Franchisor Consent To Transfer Of A Franchise

In Lockhart v Holden [2008] QSC 257, Justice Douglas of the Supreme Court of Queensland handed down a judgment where the franchisee challenged the franchisor's refusal to consent to a transfer of its franchise to a third party buyer.

Section 20(2) of the Franchising Code of Conduct (Code) provides that a franchisor must not unreasonably withhold a consent to the transfer of a franchise. In turn, section 20(3)(a) to (h) provides a non-exhaustive list of circumstances in which it is reasonable for a franchisor to withhold consent, including:

1. 'The proposed transferee has not met the selection criteria of the franchisor.
2. Agreement to the transfer will have a significantly adverse effect on the franchise system.'