What a Franchise Agreement Does to a Motel or Hotel Loan
Accommodation Finance
Franchising Code · Capital expenditure · Transfer consent · Accommodation finance
A brand agreement does not sit beside your motel or hotel loan, it can constrain the term, add future capital expenditure and create consent steps that have to fit around finance, the lease and settlement. This guide reads the agreement the way a credit team does, against the Australian Franchising Code, then follows what happens next whether you are buying, selling, renewing, refinancing or dealing with a brand change.
Quick Answer
A franchise agreement rarely decides whether an Australian motel or hotel gets financed. It can limit a franchise-specific loan term, add refurbishment costs the Code confines to four permitted categories, and make a sale subject to franchisor consent, which is deemed given if not refused within 42 days.
First check whether the arrangement is actually a franchise, then find the date it was last entered, transferred, renewed or extended. Those two facts decide which Franchising Code rules apply. Then see franchise loans in Australia for the wider lending picture.
Also searched as: brand agreement and motel finance, franchised motel loan, franchisor consent to sell a motel, selling a motel with a franchise agreement, buying a branded motel, Franchising Code and motel lending, is a motel membership group a franchise, franchisor mandated refurbishment, motel franchise renewal, side deed for an accommodation financier, brand agreement term and loan term.
Where are you right now?
- Selling a branded motelRequest franchisor consent in writing the day you have a buyer. Consent cannot be given until the statutory 14-day document period has run, and a separate 42-day refusal clock applies once the request and any further information are complete. See the consent timeline
- Buying a branded motelYour file faces two credit checks, the lender's and the franchisor's, and the transfer moves the agreement onto the current Code. See what the buyer needs
- Renewal coming upThe renewal disclosure document is where a new refurbishment obligation can lawfully attach, and you are entitled to a recoupment discussion first. See the refurbishment rules
- Refinancing with a short term leftThe remaining agreement and lease term can constrain the facility term, and holding over is generally treated as no certain term at all. See loan term and the agreement
- Brand ending or being withdrawnTermination for breach, a franchisor leaving the market and a non-renewal each land differently on your loan. See when the brand comes off
- Not sure it is even a franchiseSome accommodation groups are memberships or co-operatives, and the Code may not apply at all. See the four-part test
Every section below opens with the direct answer, so you can go straight to yours.
Does running under a brand make a motel easier to finance?
Not automatically. We found no published Australian lender policy that gives a motel or hotel better lending terms simply because it carries a recognised brand. What the agreement changes most clearly is the documents a credit team has to read, the term it can rely on and the deadlines that can sit between approval and settlement.
That matters because the opposite claim circulates freely. Ask the question online and you will be told that brand affiliation makes a motel easier to fund, that a flag improves the security position, that lenders prefer a recognised operator. Trace those answers and they run back to United Kingdom and United States hotel-franchising material: British hotel-property lending commentary, American hospitality consultancies, and a United States law firm note on hotel franchise financing that does not mention Australia anywhere in it. The most-cited valuation standard returned on an explicitly Australian query states on its own face that it applies to the United Kingdom and the Crown Dependencies.
None of that is wrong where it was written. It is answering a different country's question. The Australian rules that govern your agreement sit in the Franchising Code, a Commonwealth instrument with its own timetable, its own consent machinery and its own limits on what you can be made to spend. So the safer Australian starting point is that the brand is not a substitute for trading performance, security or serviceability, but the agreement can materially change the process and the lender's exit risk. Everything below is about those constraints.
If you are still working out what you are buying rather than what the brand does to it, start with how to buy a motel and the motel finance guide, then come back here once you have the agreement in front of you.
From our broking, indicative
On branded accommodation files we place, the brand agreement is a document problem well before it is a credit problem, and the files that go badly are almost always the ones where nobody read it early.
- What gets a branded accommodation file declined is rarely the brand. It is a remaining agreement term shorter than the loan term being asked for, or a franchisor consent nobody started early enough.
- What a credit team asks to see is the agreement itself, the current disclosure document, evidence of the most recent renewal or extension, and any schedule of required capital expenditure attaching to it.
- Gathering that set from a franchisor tends to take us weeks rather than days, and that lead time is the part sellers and buyers both underestimate.
Indicative only, based on branded accommodation files we have placed, as at September 2026. Not a quote and not an offer, and not a statement of what any lender will do. Actual terms depend on lender policy and your circumstances at the time of application. Not financial advice.
Is your motel's brand agreement actually a franchise?
Only if it meets all four parts of the definition in section 7 of the Franchising Code, and whether it does decides whether any of the protections on this page apply to you. Many motel and hotel brands in Australia run as franchise systems, but some accommodation groups operate as marketing memberships, referral networks or member co-operatives, and the name on the contract does not settle the question.
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| Part of the test | What the Code requires | What to look for in a motel agreement |
|---|---|---|
| 1. An agreement | Written, oral or implied, in whole or in part. | The brand, membership or licence agreement, plus any manual or fee schedule it brings in. |
| 2. A system or marketing plan | A right to run the business under a system or marketing plan substantially determined, controlled or suggested by the brand owner or its associate. | Mandated brand standards, an operations manual, central reservation and loyalty rules. |
| 3. Brand association | The business is substantially or materially associated with a trade mark, marketing or commercial symbol the brand owner owns, uses, licenses or specifies. | Brand signage, the brand name on booking channels, shared marketing. |
| 4. A required payment | You must pay or agree to pay the brand owner or its associate to start or continue, such as an initial fee, a percentage-based fee or a training fee. Genuine wholesale purchases, loan repayments and market-value property or equipment costs do not count. | A joining fee, a royalty or percentage of room revenue, a marketing or reservation fee. |
Is a hotel management agreement the same as a franchise agreement?
No. In Australia, a hotel management agreement generally appoints an operator to run the hotel for the owner, while a hotel franchise arrangement gives the owner access to the brand and system and leaves the owner, or a separately appointed operator, responsible for operating the hotel. A hotel can therefore carry a recognised flag without the agreement in your hand necessarily being the franchise agreement this guide is about.
Do not apply the Franchising Code just because the property has a brand on the building. Test the actual arrangement against section 7 first. If the owner has both a franchise agreement and a separate management agreement, a lender will usually need to understand both because one governs the brand relationship and the other governs who operates the business.
Source for the operating-structure distinction: Maddocks, Negotiating Hotel Management Arrangements, 19 June 2026, read 22 September 2026; Franchising Code s 7 remains the legal test for whether a particular arrangement is a franchise. Qualifier: hotel structures vary and the labels used by the parties are not conclusive.Two exclusions matter for accommodation. A landlord and tenant relationship is not in itself a franchise agreement, so a lease of the motel does not become one just because the landlord owns the name on the sign. And the Code does not apply where, under the arrangement, you are a member of a registered co-operative or a voting member of a mutual entity. Some accommodation marketing groups are member-owned, so check how yours is structured.
A quick check you can run today. Franchisors must provide information for the government's Franchise Disclosure Register, which anyone can search by franchisor name, trading name or ABN. If the brand on your motel is not on it, ask the brand owner in writing why. The arrangement may not be structured as a franchise at all, and that changes which rules protect you and what a lender will ask to see.
Why a lender cares. If the arrangement is a franchise, the Code's consent clock, capital expenditure gates and end-of-term notice sit underneath the contract. If it is not, the contract alone governs, and a credit team reads the termination, transfer and refurbishment clauses with nothing underneath them. Either way the lender wants the document. What changes is how much of it is fixed by law, and how lenders assess a franchise loan sets out the rest of that credit read.
Which version of the Code applies. The current Code applies to agreements entered into, transferred, renewed or extended on or after 1 April 2025. Agreements that already existed stay under the old Code until they are terminated, transferred, renewed or extended. Some rules start later: the ACCC's guidance says the capital expenditure disclosure rules, the reasonable-return rule and compensation for early termination apply only to agreements entered into, transferred, renewed or extended on or after 1 November 2025. The date of your most recent renewal, extension or transfer is therefore the first thing to find.
Sources: ACCC, 2025 Franchising Code changes: guidance on the 1 November changes, dated 13 October 2025, read 22 September 2026; Franchising Code ss 97 and 98 (application, saving and transitional provisions) and Part 7 (Franchise Disclosure Register), F2024L01605, compilation No. 1, read 22 September 2026; Franchise Disclosure Register buyer page, franchisedisclosure.gov.au, read 22 September 2026.Will a lender lend past the end of your franchise agreement?
Sometimes. For franchise-specific business debt, the remaining franchise agreement and any underlying lease commonly constrain how long a lender is prepared to write the facility because they constrain how long the current operating structure is certain to continue. A property-backed or separately secured facility can be structured differently, so the franchise expiry is a credit constraint rather than a universal loan-term formula.
What if the franchise agreement is holding over or renewal is not confirmed?
A month-to-month or at-will holdover does not give a lender the same certainty as a fresh fixed term. If renewal is not yet confirmed, the finance file has to show what trading and security survive if the brand ends, whether the underlying lease continues, and whether the debt can still be serviced or refinanced without the current brand.
Three situations come up repeatedly. The first is a straightforward mismatch, where the loan term being asked for is longer than the agreement has left to run, and the file has to answer what happens in the gap. The second is holding over, where there is no certain future agreement term. The third is the end-of-term notice itself.
That notice is fixed by law. A franchisor must tell you in writing whether it intends to extend the agreement, enter a new one, or do neither, at least six months before the end of the term, or at least one month before if the term is shorter than six months. If it intends to extend, the notice must tell you that you can request a disclosure document. Six months is generous for a notice provision and short for a loan. You may be finding out what happens to the brand with half a year to go on a facility that has years left on it.
There is also a consideration period. A franchisor must not sign an agreement, a renewal or an extension until 14 days after it gives you the required documents, and that period restarts if it changes the agreement other than in minor ways or gives you new earnings information. It is short, but it sits at exactly the moment a lender is waiting on you.
Sources: Franchising Code s 36 (end of term arrangements) and s 23(6) (consideration period), F2024L01605, compilation No. 1, read on the Federal Register of Legislation on 22 September 2026. Qualifier: how any lender sizes a term against an agreement is lender policy and practitioner judgement, not a rule in the Code.The workable answer is to bring the agreement to the conversation at the start rather than at valuation. Where the agreement is short, the structures that tend to survive are a shorter facility matched to the term, a stronger deposit position, or more of the security weighted to the real property. How much deposit a motel purchase needs and the accommodation acquisition document pack are the practical next steps, and where the brand decision is genuinely open, the franchise against independent comparison is the same trade-off in a different sector.
Who pays for a brand-mandated refurbishment, and what does it do to a loan you have already drawn?
If the franchise agreement requires the franchisee to incur the refurbishment cost, the franchisee is responsible for funding it unless another arrangement, such as a specific purpose fund, landlord contribution or negotiated brand contribution, covers part of the works. Under section 60 of the Franchising Code, a franchisor can only require significant capital expenditure during the term through one of four permitted categories. None of those rules automatically extends your loan, so a new refurbishment obligation can become a capital event the existing facility was not originally sized around.
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| Gate | What it requires | When it is available |
|---|---|---|
| Gate 1: Prior disclosure | The expenditure was disclosed in a disclosure document as required by section 20(4). | Only if that document was given before the most recent of entry, renewal, extension of term or extension of scope. |
| Gate 2: Majority incurred and approved | All or a majority of franchisees will incur it, and a majority of those franchisees approve it. | Any time in the term, once both limbs are met. |
| Gate 3: Legislative compliance | You incur it to comply with legislative obligations. | Any time in the term, where the obligation is genuinely legislative. |
| Gate 4: Your agreement | You agree to the expenditure. | Any time in the term, on your own agreement. |
Gate 1 is the one that reaches your loan, because it is time-anchored. For an accommodation operator, renewal is the normal event: it is the moment a fresh disclosure document lands, and therefore the moment a new refurbishment obligation can lawfully attach to a business whose facility may have years left to run. The disclosure document must state whether significant capital expenditure will be required during the term and give its rationale, amount, timing, expected outcomes and risks, as far as practicable.
What counts as significant. The Code sets no dollar threshold. The ACCC's capital expenditure guidance says expenditure is likely to be significant where it is large compared with your initial investment, profits or turnover, where it would make it hard to stay solvent or profitable, or where it goes beyond normal repairs, maintenance and end-of-life replacement. Its own worked example is a refurbishment costing a fifth of the franchise price, required every five years. It names major refurbishments and fit-outs, rebranding, relocations and equipment, software or technology upgrades as likely to be significant, and notes that some expenditure may instead be required by a landlord under a lease.
Source: ACCC, Disclosing significant capital expenditure for franchising, page dated 12 July 2026, read 22 September 2026. Qualifier: ACCC guidance explains how the regulator reads the Code; it is not the Code, and whether a particular refurbishment is significant turns on your figures.If your hotel brand calls it a PIP. If your hotel brand uses the term Property Improvement Plan (PIP), treat it as the brand's label for required upgrade works, not as a separate category in the Australian Franchising Code. For an Australian franchise, the legal questions remain what the agreement requires, whether the spend is significant capital expenditure and whether section 60 permits it to be required during the term.
Before a franchisor enters into, renews or extends an agreement, the two of you must have discussed that disclosed expenditure and the circumstances in which the franchisor considers you are likely to recoup it, having regard to the geographical area you operate in. That is a different conversation for a regional highway motel than for a metropolitan one, and you are entitled to have it before you sign.
The agreement itself must also give you a reasonable opportunity to make a return, during the term, on any investment the franchisor requires. That is the statutory thread connecting the money you are asked to spend to the time you have left to earn it back, and it is the same thread a credit team pulls when it sets your loan term. It applies to agreements entered into, transferred, renewed or extended on or after 1 November 2025, and it does not guarantee profitability. The ACCC's own example of where a reasonable opportunity is less likely is a franchise term and a lease that are not aligned, so a landlord refurbishment required late in the franchise term cannot be recouped. On a leasehold motel, that mismatch is the first thing to check.
Where a brand collects contributions for refurbishment or technology through a pooled fund, the ACCC treats it as a specific purpose fund, which must be held in a separate account, reported in an annual financial statement and, unless 75 per cent of contributing franchisees vote otherwise, audited. Ask for that statement: it shows a lender how much of a refurbishment is already funded.
Sources: Franchising Code s 20(4) (capital expenditure disclosure), s 47 (recoupment discussion), s 44 (reasonable opportunity for return) and s 31 (specific purpose fund statements), F2024L01605, compilation No. 1, read 22 September 2026; ACCC guidance on the 1 November 2025 changes, read 22 September 2026. Qualifier: the ACCC examples illustrate how the regulator reads the Code, not an outcome on any particular agreement.A regional motel operator reaches the renewal point on a brand agreement with a facility that still has several years to run. The renewed disclosure document carries a refurbishment the operator has never been asked to fund before, and it is lawful precisely because it is disclosed before the renewal rather than dropped into the middle of a term. Before signing, the operator is entitled to the recoupment discussion, with regard to where the business actually trades, and to test whether the agreement leaves a reasonable opportunity to earn the money back during the renewed term. The lender was not asked about any of this, because at that point it is not a lending question. It becomes one the day the invoice arrives.
Practically, a mandated refurbishment competes with your repayments and usually cannot be met from trading cash in a soft season. How it gets funded is covered in motel refurbishment and cabin development finance, and if the timing is bad it often becomes a refinance of the accommodation business or an equity release against the freehold rather than a new facility.
What happens to the valuation and the security if the brand comes off?
It depends on how the brand ends and on the facility terms. A termination for breach may trigger a review or default under the loan and can affect the going-concern valuation while no replacement brand or operating plan is in place. A franchisor withdrawing from the market triggers compensation terms that agreements made, transferred, renewed or extended from 1 November 2025 must contain. An orderly non-renewal comes with advance notice, which gives the borrower and lender time to plan a rebrand, sale or refinance.
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| How the brand ends | What the Code says | Valuation | Your facility |
|---|---|---|---|
| Termination for breach | Written notice of the breach, what to fix and a reasonable time, which need not exceed 30 days. Some grounds, such as losing a licence you must hold, allow 7 days' notice. | Loses the brand's trade before any replacement is in place. | May trigger a review or default, depending on the facility terms, often while the trading plan is changing. |
| Franchisor exits Australia, rationalises its network or changes distribution model | Agreements made, transferred, renewed or extended from 1 November 2025 must provide compensation, including for unamortised capital expenditure the franchisor requested. | Depends on the replacement brand and the compensation paid. | Lender will want the compensation clause and a rebrand plan. |
| End-of-term non-renewal | At least 6 months' written notice of the franchisor's intention. | Valuer can be instructed on a known forward basis. | Plannable: match the term, stage the rebrand or refinance early. |
For a hotel, one 7-day ground deserves attention: losing a licence the franchisee must hold to run the business. For a licensed venue that is the liquor licence, and the pub and hotel finance guide covers how lenders read that risk.
On the valuation side, the regulator is blunt about what is actually sold when a franchised business changes hands. It is the right to operate under a brand, and the ACCC says that right can significantly reduce in value over time, with any brand. The small business ombudsman puts the same point from the operator's side: franchisees often have limited rights when the agreement ends, and the result can be receiving no value for the franchise at all. You may not get any value for goodwill at the end, or whose efforts built it may be contested.
What protects that goodwill is partly the restraint rule. Under the current Code, a franchisor must not include, or rely on, a restraint of trade that would stop you trading after a non-renewal where you asked in writing to renew on substantially the same terms, met the renewal conditions, were not in serious breach, and received no genuine compensation for goodwill. That is what keeps an independent or rebranded future open, and an open future is what a lender values when the flag comes down.
Sources: Franchising Code ss 42 and 67 (restraint of trade after non-renewal), F2024L01605, compilation No. 1, read 22 September 2026; ACCC guidance on selling or transferring a franchise agreement (updated 21 August 2026) and on ending a franchise agreement, and ASBFEO guidance (asbfeo.gov.au) on exiting a franchise, read 22 September 2026. The ASBFEO page displays no last updated date.The Australian valuation guidance for this asset class is narrower than people assume. It directs a valuer to profile the hotel operator including details of its brands, to review agreements between owner and manager or operator that may affect value, and to assess whether the terms sit outside typical market practice. It gives no franchise-specific guidance and does not tell a valuer what a brand is worth. A valuation that treats brand affiliation as an additive line item is doing something the Australian standard does not direct.
What survives is the real property and the trade. That is why the split between the motel freehold and the business matters so much here, why the bricks-and-mortar read and the going concern valuation can diverge sharply on the same asset, and why an operator whose going concern value leans on the brand carries a different risk from one whose value sits in the land and the trade. A leasehold operator carrying a brand agreement over the top has two expiries to manage instead of one.
How does franchisor consent work when you sell or buy a franchised motel?
A franchisor cannot consent to a transfer until at least 14 days after the later of the required transfer documents and any later earnings information given to the buyer. Separately, if the franchisor does not refuse in writing within 42 days of the later of the seller's written request and the last requested further information being provided, consent is deemed given. One ground for refusal is that the buyer is unlikely to meet the agreement's financial obligations, so a buyer can face the lender's credit assessment and the franchisor's financial assessment at the same time.
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| Step | The rule | What it means for the sale and the loan |
|---|---|---|
| 1. Seller requests consent in writing | The request must carry all the information the franchisor would reasonably need. The franchisor may ask for more, in writing. | Send it the day a buyer is identified, with the buyer's financial position attached. |
| 2. Buyer receives the transfer documents | The existing agreement, anything the buyer must sign, and the disclosure document and Code unless the buyer opts out as an existing franchisee. | Pass these to the buyer's lender early. They are what a credit team reads. |
| 3. Earliest date consent can be given | Not before 14 days after the buyer receives those documents, or any later earnings information. | No settlement date should fall inside this window. |
| 4. Buyer's written statement | The franchisor cannot transfer without the buyer's written statement that it has received, read and had a reasonable opportunity to understand the disclosure document and the Code. | Often forgotten. Chase it with the documents. |
| 5. Deemed consent at 42 days | No written refusal within 42 days of the later of the request and the last further information means consent is given and cannot be revoked. | This is the outer limit. Each request for more information moves the start date. |
| 6. Revocation window | A consent actually granted can be revoked within 14 days, in writing with reasons, and not unreasonably. | Allow for it in the settlement date where consent is expressly granted. |
| 7. Buyer's cooling-off | The buyer can unwind the transfer until the earlier of 14 days after becoming the franchisee and taking possession and control. | In a motel sale this usually ends at handover. |
The Code lists six circumstances in which a franchisor may reasonably withhold or revoke consent, and says the list does not limit the circumstances:
- the buyer is unlikely to be able to meet the financial obligations under the agreement;
- the buyer does not meet a reasonable requirement of the agreement for a transfer;
- the buyer does not meet the franchisor's selection criteria;
- the buyer does not agree, in writing, to comply with the franchisee's obligations under the agreement;
- the seller has not paid, or made reasonable provision to pay, an amount owing to the franchisor;
- the seller has not remedied a breach of the agreement.
A transfer is not the only route. The ACCC notes a franchisor may instead require your buyer to sign a new franchise agreement for the rest of your term. That is treated as entering a new agreement rather than a transfer, so the 14-day consideration period and the 14-day cooling-off period for new agreements apply in place of the transfer rules above. Ask the franchisor early which route it will use, because it changes the documents and the dates.
Sources: Franchising Code s 24(1)(b), s 23(6) and s 50, F2024L01605, compilation No. 1, read 22 September 2026; ACCC selling or transferring page, read 22 September 2026.If you are selling
Before you treat the headline sale price as your net proceeds, check the franchise agreement for any right of first refusal, transfer or training fee, amounts that must be cleared before consent, and any defects or refurbishment conditions the franchisor can attach. Then allow separately for the lender payout and discharge, legal and sale costs, and tax advice from your accountant. A sale can be fully funded and still leave less cash than expected if those items are only discovered at the end.
Sequence the consent against the contract, not after it. Consent can also come with conditions: the ACCC gives paying an assignment fee and fixing defects at the premises as examples, and on a motel a defects condition can mean refurbishment work before settlement that neither the buyer nor the lender has priced. The ACCC's guidance also says a franchisor may consider withholding consent where the buyer is unlikely to have a reasonable opportunity to earn a return, including on a refurbishment the landlord requires with a new lease, so a lease-driven refurbishment is part of the consent file, not only the lender's. Send the written request the moment you have a buyer, clear any amount owing and any breach first because those are grounds for refusal, and have your solicitor make the contract conditional on franchisor consent with a settlement date outside the 14-day window. Getting the trading records a lender accepts into order early serves both assessments at once, and vendor finance or a carry-back does not remove the consent requirement, it only changes who funds the gap.
If you are buying
Your finance approval and the franchisor's consent are separate decisions on the same file, and the approval has a shelf life the consent clock does not respect. Before you rely on the seller's description of the brand relationship, read the current disclosure document, ask about the next brand audit or refurbishment programme, and use the disclosure document's current and former franchisee contacts to test how the system works in practice. A transfer also flips the regime: an agreement entered before 1 April 2025 moves onto the current Code when it is transferred, so the capital expenditure position you inherit is not necessarily the one the seller operated under. On a leasehold motel you may need three consents, not two: the franchisor's, the landlord's to assign the lease, and your lender's conditions, which on a leasehold include a deed of consent from the landlord. Why the lease term sets a leasehold motel loan covers that side, and it is worth searching the brand on the Franchise Disclosure Register before you sign anything. Start from how to buy a motel and the accommodation acquisition document pack, and where the sale is within a family or to a manager, accommodation business succession finance covers the handover.
If the franchisor refuses consent
The franchisor must tell you in writing whether consent is given and, if not, why, and unreasonably withholding consent carries a civil penalty. A dispute can go through the agreement's internal procedure or the Code's procedure. Under the Code's own procedure you first give written notice of the dispute, the outcome you want and the action you think will resolve it. If the two sides cannot agree how to resolve it within 21 days, either can refer it to mediation or conciliation, and if you cannot agree on a practitioner the Ombudsman must appoint one within 14 days of a request. The parties share the practitioner's costs equally unless they agree otherwise, and the small business ombudsman puts the average mediation at around $4,000 in total, while noting it varies widely. A dispute about the lease rather than the franchise may fall outside the Code and go to a state small business commissioner instead. Take the written reasons to your solicitor, and tell the buyer's lender early, because an approval can lapse while a dispute runs.
Sources: Franchising Code s 49(1) and (2) (written reasons and civil penalty), s 16 (Ombudsman functions), s 72(1) to (5) (notice, 21 days, 14-day appointment) and s 77 (ADR costs), F2024L01605, compilation No. 1, read 22 September 2026; ASBFEO, Franchising Code of Conduct and Alternative Dispute Resolution, read 22 September 2026. Qualifier: the $4,000 figure is the ASBFEO's stated average, not a quote for any dispute.A motel owner accepts an offer from a buyer whose finance is formally approved and whose settlement date is set. The franchisor's consent was requested late, and the franchisor has since asked twice for further information about the buyer's position, which moves the date the 42-day period runs from each time. The lender's approval has a shelf life, the contract has a date, and the consent has a clock none of the other parties control. Nothing has gone wrong on the finance side. The deal is simply being run on two assessments that were never sequenced against each other.
What does an Australian lender actually take, and what is a side deed?
The security depends first on whether the motel is freehold or leasehold. On a freehold purchase, a lender may take a mortgage over the real property plus security over the business. On a leasehold purchase, the borrower does not own the land, so the lender instead relies on the business assets, lease rights, guarantees and the consents needed to preserve those rights. Where the franchise agreement is critical to the trade, the lender may also ask whether the franchisor will enter a side deed, sometimes called a tripartite deed, giving the financier direct notice and cure rights if the franchisee defaults.
What are lender step-in rights and a non-disturbance agreement?
Step-in rights let a financier receive notice of a borrower default under a critical operating contract and, for an agreed period, cure that default or preserve the contract while enforcement or a sale is worked through. In a hotel management structure, the related document may be called a non-disturbance agreement: the owner, operator and lender agree what happens to the hotel management agreement if the owner defaults under its loan. Where a hotel runs under a management agreement and carries debt, a non-disturbance agreement or mortgagee step-in deed commonly sits alongside it. The exact rights always depend on the negotiated documents.
Qualifier: this describes common practice in Australian hotel financing, not a rule in the Franchising Code, and not evidence that every franchisor or operator will agree to the same lender protections.The side deed is Australian practice and is used in Australian financing transactions. What is missing is the join. The Australian side deed material we reviewed in September 2026 is written largely about construction, landlords, suppliers and hotel management arrangements rather than motel franchise agreements. We found no published Australian rule that says when a motel or hotel franchisor must enter one. Much of the rest of what a search returns is United States material about a different legal arrangement.
What a side deed is designed to address
- A direct contractual relationship between the financier and a third party the borrower's trade depends on.
- Acknowledgement that the financier's security over the contract is permitted.
- A direct obligation on the counterparty to tell the financier before it terminates.
- Rights for the financier to cure the borrower's default and keep the contract alive.
- Confirmation that enforcement by the financier does not itself breach the contract.
- Terms on which the contract can be assigned to a buyer.
What it does not do, and what to check instead
- It does not oblige any franchisor to sign one, and some will not.
- It does not convert a short remaining agreement term into a long one.
- It does not override the consent rules on a transfer or the deadlines attached to them.
- It does not answer who pays for a refurbishment mandated mid-term.
- It is not accommodation-specific, so the Australian material on it is written about landlords and suppliers.
- Ask the franchisor in writing, before the facility is structured, whether it will enter one at all.
The useful move is not to ask a lender whether it wants one. It is to ask the franchisor, early and in writing, whether it will enter a direct agreement with a financier at all and on what terms, because the answer may be no and it is much better to know that before a facility is structured around the assumption. Where the answer is no, the weight shifts back to the real property, which is why the freehold against leasehold map ends up driving so many branded accommodation structures, and why management rights arrangements are read so carefully where they sit alongside a brand.
What should you check before applying for finance or signing to buy a branded motel?
Start with five documents and three written answers, but do not wait for the full set before speaking to a broker. Request them before formal application and collect them while the finance conversation starts, because the disclosure document alone can take the franchisor up to two months to provide and the lender cannot finish the parts of its assessment that depend on the agreement without the relevant documents.
Request these from your franchisor, in writing
- The franchise agreement with every schedule, manual and fee schedule it brings in.
- The current disclosure document. You can request an updated one in writing once every 12 months, and the franchisor must provide it within two months.
- Proof of the latest entry, renewal, extension or transfer date, which decides whether the old or current Code applies.
- Any schedule of required capital expenditure or brand refresh programme, with timing and amounts.
- Copies of any guarantee, security or lease the agreement requires you or your directors to sign, which the franchisor must give you.
- A written answer on the end of the term, if it falls inside the loan period you are asking for.
- A written answer on a side deed: will the franchisor enter a direct agreement with a financier, and on what terms?
- If you are selling, a written answer on transfer: its transfer requirements, selection criteria and fees.
Sources: Franchising Code ss 32 and 33 (updated disclosure document on request, within two months, once every 12 months) and s 30 (copies of other agreements the franchisee must sign), F2024L01605, compilation No. 1, read 22 September 2026. Items 4, 6, 7 and 8 are practitioner requests, not Code obligations on the franchisor.
Scroll the table sideways to see every column.
| Stage | What to line up | Why it matters to finance |
|---|---|---|
| Before the offer becomes hard to unwind | Confirm freehold or leasehold, franchise or management structure, remaining agreement and lease term, transfer fees, selection criteria, any right of first refusal and disclosed future capital expenditure. | These items can change the security, loan term, cash contribution and whether the proposed settlement timetable is realistic. |
| As finance starts | Give the broker and lender the trading records, franchise agreement, disclosure document, lease where relevant, known refurbishment programme and the buyer's proposed ownership structure. | The lender can assess the business and the agreement together instead of discovering a term or consent problem after valuation. |
| During consent | Run the franchisor process and, for a leasehold motel, the landlord assignment process in parallel with finance. Keep every further-information request and response dated. | The 14-day document period, the 42-day refusal clock, landlord consent and the lender's own approval expiry can otherwise run on different calendars. |
| Before settlement | Check the consent conditions, transfer fees, outstanding amounts, required defects or works, lender conditions, payout figures and the settlement date with the solicitor. | A fully approved loan does not cure an unmet franchise or lease condition. |
| After settlement | Calendar the franchise expiry and renewal notice date, lease options, next brand inspection or refurbishment deadline, disclosed capital expenditure and lender review or covenant dates. | The next refinance problem usually starts as a date problem long before it becomes a missed payment. |
Once you have the set, the accommodation acquisition document pack shows what the lender adds to it, and a soft year on occupancy and room rate covers the trading side, which changes the conversation more than the brand does. For the asset classes themselves, motel finance, pub and hotel finance and caravan park finance are the product pages, and the accommodation finance hub collects the lot.
A brand does not by itself decide whether a motel or hotel can be financed. The agreement can constrain the loan term, add consent requirements, create future capital expenditure and change the lender's exit risk, so it needs to be read alongside the property's tenure, trading performance, lease and security structure. Check first that the arrangement is actually a franchise, then read the agreement and disclosure document before valuation and before the settlement timetable hardens. Start at the accommodation finance hub or go straight to the motel finance guide.
Key takeaway: the brand is one layer of the credit file. The agreement tells you which term, consent, refurbishment and exit risks have to fit around the finance.Frequently Asked Questions
Not automatically. We found no published Australian lender policy that gives a motel or hotel better lending terms simply because it carries a recognised brand. The agreement matters because it can constrain a franchise-specific loan term, create future capital expenditure and add consent requirements around a sale or refinance. Start with the motel finance guide for what actually drives an accommodation credit decision.
Only if it meets all four parts of section 7 of the Franchising Code: an agreement, a system or marketing plan substantially determined by the brand owner, operation substantially associated with its trade mark or marketing, and a required payment such as a joining fee or royalty. The Code does not apply where, under the arrangement, you are a member of a registered co-operative or a voting member of a mutual entity. A quick first check is whether the brand appears on the government's Franchise Disclosure Register. Whether yours qualifies is a question for your solicitor, and franchise loans in Australia covers the lending side.
Sometimes. For franchise-specific business debt, the remaining franchise agreement and any underlying lease commonly constrain how long the lender will write the facility. A property-backed or separately secured facility can be structured differently, so expiry is a credit constraint rather than a universal loan-term formula. How much deposit a motel purchase needs explains how the equity position can change the structure.
Termination and non-renewal are different events. A termination for breach may trigger a review or default under the facility, depending on its terms, while an orderly non-renewal arrives with advance notice under section 36 of the Franchising Code. In either case the lender will focus on what trading, security and operating rights survive once the brand changes. That is why the split between the motel freehold and the business matters so much.
If the agreement requires the franchisee to incur the cost, the franchisee must fund it unless another arrangement contributes. Under section 60 of the Franchising Code, significant capital expenditure during the term can only be required through the permitted categories: prior disclosure, majority approval where the test is met, legislative compliance or the franchisee's agreement. Funding it mid-facility is a separate question, covered in motel refurbishment and cabin development finance.
The Franchising Code does not fix a dollar threshold. The ACCC says expenditure is likely to be significant where it is large compared with your initial investment, profits or turnover, where it would make it hard to stay solvent or profitable, or where it goes beyond normal repairs and maintenance. Its examples include system-wide rebranding, technology upgrades, and refurbishments on a regular schedule, such as one costing a fifth of the franchise price every five years. The disclosure obligations took effect on 1 November 2025. How that expenditure lands on an accommodation credit file is in the motel finance guide.
Consent cannot be given until at least 14 days after the later of the required transfer documents and any later earnings information given to the buyer. If the franchisor has not refused in writing within 42 days of the later of the written request and the last requested further information being provided, consent is deemed given. Deemed consent cannot be revoked, but an express consent can be revoked within 14 days with written reasons. Request consent early and get the trading records a lender accepts ready at the same time.
Yes, in limited circumstances. Under section 49 of the Franchising Code a franchisor must not unreasonably withhold consent, but may reasonably withhold it if, among other grounds, your buyer is unlikely to meet the financial obligations under the agreement, does not meet its selection criteria, or you have an unremedied breach or unpaid amount owing. It must give its reasons in writing. Accommodation business succession finance covers the handover side.
Get the reasons in writing, which the franchisor must give under section 49 of the Franchising Code, and take them to your solicitor. Unreasonably withholding consent carries a civil penalty. Under the Code's dispute process you send a notice of dispute, and if the two sides cannot agree how to resolve it within 21 days either side can refer it to mediation or conciliation, with the Australian Small Business and Family Enterprise Ombudsman appointing a practitioner within 14 days if you cannot agree on one. Tell your buyer's lender early, because a finance approval can lapse while a dispute runs. The accommodation acquisition document pack shows what the lender will re-check.
Holding over is where a brand arrangement has run past its expiry and continues on a month-to-month or at-will footing rather than a fresh fixed term. A credit team does not read that as continuity. It reads it as no certain term at all, which is generally a worse position than a short but defined one, because there is no date to structure a facility around. The freehold against leasehold map shows how that interacts with the underlying tenure.
Not as an additive line item under the Australian guidance. ANZVGP 107 directs a valuer to profile the operator including details of its brands, to review agreements between owner and manager or operator that may affect value, and to assess whether terms sit outside typical market practice. It gives no franchise-specific guidance and does not price a brand. The ACCC's position is that the right to operate under a brand can significantly reduce in value over time. See the going concern valuation read.
It depends on the date of the last entry, renewal, extension or transfer. The current Franchising Code applies to agreements entered into, transferred, renewed or extended on or after 1 April 2025, and earlier agreements stay under the old Code until one of those events happens. Some rules, including the capital expenditure disclosure rules and compensation for early termination, apply only from 1 November 2025. The limb most people miss is that a transfer moves an agreement onto the current Code, so a buyer does not inherit the seller's position. Then read the franchise loans guide.
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