How To Sell A Franchise Business (2025 Updated)

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Selling a franchise can be an exciting step for a business owner, but the process can be intricate and time-consuming. With the regulatory landscape continually evolving in 2025, ensuring that all your documents and obligations are in order is more crucial than ever before you transfer ownership.

For example, it is essential to thoroughly review your Franchise Agreement and consider seeking specialised advice from an accountant or legal expert. Doing your research on the current selling market, reviewing updated statistics and even consulting resources such as our Legal Documents For Business guide, can help you confidently pin down your ideal selling price.

Moreover, it is imperative that you keep your franchisor fully informed. They typically retain significant control over the sale, including determining whether a prospective buyer meets their criteria. Always ensure you have their consent and provide comprehensive details on any potential buyer before making any final decisions.

Can I Sell A Franchise?

The simple answer is yes – provided that your Franchise Agreement permits the sale. It is critical to check whether your franchisor has imposed any restrictions on the management and sale of the franchise. In many cases, you may encounter a condition such as a right of first refusal, which obliges you to offer the franchisor the opportunity to purchase the franchise before selling it to an external party.

If the franchisor declines to purchase, only then may you proceed with putting your franchise on the market. Essentially, the franchisor is given priority should they wish to regain control. Additionally, as a franchise seller, you must remain compliant with guidelines stipulated by bodies such as the Commerce Commission and the Franchise Association of New Zealand (FANZ), both of which have updated their requirements significantly for 2025.

The takeaway is that you CAN sell your franchise if your Agreement allows you to and you have secured your franchisor’s consent to do so.

The process should look something like this:

Provide your franchisor with written notice of your intention to sell
Submit comprehensive details about the potential buyer, including financial stability and relevant experience
Obtain written consent from your franchisor to proceed

It is also your duty to ensure that you have not breached any terms set out in your Franchise Agreement, as this could derail the sale and have legal repercussions.

What Does My Franchise Agreement Say?

As mentioned, whether you can sell your franchise is governed by your Agreement. Your first step should always be to meticulously review it for any provisions that could affect the sale process. Some franchisors require that the franchise be sold back to them, thus limiting your freedom to negotiate with external buyers.

The extent of your flexibility in the sale process largely depends on your franchisor’s conditions. It is advisable to discuss these details with your franchisor, who may also offer guidance to ensure that you complete the process in full legal compliance. You might also consider reading our detailed piece on what constitutes a legally binding contract if you require further clarity.

Some typical conditions imposed by franchisors include:

The buyer must satisfy criteria outlined by the franchisor or complete an approved training programme
Payment of an assignment fee, often a percentage of the sale price (review your contract for specifics)
Upgrading equipment or meeting additional standards as stipulated

I Decided To Sell My Franchise – What Are My Obligations?

Selling a franchise entails a number of responsibilities. Your first reference point should be the franchising Code, which outlines the rules governing the sale process and the ongoing franchise arrangement. In 2025, these rules have been updated to provide greater clarity on both seller and buyer obligations.

Below, we discuss some of the key areas you should address before finalising the sale:

Sale Price

Selling your franchise at a price that accurately reflects its value is essential. In today’s market, it is recommended to arrange for an appraisal by a qualified real estate appraiser. You might also consult with your franchisor to gain insight into the current market value or check our updated small business valuation guide for tips on setting a competitive price.

It is also vital to review your Franchise Agreement for any clauses that might limit your ability to negotiate the sale price. For instance, if a buy-back clause is in place, there may be a predetermined sale price or range, leaving little room for negotiation.

Contract

Just like any business sale, you should have a comprehensive contract that outlines the terms and conditions of sale. This agreement, commonly known as a Franchise Sale Agreement, is best drafted by a lawyer or a professional business broker to ensure all details adhere to current legal standards.

The contract should:

Align with the terms specified in your Franchise Agreement
Meet the latest requirements set out by FANZ and the Commerce Commission
Clearly state who is responsible for paying the franchisor’s fees
Detail provisions regarding the assignment fee, training costs, and any other administrative charges
Address important elements such as intellectual property transfers and registration details

It is also prudent to provide the buyer with copies of your financial records and any additional documents as prescribed by the Code. Once everything is agreed upon, you may proceed to have a Deed of Termination drafted to formally conclude your current Agreement and facilitate the commencement of a new arrangement with the buyer.

Bear in mind that once the sale is finalised, you typically cannot pursue legal action against the franchisor.

Disclosure Document

If you’re a FANZ member, you are required to provide potential buyers with a Disclosure Document at least 14 days before any Agreement is signed. This document should clarify how the franchise arrangement operates – for instance, detailing the payment of royalties and other recurring fees. Even if you are not a FANZ member, it is highly recommended to adopt this practice.

Alongside the Disclosure Document, ensure that you supply all pertinent financial documentation, such as recent tax returns and balance sheets. For more detailed guidance, you can also refer to our resource on Franchising Legal Documents.

Information Statement

Alongside the Disclosure Document, it is advisable to provide prospective franchisees with an Information Statement prior to entering into any Agreement. This statement typically outlines the risks associated with franchising, due diligence requirements, and addresses common questions that buyers might have. Transparency from the outset can lead to a smoother transition for all parties involved.

Review your Franchise Agreement carefully to determine whether obtaining consent from your franchisor is mandatory before selling your franchise. Many Agreements stipulate conditions such as a right of first refusal or specific notice periods. Adhering to these obligations is essential to avoid any breach of contract.

Lease

If your lease is in your name, ensure that you arrange for its transfer to the new owner. Failure to do so means you could remain liable for the lease payments. You will likely need the landlord’s consent to assign your lease or establish a new lease in the buyer’s name. It is crucial to check your Agreement for any clauses that might affect this process, particularly any reference to the right of first refusal.

Transferring a lease requires a separate process that includes validating the buyer as the new tenant and finalising the payment terms. It is advisable to manage these requirements diligently to prevent complications in the future.

Training

When selling your franchise, ensuring that the new owner can fulfil all operational obligations is essential. As the outgoing owner, you may have a duty to train the new owner in key aspects of the business, including specific contractual, legal, and operational standards mandated by your franchisor. In some cases, you might continue to be involved for a transitional period to guarantee the business maintains its performance.

Can I Ask For Help?

The selling process can be complex and at times overwhelming. That is why it is highly advisable to seek professional assistance. Whether it’s navigating your Franchise Agreement or determining an accurate market valuation, engaging a specialist such as a franchise lawyer can simplify the process considerably.

You might want to:

Speak to a qualified franchise lawyer
Consult with an accountant for updated financial assessments
Engage a real estate appraiser to establish the franchise’s current market value

Of course, if you feel comfortable handling these steps yourself, your familiarity with your business is a unique asset. Just be sure to meticulously adhere to all regulatory and contractual requirements.

Helpful Tips For Selling

The selling process can be lengthy, so it is important to stay patient and organised. Here are some additional tips to ensure a smooth transition:

Confirm that every step you take is compliant with current regulations and disciplinary guidelines from FANZ and the Commerce Commission
Keep all financial records updated and arrange for regular reviews with your accountant
Review your ongoing obligations even after the sale—consider having a lawyer examine these clauses for you (learn more about what makes a contract legally binding)
Maintain rigorous records of all agreements and discussions with the buyer to safeguard against future disputes
Research the competitive market to ensure your selling price is both fair and attractive
Ensure all necessary equipment, loans, and documents are fully organised and accessible
Provide the buyer with access to essential systems, customer data, and intellectual property as required
Consider listing your franchise earlier rather than later to attract a higher number of potential buyers and secure a competitive price
Maintain full transparency with your franchisor at all stages of the process, and consider consulting them for advice along the way

Post Sale Obligations

Assuming you’ve found the ideal buyer and the sale is nearing completion, what comes next? Once the transfer of ownership is finalised, your franchisor may impose a restraint of trade or non-compete clause, particularly if you were privy to sensitive business information and trade secrets. We have discussed these in detail in our article on restraint clauses.

You may also be required to assist with training the new owner to ensure a seamless transition. This could mean working in a consultancy or transitional capacity for a set period after the sale, ensuring that the business continues to run efficiently under the new leadership.

Franchising Resources

Franchising law is multifaceted and ever-changing, which is why expert legal guidance is invaluable. Explore some of our key resources to help you navigate different stages of the franchising process:

Next Steps

Selling a franchise is a significant undertaking and can be complex if you are not entirely familiar with your obligations. It requires you to stay updated with current regulations, closely follow your contractual terms, and continuously run your business efficiently until the sale is complete.

Sprintlaw is here to help. Our team of expert lawyers is experienced in all facets of franchising law – from reviewing your Franchise Agreement to guiding you through every step of the sale process. Whether you need advice on drafting a comprehensive Deed of Termination or understanding your post-sale obligations, we are ready to support you.

If you would like to discuss your options further, please reach out to us at 0800 002 184 or email [email protected] for a free, no-obligations consultation.

Rowan Gardoce

Rowan is the Marketing Coordinator at Sprintlaw. She is studying law and psychology with a background in insurtech and brand experience, and now helps Sprintlaw help small businesses