Selling a franchise

Selling a franchise is different to selling a ‘standard’ business.

Your franchisor will have an established process for selling a business within the franchise. This should be in your franchise agreement and operations manual. Although it will restrict what you can do, the process will also make the sale easier by providing clear steps to follow.

TIP: Obtain advice from your accountant and lawyer before selling your franchise to make sure you understand your obligations.

It is a good idea to discuss the sale of your business with the franchisor and other franchisees as they could have useful advice or want to buy it themselves.

Franchise agreement obligations

The obligations for the sale will vary by franchise. Check with your franchisor for specific requirements, these could include:

  • the franchisor having first right to purchase the business
  • the franchisor interviewing the potential buyer
  • the potential buyer having to be approved by the franchisor
  • an assignment fee
  • the cost of training the new buyer
  • transfer of business registrations to the new owner or back to the franchisor
  • returning operations manuals and documentation to the franchisor
  • surrendering client lists, domain names, email addresses, and business phone numbers
  • restrictions preventing you from trading as a competitor or using the franchise’s intellectual property after you have sold the business.

Complying with the Franchise Code of Conduct

Under the franchise code the franchisor is required to provide a disclosure document to the potential buyer. As a gesture of goodwill it is a good idea for you to provide a copy to the potential buyer.

More information

► Understand your obligations when selling or closing a business
► Develop a succession plan
► Find out how to hire a lawyer
► Learn more about ending a franchise agreement