Buying an existing franchise in Australia: the franchisor's consent, step by step
By Grig Kochedykov · . Franchising Code of Conduct, compilation in force from 21 October 2025, ss 23, 24, 48, 49, 50, 52 and 53, the ACCC pages and [2008] WASC 67, as read and quoted in Buying a Small Business in Australia, chapter 11; [2021] SADC 88 as quoted in chapter 5; read 2 November 2026.
When you buy an existing franchised business in Australia, there is a third party to the sale: the franchisor, the company whose name and system the business uses. The seller cannot hand you the franchise alone. The franchisor must consent, and the Franchising Code of Conduct sets the steps and the dates.
Below: the dates, the two ways a transfer can go, and what to ask before you sign. The Code is quoted in the version in force from 21 October 2025, as read in chapter 11 of Buying a Small Business in Australia, a book by Grig Lien.
In short: four things before you pay
- Ask the seller for a copy of the written request for consent, and of every reply.
- Ask the franchisor which way the transfer goes: you take over the seller's agreement, or you sign a new one.
- Write the transfer fee into the sale contract, with who pays it.
- Do not settle until 14 days have passed since a written consent.
General information, not legal or financial advice. Your solicitor reads the Code and your franchise agreement before you sign.
The franchisor's consent, in four dates
The seller asks the franchisor for consent in writing (s 48). Then section 49(2):
"A franchisor must not unreasonably withhold consent to the transfer of a franchise agreement."
| What happens | The rule | What it means for you |
|---|---|---|
| The seller's written request | s 48 | Ask to see it, and the date it went |
| The franchisor stays silent | If it does not refuse in writing within 42 days of the request, or of the last information it asked for, it is taken to have consented (s 49(3)) | Count 42 days from the request, or from the last papers the franchisor asked for |
| The franchisor consents in writing | It may revoke the consent within 14 days, in writing and with reasons (s 49(4)). A consent that came from 42 days of silence cannot be revoked (s 49(3)(d)) | Do not settle until those 14 days have passed |
| The franchisor refuses | Section 49(6) lists grounds on which a refusal is reasonable: among them, you are unlikely to meet the money obligations of the agreement, you do not meet the franchisor's selection criteria, or the seller owes the franchisor money or has not fixed a breach | Ask the franchisor for its selection criteria before you apply. Ask the seller in writing whether anything is owed to the franchisor |
A refusal can be lawful. In a Western Australian case under the old version of the Code, a franchisor refused a transfer because nobody with a real stake in the buying company would run the business day to day. The court held that the refusal was not unreasonable (Masterclass Enterprises v Bedshed Franchisors [2008] WASC 67 at [121]–[122]). If you plan to own the business and hire a manager, tell the franchisor early and ask what it needs to see.
Two ways the transfer can go
The ACCC, the national competition and consumer regulator, names both ways. Ask the franchisor which it will be, because the papers and your right to withdraw differ.
| You take over the seller's agreement | You sign a new agreement | |
|---|---|---|
| Your papers | A copy of the franchise agreement and the disclosure documents, given to you 14 days before the franchisor consents (s 24) | The papers come under s 23, not s 24 (s 24(1)(b)) |
| Your right to withdraw | By written notice, until the earlier of two dates: 14 days after you become the franchisee, or the day you take possession and control of the business (s 52) | You may end the new franchise agreement within 14 days after entering into it (s 50(1)). Taking the keys does not end this period |
| What it does to your purchase from the seller | The same notice ends your purchase agreement with the seller (s 52(2)(c)). The seller repays what you paid under it within 14 days, less any reasonable expenses that agreement sets out (s 53(4), (5)) | Ending the franchise agreement does not end any other agreement, such as your purchase contract with the seller (note to s 50(5)) |
| What to do | Mark two dates: 14 days after you become the franchisee, and the day you take the keys. Your right to withdraw ends on the earlier of the two | Ask your solicitor to tie the purchase contract to the franchise agreement before you sign either |
The fee and the people who left
The transfer fee. The ACCC says the franchise agreement and the consent may set conditions, for example an assignment fee to the franchisor, and its page puts that fee on the franchisee who sells. Ask the franchisor for the amount in writing. Make the sale contract say who pays it.
The franchisees who left. The ACCC's page for buyers says the disclosure document must include contact details of current and former franchisees. Call some of them. A question for each: "How did your figures compare with what you were told before you signed?"
That question matters. In a franchise case in Adelaide, the District Court of South Australia found that the franchisor had not disclosed an earlier franchisee at the same site ([2021] SADC 88 at [943], as quoted in chapter 5 of the book). The buyer had paid A$410,000 for the café.
What to ask, in writing
To the seller:
"Has the franchisor been asked to consent to the transfer, and can I see the request and every reply? Will I take over your agreement or sign a new one?"
To the franchisor:
- What are your selection criteria for a new franchisee?
- Will I take over the seller's agreement, or sign a new one, and for what term?
- What is the transfer fee, and who pays it?
- Does the seller owe you money, or have a breach to fix?
- How long is left on the agreement, and who decides on renewal?
The last question sets how long the business lasts in your hands: the shorter of the franchise term and the lease.
Before any of this: the listing
A franchise listing may give the brand, the price and the weekly sales, and leave out the term left on the agreement. Our free extension for Chrome and Edge reads a business-for-sale listing. "Open a business-for-sale listing and press “Download PDF”. You get a report on the 12 things a check of the business needs: what the listing says about each, and which ones it does not say." "The extension does not guess: when the page is not clear, the line says “not stated”." Each "not stated" is a question for the seller.
Your next three steps
- The extension. Add to Chrome — free or Add to Edge — free. Reading on your phone? Open this page on your computer. More on our extension page.
- Your account. "Saving a listing takes a My list account. In it, the listings you save from different sites sit in one place." Create my account.
- The check, for the business you would put a deposit on. From our pricing page: "€550: from the public records, which debts can follow the business under the rules that apply where it is, and what decides whether the permit and lease pass to you". It needs "enough to identify the business — its legal name, its registration or tax number, or its trade name and town." Start for €550. "€950: everything in the €550 report, plus the seller's figures checked against the seller's own papers — tax returns or the accounts the company filed." Start for €950. "Your report comes in your language: any of 181, chosen on the order form." "We do not contact the seller." "You pay only if we take it on." Within 12 weeks of receiving the €550 report, pay the price difference for the €950 report: what you paid counts in full.
The whole path, from the listing to settlement, with the restraint on the seller and vendor finance, is in Buying a Small Business in Australia, a book by Grig Lien.
Sources
- Buying a Small Business in Australia, a book by Grig Lien, chapter 11 (Franchising Code of Conduct, in the Competition and Consumer (Industry Codes—Franchising) Regulations 2024, compilation in force from 21 October 2025, ss 23, 24, 48, 49, 50, 52, 53; ACCC pages on selling or transferring a franchise; Supreme Court of Western Australia, [2008] WASC 67) (retrieved 2 November 2026)
- Buying a Small Business in Australia, a book by Grig Lien, chapter 5 (District Court of South Australia, [2021] SADC 88) (retrieved 2 November 2026)
- Provenance Diligence, Free extension (retrieved 2 November 2026)
- Provenance Diligence, Pricing (retrieved 2 November 2026)