Buying a Franchise in Australia: Check Your Resale Rights

A franchise may suit your plans today, but illness, family commitments or a change of direction could make selling necessary later. Before joining Australia’s franchising community, understand whether you can transfer the business, what the franchisor can require and which liabilities might survive the sale. Your exit arrangements deserve attention before you commit, not when you need a buyer.

1. Establish exactly what you could sell

Buying a franchise does not give you ownership of the franchise system or an unrestricted right to sell its brand. You acquire contractual rights to operate within that system, usually for a fixed term. Selling the business therefore involves more than agreeing a price with another person.

Ask your independent franchise solicitor to distinguish between selling your business assets, transferring your franchise agreement and selling shares in the company that operates the business. The agreement may require approval for each, including changes in control that do not look like a conventional business sale.

Establish what a purchaser would actually receive:

• The remaining term of your existing agreement, or a new agreement.
• Equipment, stock and other assets that you own.
• Access to business records and customer information, subject to contractual and privacy requirements.
• Any transferable rights to telephone numbers, digital accounts and local marketing assets.

Do not assume goodwill belongs entirely to you or that every asset you use is yours to sell. Ask your solicitor to explain the treatment of goodwill and any franchisor-owned or financed equipment.

A short remaining term can affect a purchaser’s appetite and ability to obtain finance. A possible renewal is not the same as a binding entitlement to one.

2. Understand approval and your legal protections

Australia’s franchising community is regulated by the mandatory Franchising Code of Conduct, made under the Competition and Consumer Act 2010. The current Code commenced on 1 April 2025, with some requirements applying from 1 November 2025. Which provisions apply can depend on when an agreement is entered into, transferred, renewed or extended.

The Code regulates consent to franchise transfers: a franchisor must not unreasonably withhold consent. However, that does not mean every proposed purchaser must be accepted. Matters such as the purchaser’s financial resources and ability to meet reasonable selection requirements can be relevant.

Ask your solicitor to explain the applicable consent process, response deadlines, permitted grounds for refusal and any circumstances in which consent may be revoked. Map these rules against the actual agreement rather than relying on a sales representative’s summary.

Request written answers to practical questions:

• What qualifications, experience and financial resources must a purchaser demonstrate?
• Who assesses the application, and what documents make it complete?
• Must the purchaser complete training before settlement?
• Does the franchisor have a right of first refusal or another right to acquire the business?
• Must outstanding breaches or payments be resolved before approval?

The Code’s good-faith obligation applies to the parties’ dealings. Australian Consumer Law protections, including rules against misleading or deceptive conduct, also matter. Neither replaces a clear, workable sale process in your contract.

3. Calculate what a sale would leave you

The advertised sale price is not the amount you will necessarily take home. Ask your accountant to prepare an illustrative exit statement using the agreement’s actual charges and your proposed financing arrangements.

Include transfer or administration fees, broker commission, legal costs, loan repayment and any finance discharge charges. Identify who pays for purchaser training, required refurbishment, replacement equipment and stock adjustments.

Where a transfer fee is expressed as a percentage, establish what it applies to. Check whether GST is included and whether additional professional costs can be charged separately. Avoid budgeting from an informal estimate where the contract allows a different calculation.

Also investigate personal guarantees. A purchaser taking over the business does not automatically release you from guarantees given to a lender, supplier or franchisor. Your solicitor should identify which written releases are needed at settlement.

Model both an orderly sale and a pressured exit. Allow for ongoing trading costs while marketing the business, and ask your accountant about tax consequences. Do not assume sale proceeds will clear every debt.

4. Resolve exit obstacles before signing

Turn your findings into a short negotiation list. Priorities might include clearly defined transfer charges, documented purchaser criteria, an approval timetable and explicit arrangements for releasing guarantees.

Ask what happens if a purchaser is approved but a new agreement is offered on materially different terms. Changes to fees, operating obligations or required investment could alter the purchaser’s valuation or willingness to proceed.

Keep written evidence of representations about resale support or buyer demand. No franchisor can guarantee that a purchaser will appear at your preferred price, and a contractual sale right is not a promise of a market.

Practical takeaway: Before buying, have your solicitor map the transfer process and your accountant estimate net sale proceeds. Proceed only when you understand the approvals, costs and liabilities involved in leaving—not just joining—the franchise.