- You need your franchisor’s written consent to sell, and under the Franchising Code it must not be unreasonably withheld.
- If the franchisor hasn’t refused in writing within 42 days of your request (or of the last information it asked for), consent is taken to have been given.
- Clean, site-level accounts and a documented list of add-backs usually do more for your sale price than anything else.
- Plan the tax before you sign: going concern GST treatment and the small business CGT concessions can make a big difference to what you keep.
Selling a franchise isn’t quite like selling an independent business. Your franchisor has a say in who buys, the buyer takes over your franchise agreement or signs a new one, and part of the timetable is set by the Franchising Code of Conduct. Most sales also involve your landlord, because the lease usually has to be assigned. This guide walks through the process for Australian franchisees, from preparing the numbers to settlement.
Step 1: Read your franchise agreement and lease
Before you talk to brokers or buyers, check what your documents allow. In particular, look for:
- The remaining term and any renewal options
- The transfer clause: transfer fees, conditions, training the buyer must complete and any refurbishment required on transfer
- Any first right of refusal that lets the franchisor buy the business itself
- Restraint of trade clauses that apply to you after the sale
- Lease assignment conditions, bank guarantees and make-good obligations
A short remaining term is one of the most common reasons a sale stalls. Buyers and their lenders want enough time left on both the franchise agreement and the lease to earn back their investment.
Step 2: Get your numbers sale-ready
Buyers price a franchise on its maintainable earnings, so the work you do on your accounts shows up directly in the price. Prepare:
- Three years of profit and loss statements and balance sheets for the business being sold, separate from any other sites or entities
- Monthly sales reports from your point of sale system that reconcile to the accounts
- A schedule of owner wages, personal expenses and one-off costs (add-backs), with evidence for each
- Royalty and marketing fee statements that reconcile to reported sales
- An employee list with award classifications, pay rates and leave balances
- A register of equipment, fit-out and stock
If you run several sites through one entity, prepare a separate P&L for the site you’re selling, with shared costs allocated on a consistent basis. Our guide to comparing profitability across franchise locations explains how.
Step 3: Work out what the business is worth
Most franchise resales are priced as a multiple of EBITDA or adjusted net profit. The multiple depends on the strength of the brand, the remaining franchise and lease term, the trend in sales and how much the business relies on you personally. Asset condition matters too: if the franchisor will require a refurbishment on transfer, a buyer will deduct that cost from what they’re willing to pay. Ask your franchisor whether it has recent resale prices for the network, and test any broker’s appraisal against your own adjusted figures.
Step 4: Ask your franchisor for consent
Under the Franchising Code, your request to transfer the franchise must be made in writing, and the franchisor can ask for further information it reasonably needs to decide. The franchisor must not unreasonably withhold consent. The ACCC explains that if the franchisor hasn’t told you in writing that it refuses within 42 days after the later of your request and the date you provide the last of the information it asked for, consent is taken to have been given. If the franchisor does consent in writing, it can cancel that consent within 14 days, but must tell you in writing and give reasons.
Build the buyer’s disclosure into your timeline. When an existing franchise agreement is transferred, the ACCC says the incoming franchisee must be given the key documents at least 14 days before the franchisor approves the transfer. Your buyer will also need time for any training the franchisor requires.
Step 5: Plan the tax and settlement
GST
The sale of a business can be GST-free as a supply of a going concern. The ATO’s conditions include that the sale is for payment, the buyer is registered or required to be registered for GST, and you and the buyer agree in writing that the sale is of a going concern. You also need to supply everything necessary for the business to keep operating and carry it on until the day of sale. Negotiate the price as GST-exclusive and include a clause that deals with GST if the going concern treatment is later denied.
Capital gains tax
The sale of goodwill and other business assets is usually a CGT event. If you meet the basic conditions (for example, the $2 million aggregated turnover test or the $6 million maximum net asset value test), the four small business CGT concessions may reduce or remove the gain:
- the 15-year exemption
- the 50% active asset reduction
- the retirement exemption, which has a $500,000 lifetime limit
- the small business roll-over
Which concessions apply, and in what order, depends on your structure and history. Get advice before you sign the contract, because the way the sale is structured can affect eligibility.
Settlement adjustments
Expect adjustments at settlement for stock on hand, employee entitlements the buyer takes on, prepaid rent and outgoings, royalties and marketing fees up to settlement, and any gift card or loyalty liabilities. Agree how each will be calculated in the contract, not on the day.
Common reasons franchise sales fall over
- Not enough term left on the franchise agreement or lease
- The landlord won’t assign the lease on acceptable terms
- Accounts that don’t reconcile to the point of sale reports
- A required refurbishment that wasn’t priced into the deal
- The buyer’s finance falls through late in the process
- The business depends on the owner in ways a buyer can’t replace
How Franchise Co. can help
We help franchisees prepare to sell: sale-ready site P&Ls, normalised earnings with documented add-backs, a model of your after-tax proceeds including the small business CGT concessions, and a review of the contract’s settlement adjustments. See buying, selling and expanding a franchise, or book a 15-minute call to talk it through.
Selling a franchise: FAQs
Can my franchisor stop me selling my franchise?
Your franchisor must give consent before the franchise agreement is transferred, but under the Franchising Code it must not unreasonably withhold that consent. If it hasn’t refused in writing within 42 days of your request (or of the last information it asked for), consent is taken to have been given.
How long does it take to sell a franchise?
It varies with the brand and the buyer. Allow time for marketing the business, the buyer’s due diligence and finance, the franchisor’s approval process, at least 14 days for the buyer to receive the key documents before approval, any training the franchisor requires and the lease assignment.
Do I charge GST when I sell my franchise?
Not if the sale qualifies as a GST-free supply of a going concern. That requires a sale for payment to a buyer who is registered or required to be registered for GST, a written agreement that it’s a going concern, and that you supply everything needed to keep the business running and trade until the day of sale.
Will I pay capital gains tax when I sell?
Usually the sale creates a capital gain, mostly on goodwill. If you meet the basic conditions, the small business CGT concessions may reduce or remove that gain. Get advice before signing, because the structure of the sale matters.
This article is general information for Australian franchise businesses. It doesn’t take your circumstances into account and isn’t personal tax, legal or financial advice.
Sources and further reading
- ACCC: Selling or transferring a franchise agreement
- ATO: Sale of a going concern
- ATO: Small business CGT concessions
- Competition and Consumer (Industry Codes—Franchising) Regulations 2024
Sources checked November 2026. Rules change. Confirm current guidance before acting.
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Every franchise is different. Ask us how this applies to yours.
