Selling your franchise starts with the franchisor’s consent

To sell a franchise in Canada you usually need the franchisor’s consent under your franchise agreement’s transfer clause, and the franchisor may hold a right of first refusal to buy on your buyer’s terms. The buyer also qualifies with the franchisor. In the six provinces with franchise acts, a franchisee’s own resale is exempt from the franchisor’s disclosure duty.

Two sales in one: your assets and your place in the system

To sell a franchise in Canada, you sell the assets of your location and your place in the franchisor’s system at the same time. Lawyers call it a franchise resale. The second half needs the franchisor’s agreement, on terms written into the transfer or assignment clause of your franchise agreement, so read that clause before you speak to any buyer. Farms with supply managed quota face the same kind of gatekeeper in a provincial marketing board, as selling a dairy or poultry farm explains.

Where your agreement treats a change in who owns your company’s shares as a transfer, a share sale needs the same consent, and share sale or asset sale sets out the tax side of that choice. The general steps to sell your business still apply, with one more party holding rights under a contract you signed years ago.

Consent and first refusal in the transfer clause

Two rights in that clause shape the sale. The first is consent: the franchisor approves the buyer in writing before closing, and some agreements let it approve the terms of the deal as well. The second, where your agreement includes one, is a right of first refusal, which lets the franchisor buy your location itself on the price and terms an outside buyer has offered.

You deliver a signed offer to the franchisor, which then has a fixed period to match it. Once that period ends, you may sell to the outside buyer on the terms the franchisor passed on. Look for these points in your own agreement:

• Find the number of days the franchisor has to match an offer, and the notice that starts the count.
• Check whether a match must cover the buyer’s whole package, including any vendor note, or the price alone.
• See whether the right revives if you change the terms after the franchisor has passed.
• Note the transfer fee, whether the agreement states it as a fixed amount or a formula, and who pays it.
• Read the list of conditions the franchisor may set before it gives consent.

Your buyer applies to the franchisor as well

A buyer agrees terms with you and then qualifies with the franchisor. The franchisor’s review usually starts with the buyer’s finances and business experience. Some agreements require the buyer to finish the franchisor’s training before closing day.

A clause may also ask the buyer to sign the franchisor’s current form of agreement in place of taking over yours. That form can carry a different royalty or term, and a buyer will weigh it in the offer. A refit of the premises to the current brand standard is another condition to look for, along with who pays for it.

Other conditions fall on you, such as bringing royalties up to date before closing. A transfer clause may also ask the seller to sign a release of claims against the franchisor. In Ontario, section 11 of the Arthur Wishart Act makes void any release by a franchisee of a right the act gives, and Manitoba’s section 11 and BC’s section 13 say the same, BC with an exception for the settlement of a dispute. A non-compete in the franchise agreement can bind you after closing alongside the one in the purchase agreement.

For a salon or a gym, selling a hair salon or spa and selling a gym or fitness studio cover the rest of the sale. A franchised restaurant also has a liquor licence to transfer, explained in selling a restaurant.

Six provincial franchise acts, read for a resale

Six provinces have franchise statutes, and each makes the franchisor give a disclosure document to a prospective franchisee before an agreement is signed or money changes hands. Each also exempts a franchisee’s own sale from that duty, in close to identical words. In Ontario, section 5(7)(a) of the Arthur Wishart Act sets four conditions:

1. 01The seller is an independent franchisee, separate from the franchisor’s group and its staff.
2. 02The sale is for the seller’s own account.
3. 03In the case of a master franchise, the whole franchise is sold.
4. 04The seller makes the sale itself.

Section 5(8) adds that two things leave the sale in the franchisee’s hands. One is a franchisor’s right to approve or disapprove the buyer on reasonable grounds. The other is a transfer fee set in the agreement or limited to the franchisor’s reasonable actual costs of processing the transfer.

On those terms the buyer relies on its own due diligence and on what you tell it, since the disclosure duty applies to franchises the franchisor grants. Section 12 places the burden of proving an exemption on the person claiming it. Where a franchisor takes a larger part, for instance by finding the buyer and setting the terms, the fourth condition comes into question, and a franchise lawyer should look at it before anyone signs.

In Alberta, the Franchises Act speaks of a sale by a franchisee in section 5(1)(a) and protects “a reasonable right to approve or disapprove the sale” in section 5(2). All six acts also exempt a sale by an executor or a trustee in bankruptcy acting for someone other than the franchisor. We read each act on its government’s site in November 2026.

Fair dealing when the franchisor weighs your buyer

Each of the six acts imposes a duty of fair dealing on every party to a franchise agreement. Five of them define it to include good faith and reasonable commercial standards, and Alberta’s section 7 states the duty alone.

Four acts carry the duty into the exercise of rights under the agreement. In British Columbia, section 3(1) says so in terms, and Prince Edward Island uses the same words in its own section 3(1). Manitoba and New Brunswick reach it through a definition in section 3(3), in The Franchises Act and the Franchises Act respectively. A right to consent to a transfer is one of those rights.

For a seller the practical point is the record. Send the franchisor a complete file on your buyer and keep every exchange in writing. If consent is refused or slow to come, written reasons are what a lawyer needs to judge whether the duty was met.

A franchise resale in the order it happens

1. 01Read the transfer clause and the lease, and list each consent the sale needs, including the landlord’s.
2. 02Bring royalties and supplier accounts up to date.
3. 03Agree terms with a buyer in a signed offer or letter of intent made conditional on the franchisor’s consent.
4. 04Deliver the offer to the franchisor and let the first refusal period run its course.
5. 05Give the buyer monthly sales and the full franchise agreement for its due diligence, because in an exempt resale your records stand in for a disclosure document.
6. 06Support the buyer through the franchisor’s approval and training.
7. 07Close the asset sale and the franchise transfer on the same day, with the franchisor’s written consent in the closing file.

Where InvestDeal fits in a franchise resale

The franchisor learns of your sale when you ask for consent, and with a right of first refusal it reads the buyer’s offer. InvestDeal starts with a free business valuation that you run anonymously, so you know where your location stands before the franchisor hears you are thinking of selling. The usual route begins with a meeting and often a retainer.

Buyers first see an anonymous profile that shows the region and the earnings band. The name and the statements unlock one buyer at a time, after a non-disclosure agreement and your approval, so you can check a buyer against the franchisor’s criteria before your staff or neighbouring franchisees learn who it is.

The fee is five percent of the sale price, payable on closing as the only payment you make. A resale can end at the consent stage, and since the fee falls due on closing day alone, such a sale costs you the time it took.

InvestDeal acts for the seller alone. The franchisor has its own interest in who runs the location next, and the buyer has its own adviser. To see where your location sits today, the Quick AI valuation returns an early range in a few minutes, before you give anyone your name. InvestDeal’s retail and consumer M&A advisory page sets out the buyers active in the sector and what they check.

Questions owners ask

Do I need the franchisor’s consent to sell my franchise?

The franchise agreement decides it, and its transfer clause usually requires the franchisor’s written approval of the buyer. The six provincial franchise acts leave the consent right to the agreement and add a duty of fair dealing, which in BC, Manitoba, New Brunswick and Prince Edward Island covers the exercise of a right under the agreement.

Does the franchisor have to give my buyer a disclosure document?

A franchisee’s own resale is exempt in all six provinces with franchise acts, on four conditions, one of which is that the franchisee makes the sale itself. A right to approve the buyer on reasonable grounds, and a transfer fee set in the agreement or at reasonable actual cost, leave the exemption in place.

What is a right of first refusal in a franchise agreement?

It lets the franchisor buy your location itself on the price and terms an outside buyer has offered. Your agreement sets how many days the franchisor has to decide after you deliver the offer, and you may sell to the outside buyer once that period ends.

Can the franchisor ask me to sign a release when I sell?

A transfer clause may ask for one. In Ontario and Manitoba a release by a franchisee of a right the provincial franchise act gives is void, and BC says the same with an exception for the settlement of a dispute.