How to Sell a Franchise: Exit Strategy, Transfers and End of Term

Most people research a franchise as buyers and only think about selling years later, when something changes: a move, retirement, a health issue or a new opportunity. That is the wrong way round. Knowing how to sell a franchise starts before you sign, because the franchise agreement decides who you can sell to, who must approve the buyer, what fees apply, whether the franchisor can buy the business first, and what happens if the term simply runs out. This applies to a tutoring franchise as much as to a café or a gym.

This guide is for owners, and future owners, planning an exit. It covers transfer clauses and franchisor consent, rights of first refusal, transfer fees, buyer approval and training, valuation basics, renewal versus sale versus closing, and the rules in Australia, the United States and Canada. If you are on the other side of the deal, our guide to finding a tutoring franchise for sale covers resales from the buyer's point of view. We are a tutoring franchisor, so read our view with that in mind; the legal points below are attributed to the legislation and regulators, and they are general information, not legal advice.

Plan your franchise exit strategy from day one

A franchise is not a freehold business. You are buying rights for a fixed term, under a contract the franchisor wrote. A sensible franchise exit strategy starts with reading the exit before the entry:

• The term and renewal. How long is the agreement, is there an option to renew, and on what conditions (refurbishment, signing the then-current agreement, a renewal fee, being free of breaches)?
• Transfer rights. Can you sell at all, and what does the agreement treat as a "transfer"? Many count a change in your company's shareholding.
• Consent and conditions. Who approves the buyer, on what criteria, and what conditions can the franchisor attach?
• Pre-emptive rights. Does the franchisor have a right of first refusal or an option to buy?
• Fees and costs. Transfer fee, training costs for the buyer, legal costs, and any refurbishment required before sale.
• Restraints. What non-compete obligations apply after you leave, where and for how long?
• The lease. A buyer needs premises, so lease term and assignment rights matter too.

Then run the business as though a buyer will inspect it: reconciled books, documented processes, a team that does not depend entirely on you, a lease with enough term left and a clean compliance record. None of them guarantees a price, but their absence can make a sale harder or slower.

How a franchise transfer works

A franchise transfer is usually a three-way transaction: you (the seller), the buyer, and the franchisor, whose consent is needed. The typical sequence looks like this.

1. Check the agreement and get advice. Confirm the term, transfer clause, any right of first refusal, fees and restraints with a franchise lawyer.
2. Talk to the franchisor early. Many have a resale process and will tell you what they need to assess a buyer.
3. Prepare information. Financial statements, customer data handled in line with privacy law, staff details, the lease and assets, shared under a confidentiality agreement.
4. Find a buyer. Through the franchisor, a broker who understands franchise resales, or your own network.
5. Offer it to the franchisor first, if required. Follow any right of first refusal procedure exactly.
6. Request consent in writing with the information the franchisor reasonably needs.
7. Buyer approval, disclosure and training. The buyer is assessed, receives the disclosure the law requires and usually completes initial training.
8. Settle. Sale contract, lease assignment, transfer or new agreement, and handover.

Transfer clauses and franchisor consent

Almost every franchise agreement requires the franchisor's consent to a transfer. Common conditions include the buyer meeting the franchisor's selection criteria and financial requirements, the seller being up to date with payments and free of breaches, the buyer completing training, the buyer signing the franchisor's current form of agreement (which may differ from yours), the seller signing a release or a restraint, and refurbishing the premises to current standards. Enforceability depends on the agreement and local law.

Right of first refusal

A right of first refusal lets the franchisor buy your business on the same terms a third-party buyer has offered, usually within a set number of days after you notify it. An option to purchase is different: it can let the franchisor buy the business in specified circumstances, sometimes at a price set by a formula. Both affect your sale. Buyers may hesitate to spend on due diligence if the franchisor can step in, so know the procedure before going to market.

Transfer fees

Many franchise agreements charge a transfer fee to cover the franchisor's costs of assessing and training the buyer and preparing documents. The amount, and whether the seller or buyer pays, varies by system and is set out in the agreement and disclosure document. Build it, and the buyer's training and legal costs, into your negotiation from the start.

Buyer approval and training

Expect the franchisor to interview the buyer, check their finances and experience, and require the same initial training a new franchisee completes. Allow for this in the settlement date; a transfer that drags on can unsettle staff and customers.

Valuation basics

There is no standard price for a franchise resale, and nobody can promise what yours will sell for. Price depends on the business's own results and on what a willing buyer will pay at the time. In general terms, an accountant or a business broker experienced in franchise resales will look at:

• Sustainable earnings. Usually the business's normalised profit, adjusted for one-off items and for what it would cost to replace the owner's labour.
• Revenue quality. In a membership business such as a tutoring centre, how recurring and seasonal revenue is.
• Remaining term and renewal rights. A short remaining term, or no renewal option, can reduce what a buyer is willing to pay.
• The lease. Remaining term, options, rent and assignment conditions.
• Assets and transferability. The fit-out's condition, any refurbishment due, and how dependent the business is on you personally.
• The market. Finance availability and demand for the brand when you sell.

Get an independent valuation and tax advice before you set a price.

Renewal, sale or closing: what happens at term end

As the end of your term approaches, you usually have three paths.

• Renew or extend. If the agreement gives you an option and you meet the conditions, you may continue, often on the franchisor's current agreement, which may carry different fees or obligations.
• Sell before the term ends. Selling with meaningful term remaining, or with a renewal right a buyer can exercise, generally gives the buyer more to pay for than selling in the final months.
• Close or exit at expiry. If the agreement ends without renewal, you generally lose the right to operate under the brand and must follow the agreement's post-term obligations: de-identifying the premises, returning materials and observing any restraint. What happens to goodwill, equipment and the premises depends on the agreement.

Start planning well before expiry; leaving the decision to the final months narrows your options.

Market-specific rules

Australia: the Franchising Code on transfers and end of term

Australia's Franchising Code of Conduct was remade as Chapter 2 of the Competition and Consumer (Industry Codes—Franchising) Regulation 2024 and applies to agreements entered into, transferred, renewed or extended on or after 1 April 2025, with the ACCC as regulator. On transfers, the Code says:

• A request for the franchisor's consent must be in writing and include the information the franchisor would reasonably need to decide (section 48).
• The franchisor must not unreasonably withhold consent, and must say in writing whether consent is given, with reasons if it is not, and any conditions (section 49).
• If the franchisor does not refuse in writing within 42 days of the request, or of receiving further information it asked for, consent is taken to be given (section 49(3)).
• The Code lists circumstances where refusing consent may be reasonable, including where the buyer is unlikely to meet the financial obligations, does not meet the franchisor's selection criteria or a reasonable transfer requirement, or will not agree in writing to comply with the agreement, and where the seller owes money to the franchisor or has not remedied a breach (section 49(6)).
• The buyer must receive the existing agreement and other documents before consent is given, with a 14-day wait (section 24), and has a cooling-off right after the transfer, which ends at the earlier of 14 days or the buyer taking control of the business (section 52).

On end of term, the franchisor must tell you in writing whether it intends to extend, enter a new agreement or do neither, at least six months before the term ends for agreements of six months or longer (section 36). A restraint of trade cannot apply in certain non-renewal situations where you sought renewal on substantially the same terms, met the conditions and were not compensated for goodwill (sections 42 and 67). The disclosure document must also set out end-of-term arrangements, including whether you can sell the business at the end of the agreement, whether the franchisor has a first right of refusal, how market value is determined and your rights to goodwill (Schedule 1, item 18). Read that item before you buy.

United States: FDD Item 17

Under the Federal Trade Commission's Franchise Rule, Item 17 of the Franchise Disclosure Document is a table called "The Franchise Relationship" summarising renewal, termination, transfer and dispute resolution. Its rows include the definition of "transfer" by the franchisee, franchisor approval of transfers, conditions for approval, the franchisor's right of first refusal, the franchisor's option to purchase, death or disability of the franchisee, and post-term non-competes. Transfer fees appear in Item 6, and Item 20 shows how many outlets were transferred in recent years.

The Rule's definition of a "sale of a franchise" excludes a transfer by an existing franchisee where the franchisor has had no significant involvement with the buyer, and says approval or disapproval alone is not significant involvement (16 CFR 436.1). Several states add their own franchise and relationship laws, so check the state where you operate.

Canada

Seven provinces have franchise legislation: Alberta, British Columbia, Manitoba, New Brunswick, Ontario, Prince Edward Island and Saskatchewan, whose Franchise Disclosure Act took effect on 30 June 2026, according to the Canadian Franchise Association. Ontario's Arthur Wishart Act (Franchise Disclosure), 2000, imposes a duty of fair dealing on both parties and exempts some franchisee resales from disclosure, but only where all its conditions are met, including that the sale is not "effected by or through the franchisor"; a franchisor's right to approve and a reasonable transfer fee do not by themselves defeat the exemption (section 5(7) and (8)). Ontario courts have read the exemption narrowly, according to commentary from McCarthy Tétrault and Gowling WLG, so take advice on whether the buyer must receive disclosure.

UK and New Zealand

Neither the UK nor New Zealand has franchise-specific legislation, so the agreement and general contract law govern transfers. The British Franchise Association and the Franchise Association of New Zealand set codes for their members.

How this works at Success Tutoring

Success Tutoring centres are hands-on, retail-style learning centres for K–12 English and Mathematics, run by franchise partners with teams of tutors. Term, renewal, transfer and end-of-term arrangements are set out in the franchise agreement and disclosure document; read those sections with a franchise lawyer before signing. Start with why us, the investment schedule and the process, and use our questions to ask a tutoring franchisor and disclosure documents explained guides to check exit terms in any system.

Frequently asked questions

Can I sell my franchise whenever I want?

Usually you can sell during the term, but only with the franchisor's consent and subject to your agreement's conditions, such as buyer approval, training, a transfer fee and any right of first refusal. In Australia, the Franchising Code says the franchisor must not unreasonably withhold consent.

What is a franchise transfer fee?

It is a fee charged under the franchise agreement, typically to cover the franchisor's costs of assessing and training the buyer and preparing documents. The amount and who pays it vary; in the US it is listed in Item 6 of the FDD.

How much is my franchise worth?

It depends on sustainable earnings, revenue quality, remaining term, the lease and market conditions. No one can promise a resale value; ask an accountant or franchise resale broker for an independent valuation.

What happens if my franchise agreement is not renewed?

You generally lose the right to trade under the brand and must follow the post-term obligations. In Australia, the franchisor must give at least six months' written notice of its intentions for agreements of six months or longer.

Next steps

The best time to plan your exit is before you sign. If you are considering a tutoring franchise, read the exit terms with a lawyer, then explore what Success Tutoring offers and how the process works.

This article is general information, not financial or legal advice. Laws change and differ between jurisdictions; seek independent legal, accounting and tax advice before buying or selling any franchise.