Can a franchisor charge whatever they want as a transfer fee?

Not entirely without limit, though franchisors generally have considerably more contractual room to set a transfer fee than a general "reasonableness" standard might suggest. Most franchise agreements specify a transfer fee, or a formula for calculating one, precisely so this isn't left to be negotiated fresh at the time of every resale — and where the agreement sets a specific figure or method, the franchisor is generally entitled to charge it as written.

The Arthur Wishart Act's duty of good faith and fair dealing can still provide some check on a franchisor using the transfer approval process opportunistically — for instance, demanding a fee wildly disconnected from what the agreement actually specifies, or using the fee as leverage unrelated to the legitimate administrative cost of processing a transfer. But where the agreement's own fee provision is clear and the franchisor is simply applying it, there's limited room to challenge the amount itself.

Before assuming a quoted fee is negotiable or excessive, check exactly what your franchise agreement says about transfers. A Treadstone business lawyer can confirm whether the fee matches the agreement or goes beyond it.