Under the Franchising Code of Conduct, there are certain obligations on franchisors to allow the franchisee to transfer a franchise business. In other words, unless there is some rational basis for denying the franchisee the right to transfer, consent may not be unreasonably withheld by the franchisor.

What constitutes a transfer?

Under the Code, a ‘transfer’ is defined as including the granting, selling, or transfer of the franchised business. If you are unsure about how the transfer provisions apply, you may want to get some advice from a franchise lawyer.

When is it reasonable to deny a franchisee’s request to transfer?

According to the Franchising Code of Conduct, there may be a number of circumstances under which the franchisor may deny a franchisee’s request to transfer the franchised business, including the following:

  1. If the franchisee has breached the terms of the Franchise Agreement, and this breach has not been remedied by the franchisee;
  2. If the franchisee owes money to the franchisor, and has not repaid, or made any attempt to repay, the debt. These debts may constitute any ongoing fees (marketing fund contributions, royalties), or be the transfer fee itself (a fee which represents a percentage of the total sale price);
  3. The prospective transferee has not agreed, in writing, to be bound by the terms of the Franchise Agreement – specifically the franchisee’s obligations. In other words, the prospective transferee is seeking to vary the terms of the Franchise Agreement;
  4. If, by transferring to the prospective transferee, the entire franchise network will be significantly adversely affected;
  5. If the prospective transferee does not satisfy the franchisor’s selection criteria;
  6. If the prospective transferee has not been able to satisfy a reasonable requirement under the Franchise Agreement to complete the transfer; or
  7. The prospective transferee will not be able to afford the financial obligations under the Franchise Agreement.

The Franchise Agreement

If there is to be some change in control of the business or a transfer of shares, this will normally be regarded as an assignment/transfer under the Franchise Agreement, which will activate the ‘transfer’ conditions under the Agreement.


Are you a franchisee looking to transfer a franchise business to a new purchaser? Have you checked the transfer provisions to see whether you will need to pay a transfer fee? For assistance with making your transfer effective, contact LegalVision on 1300 544 755, and have a chat with one of our team of franchise lawyers today. They will be able to guide you through the process to transfer a franchise without facing any unnecessary complications along the way.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Lachlan McKnight
Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy