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There’s a lot to consider when you’re selling a business in 2025. When your business is an individual franchise, the process becomes even more complex as you must negotiate not only with the purchaser but also with the franchisor, ensuring all legal and regulatory requirements are met in today’s evolving landscape.
A franchise remains a unique business structure whereby the franchisor licences the right to use its trade name, systems, and operational processes to the franchisee. With recent updates to Australian franchising laws effective from 2024, it’s more important than ever to stay informed about any new regulatory requirements and best practice standards.
If you are an existing franchisee looking to sell your business to a new franchisee, it’s crucial to have a clear Franchise Sale Agreement in place. This document protects your interests, outlines the precise terms of the sale, and ensures compliance with the latest legal standards in 2025.
Why Do I Need A Franchise Sale Agreement?
A Franchise Sale Agreement is a legally binding document that formalises the sale of an individual franchise. In today’s regulatory climate, this agreement protects you by confirming your rights to payment and clearly outlining your ongoing obligations, ensuring you are shielded from any future liabilities.
Without a comprehensive agreement in place, you risk retaining unforeseen liabilities and potential disputes over assets or post-sale support. Clearly articulating every detail of the sale helps mitigate ambiguity and builds trust between you, the franchisor, and the purchaser.
What’s Included In A Franchise Sale Agreement?
A Franchise Sale Agreement covers all the essential terms that define the rights and obligations of each party throughout and after the sale process. Key elements typically include:
- Purchase amount
- Assets included in the sale
- Details negotiated with both the purchaser and the franchisor
In addition to these primary terms, a robust Franchise Sale Agreement should address transitional support, dispute resolution procedures, and post-sale obligations such as warranties or representations regarding the business’s condition. It is also wise to include clauses relating to the transfer of intellectual property – for example, ensuring a clear pathway for the transfer of the franchisor’s trade mark and confidential business information. For further guidance on drafting clear legal documents, you might explore our articles on Good Business Terms & Conditions and our insights into Non-Disclosure Agreements.
What Franchising Laws Should I Be Aware Of?
When selling your franchise, it’s essential to be aware of the Franchising Code of Conduct, which has been updated to reflect changes effective from 2024. This Code outlines the specific processes for transferring or terminating franchise agreements, ensuring fair treatment for both parties.
You’ll also need to secure the franchisor’s consent for the sale, as the Code stipulates that such consent cannot be unreasonably withheld. Recall the process you experienced when the franchise was originally sold to you; a similar procedure applies now, including the provision of key documents such as:
- Disclosure Document
- Franchise Agreement
- Information Statement
- Copy of the Franchising Code of Conduct
- Non-Disclosure Agreement or a Confidentiality Agreement
- Deposits
- Cooling-off period
Generally, you’ll need to provide potential franchisees with the relevant franchising documents so they can begin operations seamlessly once the sale is finalised.
Given the dynamic nature of the franchising environment in 2025, staying abreast of regulatory updates is essential. Our comprehensive resources – including our guide on Business Structure and Legal Requirements for Starting a Business – can help you navigate any complexities during the transfer of ownership. These tools ensure that every sale complies with the latest legislative standards, providing you with greater peace of mind.
Need Help?
Even if you’ve already agreed on terms with the potential buyer and franchisor, it’s a smart move to have an experienced lawyer draft your Franchise Sale Agreement. Our legal team will ensure that the agreement clearly sets out the terms of sale and complies with the latest 2025 regulatory requirements, while also offering advice and recommendations to protect your interests should any disputes arise. For more insights, take a look at our Franchise Agreements: What Do I Need to Know guide.
Feel free to get in touch either at team@sprintlaw.com.au or on 1800 730 617 for a free, no-obligation chat about how we can assist you with your franchise sale process.
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