Transfer

What it means

Most franchise agreements require the franchisor's approval before a franchisee can sell (transfer) the business, so the franchisor can vet the incoming franchisee and preserve network standards. The Code regulates this: a franchisor must not unreasonably withhold consent, must respond within set timeframes, and can only refuse on defined grounds, such as the proposed buyer not meeting reasonable requirements, being unable to pay, or the seller not remedying a breach.

A transfer is treated similarly to entering a new franchise agreement for the incoming franchisee. The buyer must receive the ACCC's information statement, a current disclosure document, a copy of the Code and the agreement, and the franchisor cannot consent to the transfer until 14 days after the buyer receives them. The buyer also has a right to unwind the deal before 14 days pass or before taking control, whichever is earlier. This ensures a new franchisee stepping into an existing business is as informed as one starting from scratch.

If a franchisor does not respond to a transfer request within the required period, consent can be taken to have been given in some circumstances. The 2025 Code continues to require the franchisor to act in good faith when considering a transfer, so delay or refusal for an improper purpose can breach the Code.

In practice

For a selling franchisee, planning the transfer early matters because franchisor approval, buyer finance, disclosure and lease assignment all take time. The seller should expect to provide information to the franchisor about the buyer and to make sure any outstanding breaches are cleared, since an unremedied breach is a legitimate ground for refusal.

For the incoming franchisee, a transfer is a full due-diligence exercise: reviewing the disclosure document, the remaining term of the agreement, the actual trading performance of that specific outlet, and the lease. Buyers should use the consideration and cooling-off periods just as a new franchisee would, and confirm exactly what they are inheriting, including any fit-out or refurbishment obligations.

A real example

A franchisee wants to sell their juice-bar outlet and finds a buyer. They apply to the franchisor for consent in writing and provide the buyer's financial and background details. The franchisor cannot unreasonably refuse and must respond in writing; if it gives no written refusal within 42 days, consent is deemed. The buyer receives the information statement, a current disclosure document and a copy of the Code, the franchisor cannot consent until 14 days after that, and the buyer can still unwind the deal within 14 days or before taking control, whichever is earlier.

Transfer, FAQs