Skip to content

Selling Your Franchise Network Part 3: Franchise Agreements and Leases

Selling your franchise network involves many steps and a lot of planning. Organising your franchise agreements and leases is a crucial part of this process.

In Part Three of this Selling Your Franchise Network series, we explain what you need to know about franchise agreements and leases in a franchise sale. This article will help you understand the importance of organising these documents and closing the deal.

Franchise Agreements

The purchaser will care most about the legal arrangements for the franchise sale. They will want to know about the franchise agreements between the franchisor and franchisees. They will also want to be confident that you can transfer those agreements smoothly, since they are the main ‘asset’ of the sale.

First, the parties should ensure they have correctly signed the franchise agreements and that the agreements are up to date.  When you scratch the surface of many franchise systems, there are often documentation issues. Sometimes changes happen and parties do not update the agreement. Other times, details go unconfirmed or essential documents are missing.

These are common issues, but they have a big impact on the sale process. Each complication or problem with a franchise agreement potentially diminishes the value of your business. Therefore, it is essential to have adequate systems in place to record every franchise recruit. This ensures the franchise agreement is enforceable for both parties.

Well-organised and well-presented documentation is a crucial part of the sale process. Ensuring that you can easily assign the franchise agreements upon sale adds value to your business.

Leases

If your franchise network requires premises from which to operate, you will need to think about how the leases will be dealt with in your franchise sale.

Often, you or an associated company will have signed leases. You then sub-license (or license) these leases to your franchisees, allowing them to operate from the premises. Sometimes, one of your directors has to sign a personal guarantee in order to secure a lease for the premises.

You will eventually need to assign these leases to a new entity created by the purchaser. This will be a long and involved process; it often requires contacting dozens of separate landlords.

In some instances, the best outcome is for the purchaser to agree to you assigning the leases over time. This may involve the purchaser providing appropriate guarantees to get the assignments over the line.

However, despite the complicated nature of this process, the purchaser will want to know a number of things for sure. They include whether:

  • the leases are actually in place;
  • you have issued renewal notices; and
  • rent is paid up to date.

Again, having appropriate documentation and effective systems in place will ensure everything progresses as smoothly as possible.  In contrast, if you do not document the leases properly, are missing renewal notices, or franchisees are late with rental payments, this could hamper, or even jeopardise, the sale process.

Continue reading this article below the form
Loading form

Key Takeaways

Even if your franchise is profitable, this does not mean your network is in a saleable condition. Organising your franchise agreements and leases will mean the purchaser has full faith in their decision. Good head office practices, such as professional franchise recruitment and leasing arrangements, will pay off come sale time. If you need assistance in organising your franchise agreements and leases in a franchise sale, contact LegalVision’s franchise lawyers on 1300 544 755 or fill out the form on this page.

Register for our free webinars

Ask an Employment Lawyer: Contracts, Performance and Navigating Dismissals

Online
Ask an employment lawyer your contract, performance and dismissal questions in our free webinar. Register today.
Register Now

Stop Chasing Unpaid Invoices: Payment Terms That Actually Work

Online
Stop chasing late payments with stronger terms and protections. Register for our free webinar.
Register Now

Managing Psychosocial Risks: Employer and Legal Counsel Responsibilities

Online
Protect your business by managing workplace psychosocial risks. Register for our free webinar.
Register Now

Franchisor Compliance Update: Code Obligations from November 2025

Online
Stay compliant with the new franchising updates from November 2025. Register for our free webinar.
Register Now
See more webinars >
Tim Mak

Tim Mak

Read all articles by Tim

About LegalVision

LegalVision is an innovative commercial law firm that provides businesses with affordable, unlimited and ongoing legal assistance through our membership. We operate in Australia, the United Kingdom and New Zealand.

Learn more

We’re an award-winning law firm

  • Award

    2025 Future of Legal Services Innovation Finalist - Legal Innovation Awards

  • Award

    2025 Employer of Choice - Australasian Lawyer

  • Award

    2024 Law Company of the Year Finalist - The Lawyer Awards

  • Award

    2024 Law Firm of the Year Finalist - Modern Law Private Client Awards

  • Award

    2022 Law Firm of the Year - Australasian Law Awards