Sarah is a content and copy writer with a background in merchant banking. She has a passion for putting technical language into plain English and is a contributing writer for Sprintlaw.
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Handing over your franchise to a new owner can be an exciting next step - but it also comes with a clear process and a set of fees you’ll want to budget for.
In Australia, most franchise networks allow transfers, provided the franchisor consents and certain conditions are met. Along the way, you can expect franchisor transfer fees, landlord consent costs, legal and document fees, possible refurbishment requirements and a few settlement adjustments.
This guide breaks down the typical fees and costs you may encounter, how they’re usually shared between buyer and seller, and the practical steps to get from decision to settlement with minimal stress.
What Does “Transferring A Franchise” Actually Mean?
Transferring a franchise generally means you (the current franchisee) assign your rights and obligations under the Franchise Agreement to the incoming franchisee, with the franchisor’s written consent.
In practice, the deal usually has two parts:
- The business sale between you and the buyer (goodwill, plant and equipment, stock, etc.).
- The franchisor’s consent to assign or issue a new Franchise Agreement to the buyer (sometimes on the current network’s standard terms).
Some transfers are done as a simple business asset sale; others may be structured as a share sale of the company that holds the franchise. Those structures come with different tax and legal implications, so it’s worth understanding the difference between an asset sale and a share sale early on.
Most systems also require the landlord’s consent to transfer or enter a new lease for the premises, which can add separate assignment and legal fees.
What Transfer Fees Will I Pay To The Franchisor?
Every franchise network sets its own transfer policy and pricing in the Franchise Agreement and disclosure documents. Typical franchisor charges include:
1) Franchisor Transfer/Assignment Fee
This is the main “administration” fee the franchisor charges to assess the buyer, handle paperwork and process the transfer. It might be a flat fee or a percentage of the sale price, and can range from a few thousand dollars to materially more in larger systems.
2) Franchisor’s Legal Costs
Many agreements require you (or sometimes the incoming franchisee) to cover the franchisor’s reasonable legal costs for preparing consent documents, deed of assignment or a new Franchise Agreement.
3) Training and Onboarding Fees
Where the incoming franchisee needs initial training (as if they were a new franchisee), the franchisor often charges the standard training fee. Contracts vary on who pays - check your transfer clause carefully.
4) Document Issue/Variation Fees
If the franchisor issues updated documents (for example, a new Franchise Agreement on current network terms), there can be document preparation fees, manuals access fees, technology set-up fees and similar charges.
5) Marketing Fund and Fees At Transfer
Some networks require the buyer to prepay initial marketing or brand launch costs for the new owner, particularly if the franchisor is rebranding or relaunching the site. There may also be adjustments for marketing contributions already paid or owing up to settlement.
6) Exit or Renewal-Related Fees
Where a transfer occurs near the end of a term, your system may bundle renewal fees into the transfer process, or condition consent on bringing the site up to current standards (see refurbishment below).
Always confirm the exact fees by checking your Franchise Agreement and the most recent disclosure documents. It’s common to have some flexibility in who pays what, provided the franchisor approves the split.
Other Costs You Should Budget For
Beyond franchisor fees, a typical transfer involves third-party consents, lease steps and settlement adjustments that can add to your total cost.
1) Landlord Consent and Lease Assignment
If your franchise operates from leased premises, you’ll likely need the landlord’s consent to assign the lease or enter a new lease for the buyer. Expect:
- Landlord’s legal and administration fees for reviewing the assignment.
- Your own legal costs for the lease transfer.
- Possible lease documentation such as a Deed of Assignment of Lease or a fresh lease with new guarantees.
2) Refurbishment or Upgrades
Many systems condition transfer consent on your site meeting current brand standards. That can mean signage, fit-out refreshes, equipment upgrades or tech subscriptions. Sometimes the buyer pays; sometimes the seller negotiates to contribute as part of the sale price.
3) Equipment, IT and Licence Transfer Fees
Point-of-sale systems, software subscriptions and equipment finance may all have transfer fees. Check supplier contracts for assignment clauses and any costs to terminate or re-contract.
4) Bank Guarantees and Security Releases
If a bank guarantee supports the lease or supply arrangements, the outgoing guarantee must be replaced by the buyer’s guarantee at settlement. It’s wise to understand how bank guarantees are released and what timing the landlord requires.
Similarly, if there are security interests registered over your business assets, factor in releases and timing for any PPSR cancellations. If you’re not sure what’s registered, start with a quick refresher on why the PPSR matters for your business.
5) Supplier and Contract Consents
Key supplier, finance, or service contracts may require consent before assignment. Some charge a fee for novation or assignment. If a contract can’t be assigned, the buyer may need a new contract - practical to plan early. For context, here’s how assignment of contracts typically works in Australia.
6) Accounting, Tax and Settlement Adjustments
Budget for your accountant’s work (CGT/GST advice, apportionments), stocktake costs, and settlement adjustments for rent, outgoings, utilities and marketing contributions up to completion.
7) Your Own Legal Costs
You’ll want a lawyer to review the sale and franchisor documents, negotiate risk areas, and coordinate completion. The buyer will usually run their own due diligence too, so allow for information requests and Q&A time. If you’re on the buy-side, a structured legal due diligence package can help you verify the numbers and the risks before you commit.
Who Pays What? Common Ways Fees Are Split
There’s no one “right” way to allocate transfer costs - it’s commercial. That said, here are common approaches we see in Australian franchise transfers:
- Seller pays franchisor transfer fee; buyer pays training and onboarding fees.
- Each party pays their own legal costs; buyer also covers franchisor’s legal costs (if required under the Franchise Agreement).
- Buyer pays landlord’s consent and lease setup costs (as the new tenant), while seller pays for any arrears or make-good obligations up to settlement.
- Refurbishment costs are negotiated - sometimes shared or reflected in the sale price.
Importantly, the Franchising Code of Conduct requires franchisors to act reasonably in giving or withholding consent (among other obligations). Your Franchise Agreement will set out the approval criteria and fee defaults. It’s also normal to negotiate fee splits in your heads of agreement with the buyer and seek franchisor approval early.
Step-By-Step: How A Franchise Transfer Usually Works
1) Decide Your Deal Structure
Confirm whether the sale is an asset sale or share sale, and whether the franchisor will require a new Franchise Agreement or consent to an assignment of the current one. Early alignment on structure can avoid double work and surprises later.
2) Heads Of Agreement And Deposit
It’s common to agree key commercial terms (price, deposit, timing, what’s included, refurbishment responsibilities, who pays which fees) in a short-form deal document. Many parties use a simple letter or a Heads of Agreement before the full documents are drafted.
3) Franchisor Engagement And Buyer Assessment
Submit the buyer’s details for franchisor assessment and provide requested information. The franchisor will often meet the buyer, confirm training plans, and outline any brand standard works required as a condition of consent.
4) Due Diligence And Contracts
The buyer tests the business with financial and legal due diligence while lawyers draft the Business Sale Agreement, lease assignment documents and franchisor documents. The Business Sale Agreement sets the commercial terms between buyer and seller - Sprintlaw can prepare or review a Business Sale Agreement that fits your deal.
5) Landlord And Supplier Consents
Coordinate the landlord’s consent process (including any new guarantees) and line up supplier assignments or new accounts for the buyer to go live on day one.
6) Settlement And Handover
On completion, the buyer pays the balance price, franchisor consent documents are exchanged, guarantees are swapped, POS/tech access is handed over and keys are delivered. Stock is usually counted and adjusted on the day.
If a portion of the price will be paid over time, you may need agreed terms and protections for the balance. In some deals, parties use a Vendor Finance Agreement to document timing, security and default steps.
Key Legal Documents You’ll See In A Transfer
Here are the documents that commonly appear in a franchise transfer. Your deal may use some or all of these, depending on the network and structure:
- Business Sale Agreement: Sets the terms for the sale of the business, including price, assets included, warranties, restraints and completion steps. A tailored Business Sale Agreement helps manage risk on both sides.
- Franchise Agreement (New or Assigned): Either an assignment of your existing agreement to the buyer or a fresh agreement on current network terms. It’s prudent for the buyer to get a Franchise Agreement Review before signing.
- Franchisor Consent/Deed Of Assignment: The franchisor’s formal consent and any special conditions (training, refurb, fees, transition support).
- Lease Assignment Or New Lease: Usually documented via a Deed of Assignment of Lease or a new lease with landlord’s consent and replacement guarantees.
- Supplier Assignments/Novations: Contract transfers for POS, utilities, key supply and service agreements; note that some contracts require consent or a fresh agreement instead of assignment.
- Disclosure And Warranties: Statements about the business (turnover, employees, equipment condition, disputes) that the seller confirms are true, often backed by indemnities.
If you’re unsure where to start or need a specialist view on franchisor terms, it’s a good moment to speak with a Franchise Lawyer to check the documents and deadlines align with the Code and your commercial goals.
How Much Should I Budget? A Practical Checklist
Every brand and site is different, but as a seller, it’s sensible to allow for:
- Franchisor transfer/assignment fee.
- Franchisor legal/admin fees (if payable by you).
- Your own legal fees and accounting advice.
- Landlord consent and assignment costs (if agreed you’ll pay).
- Refurbishment works or contributions (if required for consent).
- Stocktake and settlement adjustments (rent, outgoings, utilities, marketing contributions).
- Releases of guarantees, PPSR discharges and any lender payout fees.
As a buyer, budget for:
- Training and onboarding fees.
- Franchisor legal fees (if required by the agreement).
- Your legal due diligence and document review costs.
- Landlord consent/new lease costs and a replacement bank guarantee.
- Initial stock, petty cash floats, insurance and working capital.
- Any fit-out or equipment upgrades tied to brand standards.
Document who pays which item in your deal term sheet and reflect it clearly in the contracts to avoid confusion at settlement.
Key Takeaways
- Franchise transfers in Australia typically involve franchisor transfer fees, legal/admin charges, and training costs - check your Franchise Agreement and disclosure to confirm the exact amounts.
- Plan for third‑party costs like landlord consent, lease assignment, refurbishment, supplier contract assignments, bank guarantee replacement and PPSR releases.
- Who pays what is commercial - agree a clear split early (in a term sheet) and get franchisor approval to avoid delays.
- Lock in your structure (asset sale vs share sale) upfront, because it affects tax, consents and the documents you’ll need.
- Expect a Business Sale Agreement, franchisor consent documents, a Franchise Agreement (new or assigned) and lease paperwork - have these reviewed before you sign.
- A well-managed process and early due diligence reduce surprises, control costs and keep your settlement date on track.
If you’d like a consultation on transferring a franchise - from reviewing your Franchise Agreement to preparing your Business Sale Agreement and lease assignment - you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.
