Selling your franchise: the 42-day consent rule and reasonable grounds to refuse

• Your request must come with all the information the franchisor would reasonably need to make an informed decision (s48(2)).
• The Code lists reasonable grounds for refusal, such as a buyer unlikely to meet the financial obligations or a seller who owes money, but the list isn't exhaustive (s49(6)).
• Where the buyer takes over the existing agreement, the franchisor can't consent until 14 days after giving the buyer the required documents, including the disclosure document and the Code unless the buyer opts out (s24(3)).
• A buyer taking over the existing agreement can unwind the deal within 14 days, or before taking control if that is earlier (s52 and s53).
• The 42-day deemed consent rule isn't new: clause 25 of the 2014 Code had it too.

1. The buyer formally applies or expresses interest. The franchisor must give the buyer the ACCC's information statement within 7 days, and before the disclosure documents (s22).
2. You make a written request for consent, with all the information the franchisor would reasonably need (s48).
3. If the franchisor needs more, it asks in writing for specified information. The 42-day clock then runs from when you provide the last of it (s49(3)).
4. The franchisor gives the buyer a copy of the existing agreement, any documents the buyer must sign, any head lease documents that apply, and the disclosure document and Code unless the buyer has validly opted out (s24(2)).
5. The buyer gives the franchisor a written statement that they received, read and had a reasonable opportunity to understand the disclosure document and the Code (s26).
6. At least 14 days after the buyer received those documents, or any later earnings information, the franchisor can consent (s24(3)).
7. The franchisor tells you in writing: consent, consent subject to conditions, or refusal with reasons (s49(1)).
8. Settlement and handover. The buyer's unwind right lasts until the end of the 14 days starting the day after they become the franchisee, or until the day they take possession and control, if that comes first (s52(3)). If they take control on the first day, the window may close almost at once.

Section 49(6) lists six circumstances in which refusing, or revoking consent, is reasonable. Other reasons can be reasonable too, but the franchisor must explain them in writing.

• The buyer is unlikely to be able to meet the financial obligations under the agreement.
• The buyer doesn't meet a reasonable requirement of the agreement for a transfer.
• The buyer doesn't meet the franchisor's selection criteria.
• The buyer won't agree in writing to comply with the franchisee's obligations under the agreement.
• You, the seller, haven't paid, or made reasonable provision to pay, an amount you owe the franchisor.
• You haven't remedied a breach of the agreement.

The ACCC's guidance adds that a franchisor must act in good faith towards both seller and buyer and not unreasonably withhold consent, but should consider withholding it where the buyer is unlikely to have a reasonable opportunity to earn a return on their investment.

• The clock starts on the date of your written request, or the date you provide the last of any further information the franchisor asked for in writing, whichever is later (s49(3)).
• Only a written refusal stops deemed consent. Silence, phone calls or emails saying the request is still under review don't.
• Once consent is deemed, the franchisor can't revoke it (s49(3)(d)).
• Consent the franchisor actually gives can be revoked within 14 days, in writing, with reasons, and not unreasonably (s49(4) and (5)).
• Illustrative dates: a complete request made on 1 October 2026, with no further information requested, reaches 42 days around 12 November 2026. If the franchisor asks for more and you provide it on 20 October, the 42 days run from then, to around 1 December 2026.
• For franchisors: give the buyer the s24 documents early, so the 14-day wait before consent finishes well inside the 42 days.

• The ACCC's information statement within 7 days of formally applying or expressing interest (s22).
• A copy of the existing agreement and any other document the franchisor requires them to sign for the transfer (s24(2)).
• The disclosure document and a copy of the Code, unless they already have a substantially identical agreement with the franchisor for a substantially identical business and opt out in writing (s24(4)).
• At least 14 days with those documents before the franchisor can consent (s24(3)).
• If the transfer is done by signing a new agreement, the new-agreement rules apply instead, including the 14-day consideration period and the 14-day cooling-off (s23 and s50).
• If they take over the existing agreement, a right to unwind by written notice to you and the franchisor before the deadline in s52(3).
• If they unwind, refunds within 14 days from the franchisor and from you, less only reasonable expenses whose amount or method of calculation is set out in the relevant agreement (s53).
• A disclosure document that says whether the franchisor will amend the agreement, or require a new one, on transfer (item 19).

1. Clear any money you owe the franchisor, or agree in writing how it will be paid at settlement.
2. Fix any outstanding breach, and ask the franchisor to confirm in writing that it is remedied.
3. Ask for the franchisor's buyer selection criteria early, and screen buyers against them.
4. Collect the buyer's financial information, experience and funding approval before you lodge the request.
5. Lodge a complete written request, and keep proof of the date it was made.
6. Respond quickly to any written request for further information, because the 42 days restart from your last answer.
7. Diarise day 42, and the 14-day revocation window after any consent.
8. Remember that after the sale you'll be a former franchisee. The franchisor must tell you in writing at least 14 days before it shares your personal information with prospective franchisees, and you can ask it not to (s63).

ASBFEO's June quarter 2026 report refers to recent media reports of disputes at the end of agreements where a franchisee wants to sell to an identified purchaser and the franchisor doesn't agree. These steps help avoid them.

• Acknowledge the request, and ask for any further information in writing, promptly and specifically (s48(3)).
• Give the buyer the information statement and the s24 documents early.
• Assess the buyer against written selection criteria that you apply consistently.
• Decide in writing within 42 days. If refusing, give reasons that fit s49(6) or are otherwise reasonable.
• If consenting with conditions, say so in the consent (s49(1)(b)).
• Revoke only within 14 days, in writing, with reasons, and only on reasonable grounds.
• Unreasonably withholding or revoking consent can each attract up to 600 penalty units, which is $218,400 for conduct from 1 July 2026.

• Does my agreement allow a transfer, and what conditions and fees apply?
• Have I cleared debts and breaches, or agreed in writing how they'll be handled?
• Has the buyer received the information statement and the s24 documents?
• When did I make my written request, and when does day 42 fall?
• Has the franchisor asked for further information in writing, and when did I provide the last of it?
• Is the franchisor requiring a new agreement, or amendments, on transfer?
• Does the buyer understand their unwind right, and have we allowed for it at settlement?