Chapter 5: The Sale and Termination of a Franchised Business

The disposal of a franchised business from an existing franchisee to a third party was recognised through three mechanisms under the 1998 Code which referred to an assignment, novation or the execution of a new franchise agreement by the incoming party. Each process was assumed to be preceded by the need to secure the franchisor's consent under the terms of the franchise agreement. These terms invariably specified a range of criteria for the granting or withholding of consent.

The 1998 Code definition of a ‘transfer’ lacked specificity, reading includes a grant, transfer or sale.¹

The mechanics of any transfer were dealt with under clause 20 requiring the franchisor to: