Planning Franchise Resales Before Expanding in Australia

Before you franchise an existing Australian business, decide how a future franchisee could sell their business. A resale involves more than finding a buyer: it requires a workable process for transferring the right to operate under your brand. Designing that process early helps protect business continuity, franchisee investment and trust across your franchising community.

1. Build an exit route into the original agreement

A franchisee may want to sell because of retirement, changed family circumstances or a new opportunity. Your franchise model should accommodate a legitimate exit without treating every proposed sale as a threat to brand standards.

Start by separating two transactions: the sale of the franchisee’s business assets and the transfer of franchise rights. Buying equipment, stock and goodwill does not, by itself, give the buyer permission to operate under your franchise system.

Ask your franchise lawyer to explain the available structures. Depending on the circumstances, the parties might transfer an existing agreement or arrange for the buyer to enter a new agreement. Those choices can affect the buyer’s remaining operating term, obligations and disclosure requirements.

Your agreement should make clear:

• How the franchisee requests consent to a transfer.
• What information you reasonably need to assess the buyer.
• Which approval criteria apply.
• What transfer-related costs may be payable.
• Which obligations must be completed before settlement.

Avoid relying on a broad statement that consent is entirely at your discretion. Clear, proportionate rules are easier to administer and give franchisees a more useful basis for planning their exit.

2. Match the process to Australian franchise law

Australia’s Franchising Code of Conduct is a mandatory code under the Competition and Consumer Act 2010, enforced by the Australian Competition and Consumer Commission. The current Code commenced on 1 April 2025, with some requirements applying from 1 November 2025.

The Code regulates requests for consent to transfer a franchise agreement. It includes requirements concerning the response period, written decisions and reasons for refusal, and prohibits unreasonable withholding of consent. Failure to respond within the applicable period can result in deemed consent. Have your lawyer translate these rules into a transfer checklist and timetable rather than inventing an internal deadline.

Good faith applies to dealings between franchisors and franchisees. The Australian Consumer Law also prohibits misleading or deceptive conduct, and unfair contract terms protections can apply to standard form small business contracts. A transfer clause should therefore undergo legal review, particularly if it imposes broad restrictions, substantial charges or unilateral powers.

Do not assume that an incoming buyer can simply inherit the outgoing franchisee’s paperwork. Ask your lawyer to identify the disclosure, consideration and cooling-off requirements for the proposed transaction structure. Build the applicable periods into the sale timetable before anyone promises a settlement date.

There is no general government franchise approval process that substitutes for these duties. Maintaining a Franchise Disclosure Register profile is a separate compliance obligation, not approval of a particular resale.

3. Set objective buyer and business checks

Write down the qualities an incoming operator needs before your first franchise sale. Use criteria connected to running the business successfully, rather than personal preference or a desire to prevent an existing franchisee from leaving.

A practical assessment can cover the buyer’s financial capacity, relevant experience, availability to operate the business, required licences and willingness to complete training. Apply the criteria consistently and record the reasons for your decision.

Also check what the buyer is actually acquiring. Prepare a responsibility schedule covering equipment ownership, stock, customer commitments, prepaid services, outstanding complaints and access to business systems. Identify anything that requires separate third-party consent, such as a lease or software account.

Keep your role distinct from the seller’s. You may assess suitability and explain franchise obligations, but you should not casually endorse the asking price or promise future earnings. If you supply trading information, check its accuracy, explain its scope and distinguish historical results from forecasts. Encourage both parties to obtain independent legal and accounting advice.

4. Design a controlled handover

Create a settlement checklist that identifies who confirms each condition and when it must be satisfied. Coordinate legal consent, required training, premises access, insurance and operational readiness so the buyer does not take over an unusable business.

Digital access deserves particular attention. Arrange authorised transfer or replacement of accounts, remove the outgoing operator’s permissions and avoid sharing personal passwords. Obtain privacy advice before customer or employee information is disclosed to a prospective purchaser or transferred at settlement.

Agree how staff, customers and suppliers will be told about the change. Keep the message factual and avoid suggesting that every previous obligation disappears when ownership changes.

Finally, define the support available immediately after handover and allocate responsibility for unresolved matters. Practical takeaway: before offering your first franchise, prepare a lawyer-reviewed transfer clause, an objective buyer assessment and a settlement checklist. A credible resale route is part of a sustainable franchising community.