Transfer fee
What it means
When a franchisee sells their business (a resale), the franchisor usually has to consent to the new owner, because the buyer is taking on the franchise agreement. The transfer fee is charged for that process — vetting the buyer, preparing transfer documents, and often training the incoming franchisee. It is separate from the sale price the buyer pays the seller for the business itself.
The Franchising Code constrains franchisors here in two ways. First, a franchisor cannot unreasonably withhold consent to a transfer, and must respond within set timeframes or the transfer can be deemed consented to. Second, fees connected with the arrangement, including transfer fees, should be disclosed, and the franchisor is generally expected to act in good faith rather than use the fee or the consent process to block a legitimate sale.
Transfer fees vary widely between systems and are set by the agreement. Some are a fixed dollar amount; others are a percentage of the sale price or the current initial franchise fee. Because they affect the net proceeds of a resale, they matter to both the exiting franchisee (who often pays them) and the incoming buyer's overall cost.
In practice
If you are buying an existing franchise, factor the transfer fee, training cost and any franchisor requirements (such as a fresh term or a renovated fit-out) into your total investment, not just the seller's asking price. Confirm who pays the transfer fee under the agreement.
If you are selling, check the transfer provisions early: the fee amount, the franchisor's consent conditions and timeframes, and whether the franchisor has a right of first refusal to buy the business itself. Knowing these before you list avoids surprises at settlement.
A real example
An exiting cleaning franchisee agrees to sell their territory for $120,000. The franchise agreement sets a $7,500 transfer fee to cover the franchisor's approval process and training of the buyer. The franchisor vets the buyer, consents within the Code's timeframe, and inducts the new franchisee, who also pays for a short refresher training program.
Transfer fee — FAQs
Who pays the transfer fee, the buyer or the seller?
It depends on the agreement. Often the exiting franchisee pays it as a cost of selling, but sometimes it is shared or paid by the incoming buyer. Check the transfer clause before you commit.
Can the franchisor refuse to approve my buyer?
They can set reasonable conditions, but the Franchising Code says a franchisor cannot unreasonably withhold consent to a transfer and must respond within set timeframes.
Is the transfer fee the same as the sale price?
No. The sale price is what the buyer pays the seller for the business. The transfer fee is a separate charge paid to the franchisor to process and approve the change of ownership.
How much are transfer fees?
They vary by system — a fixed amount or a percentage of the sale price or current initial fee. The agreement and disclosure document set out the amount.
See the full franchise glossary, the Fee Index or our buyer guides.