prospective franchisee prescribed documents, which can include:
- a copy of the existing Franchise Agreement;
- documents the buyer must sign to give effect to the transfer;
- applicable lease or occupancy documents;
- the Disclosure Document, unless an applicable opt-out provision is validly used; and
- a copy of the Franchising Code.
The franchisor must not give consent to the transfer before the end of the applicable 14-day period after the required documents are provided.
If earnings information is provided later and before the transfer occurs, that can affect when the 14-day period begins.
Buyer Entering Into a New Franchise Agreement
Different provisions apply if the transfer involves the buyer entering into a new Franchise Agreement with the franchisor.
In that situation, section 23 of the Code applies to the documents and consideration period rather than the transfer process in section 24.
This distinction should be identified early because it affects the paperwork and timing of the transaction.
Franchisor Consent
Section 48 of the Franchising Code allows a written request to be made for the franchisor’s consent to transfer a Franchise Agreement.
The request must include the information the franchisor would reasonably require and expect in order to make an informed decision.
The franchisor can request further relevant information where needed.
Can the Franchisor Refuse Consent?
The Code provides that a franchisor must not unreasonably withhold consent to the transfer.
Section 49 identifies circumstances in which withholding consent may be reasonable, including where:
- the proposed buyer is unlikely to meet the financial obligations under the Franchise Agreement;
- the buyer does not satisfy a reasonable transfer requirement;
- the buyer does not meet the franchisor’s selection criteria;
- the buyer will not agree in writing to comply with the franchisee obligations;
- the existing franchisee has not paid, or made reasonable provision to pay, money owing to the franchisor; or
- the existing franchisee has not remedied a breach of the Franchise Agreement.
The 42-Day Rule
There is also an important response period.
If the franchisor does not advise in writing that it refuses consent within 42 days after the applicable starting point under section 49, consent can be taken to have been given.
If the franchisor requests further information, the 42-day period is calculated by reference to the date the last of that information is provided.
Where consent is expressly given, section 49 also contains provisions concerning revocation of that consent.
Choosing and Preparing the Buyer
The buyer needs to satisfy more than the seller’s commercial requirements.
The franchisor may assess matters such as:
- financial capacity;
- business experience;
- operational capability;
- training requirements;
- character or suitability criteria;
- the proposed ownership structure; and
- compliance with the franchisor’s usual selection criteria.
It can therefore be useful to understand the franchisor’s requirements before committing to a buyer or setting an inflexible completion date.
The Business Sale Agreement
The Business Sale Agreement and franchise transfer arrangements should be prepared so they work together.
Depending on the transaction, the sale agreement may deal with:
- the purchase price;
- deposit;
- assets included in the sale;
- stock;
- employees;
- customer deposits or prepaid amounts;
- intellectual property;
- PPSR security interests;
- restraints;
- training and handover;
- lease arrangements;
- franchisor consent;
- conditions precedent; and
- completion arrangements.
If completion depends on franchisor consent, the sale agreement should deal appropriately with that condition.
See our business sales and purchases services.
Lease and Premises Arrangements
Many franchised businesses operate from leased premises.
The lease does not necessarily transfer automatically when the business is sold.
Depending on the arrangement, the transaction may require:
- landlord consent;
- assignment of an existing lease;
- a new lease;
- assignment of an occupancy right;
- replacement guarantees or security deposits; or
- other documentation.
The franchise transfer and lease arrangements should be coordinated because the buyer may need the right to occupy the premises before the business can be handed over.
Where the franchisor or an associate is involved in the lease or occupancy arrangement, the Franchising Code also contains specific document and disclosure obligations.
Preparing for Buyer Due Diligence
A buyer will commonly undertake due diligence before committing to a business purchase.
A seller may need to gather documents such as:
- the Franchise Agreement and variations;
- relevant franchise disclosure documents;
- financial information;
- the lease and related premises documents;
- asset lists;
- equipment information;
- employee information;
- supplier agreements;
- material customer or service contracts;
- licences and permits;
- PPSR information; and
- other records relevant to the business.
Confidentiality obligations should be considered before sensitive information is provided to a prospective buyer.
Updated Disclosure Documents
Under sections 32 and 33 of the Franchising Code, an existing franchisee may generally request an updated Disclosure Document once every 12 months.
Where a valid request is made, the franchisor must update the document in accordance with the Code and provide it within two months of the request.
This is separate from other disclosure obligations that may apply directly to a prospective franchisee as part of the transfer.
Statements Required Under the Code
The Franchising Code also contains requirements concerning statements that must be received by the franchisor before certain franchise transactions proceed.
Under section 26, the franchisor must generally receive the prescribed written statement from the franchisee or prospective franchisee confirming that the person has received, read and had a reasonable opportunity to understand the Disclosure Document and the Code, unless an applicable opt-out provision applies.
The precise requirements depend on the structure of the transaction.
Coordinating Completion
Before the transaction completes, check that the relevant parts of the deal are ready to occur together.
This may include confirming:
- franchisor consent;
- any conditions attached to that consent;
- execution of franchise transfer or replacement documents;
- lease assignment or new occupancy arrangements;
- payment of the purchase price;
- transfer of business assets;
- release or discharge of relevant PPSR registrations;
- employee arrangements;
- handover and training; and
- transfer of keys, records, accounts and other operational items.
The completion date should allow enough time for the approvals, documentation and other conditions required by the transaction.
Legal, Accounting and Tax Advice
Different advisers have different roles in a franchise sale.
A commercial lawyer can advise on matters such as:
- the Business Sale Agreement;
- the Franchise Agreement;
- transfer conditions;
- franchisor consent;
- lease documentation;
- PPSR issues; and
- completion arrangements.
Valuation, tax, accounting and financial advice should be obtained from appropriately qualified advisers in those areas.
How Rise Legal Can Help
Rise Legal assists Australian business owners with franchise transfers and business sales and purchases.
Our work can include:
- reviewing Franchise Agreement transfer provisions;
- advising on the Franchising Code transfer requirements;
- preparing or reviewing Business Sale Agreements;
- advising on franchisor consent conditions;
- reviewing related lease arrangements;
- reviewing PPSR issues;
- coordinating franchise and business sale documentation; and
- assisting with settlement of the transaction.
Rise Legal provides fixed-fee proposals for defined legal work so the scope and legal fee are agreed before work begins.
Rise Legal does not undertake disputes or litigation.
Contact Rise Legal to discuss selling your franchised business and request a fixed-fee proposal.
Frequently Asked Questions
Can I sell my franchise business without the franchisor’s consent?
The right to transfer the franchise should be considered under both the Franchise Agreement and the Franchising Code.
The Code provides that a franchisor must not unreasonably withhold consent to a transfer, but there are circumstances in which withholding consent may be reasonable.
The transfer process and required information should therefore be checked before committing to a buyer.
Does the franchisor have 14 days to approve a transfer?
No.
Where section 24 applies, the 14-day period is a minimum period that must pass before the franchisor can give consent after providing the required documents to the prospective franchisee.
It is not a requirement that the entire approval or sale process be completed within 14 days.
How long does the franchisor have to respond to a transfer request?
Section 49 contains a 42-day mechanism.
If the franchisor does not advise in writing that consent is refused within the applicable 42-day period, consent can be taken to have been given.
The timing can be affected where the franchisor requests further information.
Does the buyer receive a cooling-off period?
The Code contains cooling-off provisions for franchise transactions.
Different provisions apply depending on whether the buyer enters into a new Franchise Agreement or becomes the franchisee through transfer of an existing agreement.
For a transferred Franchise Agreement where no new Franchise Agreement is entered into, section 52 contains specific cooling-off provisions.
Can the franchisor refuse my buyer?
Potentially, but the Code states that consent must not be unreasonably withheld.
Section 49 identifies examples of circumstances where refusal may be reasonable, including the buyer’s financial capacity, failure to meet reasonable transfer requirements or selection criteria, and certain unresolved matters involving the existing franchisee.
Does the lease automatically transfer when I sell the franchise?
No.
The lease or occupancy arrangement must be checked separately. Landlord consent, an assignment, a new lease or other documents may be required.
Do I need a lawyer to sell a franchise business?
There is no general requirement that every seller engage a lawyer.
Legal advice can be particularly useful where the business sale is conditional on franchisor consent, where lease arrangements need to be transferred, or where the Franchise Agreement contains detailed transfer requirements.
Article by
Helen Kay, Principal Lawyer, Rise Legal
Helen Kay is the Managing Director and Principal Lawyer at Rise Legal, an Australian commercial and business law firm advising business owners, franchisors and franchisees across Australia. Helen practises in commercial law, franchising, business contracts, business sales and purchases, trade marks and related business law matters.
Disclaimer
This article provides general information only and does not constitute legal advice. It does not take into account your specific circumstances. Laws and regulatory requirements may change, so you should obtain legal advice relevant to your situation before acting on the information contained in this article. Liability limited by a scheme approved under professional standards legislation.
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