Key Takeaways
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A franchise provides access to a brand and operating system under an agreement. Fees, support and performance vary between networks.
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An independent business offers more operating discretion, subject to its contracts, licences and other obligations.
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A franchise resale needs careful review of the existing business, agreement term and franchisor approval process.
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Disclosure and cooling-off rules differ between new and transferred franchise agreements. Obtain advice before signing or taking possession.
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Franchise resale value depends on term and consent, independent resale on how well the business runs without you.
When comparing a franchise with an independent business, assess the total cost, operating restrictions, support and exit arrangements. The label alone does not tell you which will suit your goals.
Bond Business Brokers can help you explore available businesses and identify the information needed for a comparison.
New Franchise, Resale or Independent
A franchise allows you to operate under a franchisor’s brand and system for an agreed term. An independent business operates outside that franchise arrangement, while still having obligations to landlords, lenders, suppliers and regulators.
Within franchising, there are two paths. A new franchise means paying the franchisor’s initial fee, funding a fit-out and opening with no customers. A franchise resale means buying an existing unit from the outgoing franchisee at a price based on its trading, then entering a new or assigned agreement with the franchisor.
Upfront Cost and Ongoing Fees
The two models spend money at different points, and a fair comparison has to account for both:
Franchise Costs
A new franchise may involve an initial fee, fit-out, training and working capital. A resale has a purchase price and may also involve transfer fees, training, refurbishment and other required spending. Check the agreement and disclosure documents rather than assuming the existing fit-out removes those costs.
Ongoing, franchisees pay royalties and a marketing levy, usually calculated as a percentage of gross turnover, not profit. The percentages vary by system and are set out in the disclosure document.
Independent Business Costs
An independent business may be priced by reference to earnings, assets and goodwill. It does not carry franchise royalties, but the transaction may still involve legal, lease assignment, licence, finance and other costs.
The trade-off is that you fund everything the franchisor would otherwise supply, including systems, marketing, supplier terms and training.
Like-for-Like Profit Comparison
Compare earnings on a consistent basis after all recurring costs. Check whether royalties and levies are already included before making adjustments, and include realistic marketing, systems and management costs for each business.
Support and Systems Versus Control
Review the actual support offered by the franchisor, including training, systems, purchasing arrangements and marketing. Speak with current and former franchisees about their experience.
The cost is control. Menus, pricing, trading hours, refurbishment cycles and local marketing are usually set or approved by the franchisor.
An independent owner has more discretion over operations, while remaining accountable to contractual and legal obligations. When comparing Gold Coast businesses for sale, assess the quality of each business’s systems and team rather than assuming either model provides them automatically.
Franchise Agreement Terms
On a resale, the agreement and approval requirements affect both the price and the transaction:
Term and Renewal
Check the remaining term, renewal rights, fees, territory, performance requirements and required capital expenditure. Do not assume renewal is automatic or that the purchase price can be recovered within the available term.
Under the Franchising Code of Conduct, agreements entered into, transferred, renewed or extended on or after 1 November 2025 must give the franchisee a reasonable opportunity to make a return on any investment the franchisor requires, which makes the remaining term and any capital expenditure requirements worth reading closely.
Franchisor Approval
You cannot buy an existing franchise without the franchisor’s consent. Buyers can expect an application, an interview, a financial capacity check and mandatory training before settlement. Under the franchise transfer rules, the franchisor must not unreasonably withhold consent, and consent is taken to be given if it has not refused in writing within 42 days of the request, or of receiving the last information it asked for. The process can still add weeks to a sale timeline.
Disclosure and Cooling Off
Under the Franchising Code of Conduct, the franchisor must give you a current disclosure document at least 14 days before you sign the agreement, and the same 14-day period applies when an existing agreement is transferred to a resale buyer. It covers the franchisor’s financial position, set-up and operating costs, supplier arrangements and rebates, legal actions, capital expenditure obligations and contact details for current and former franchisees.
For a new agreement, the cooling-off period is generally 14 days, subject to the applicable rules. For an existing agreement transferred to a new franchisee, the period can end at the earlier of 14 days after becoming the franchisee or the day they take possession and control. Limited opt-out provisions and other timing rules may apply. Have a franchise solicitor confirm the dates and rights for the transaction.
Resale Value and Exit
The two models exit differently. A franchise unit may sell readily if the brand is strong, the term is long and the numbers are good, and the franchisor’s own marketing partly pre-qualifies your buyer pool. Against that, your sale depends on franchisor consent, transfer fees and the buyer passing approval, and the price is anchored to what other units in the system sell for.
An independent business sells on its own merits. Documented, owner-independent businesses can attract a premium because the buyer gets the upside without paying a percentage of turnover to anyone. Owner-dependent businesses with informal systems may sell for less, or not at all.
Which Buyer Suits Which Model
A franchise may suit a buyer who values defined systems and support, provided the fees, restrictions and actual network performance are acceptable.
An independent business may suit a buyer who wants more control over suppliers, branding and operations and can provide the necessary management support.
For hospitality buyers, compare menu flexibility, supply costs, staffing, refurbishment obligations and sustainable profit. Review both models against the same budget and operating goals.
Questions to Ask First
Before comparing any two opportunities, these questions tend to separate them quickly:
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What is the total cost to acquire, including transfer or franchise fees, training, fit-out or refurbishment, stock and working capital?
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What are royalties and the marketing levy as a percentage of turnover, and what did this unit actually pay last year?
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How much of the agreement term remains, and what does renewal cost and require?
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Who must approve the sale, and how long does that usually take?
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Which systems, suppliers and customer relationships depend on the current owner of an independent business?
Compare the Whole Opportunity
Use verified earnings, total costs and contract terms to compare the opportunities. Consider what you will need to contribute as an owner and how you could eventually exit.
Bond Business Brokers can help you shortlist franchise and independent businesses for sale that match your budget and goals.
Common Questions
Is a franchise resale cheaper than a new franchise?
Not necessarily. Compare the purchase price with establishment costs and include transfer fees, training, refurbishment and working capital. A trading history also needs to be verified.
Can I choose my own suppliers?
Franchise agreements may restrict suppliers, products and purchasing terms. An independent business may have existing supply contracts too. Review the actual obligations and costs.
What should I check before taking possession?
Confirm franchisor consent, finance, lease arrangements and contractual conditions with your solicitor. Taking possession can affect cooling-off rights on a transferred franchise agreement.
This article provides general information only. Obtain advice from appropriately qualified advisers about your circumstances before entering into a transaction or relying on tax, legal or regulatory information.