What Is a Freehold Going Concern Motel?

A freehold going concern (FHGC) is a motel sold as property plus operating business in a single transaction. The buyer acquires the land, the buildings, the fixtures and fittings, the plant and equipment, the business name, and the forward bookings — and takes over a running motel.

It is the most complete form of motel ownership in Australia: no landlord, no rent, and full control over the asset.

Because real property is included, FHGC motels are usually assessed on a capitalisation rate: sustainable profit divided by a yield that reflects location, asset quality, and risk. Strong locations and well-maintained properties attract lower capitalisation rates — and higher prices.

Lenders like the structure because the loan is secured against land and buildings as well as the business, which typically means better lending terms for the buyer.

The premium reflects control and optionality. A freehold owner can sell the business and property together, redevelop the land, change operators, or hold the property long after the business matters. A leasehold owner can do none of these things.

For many buyers — especially those planning a long hold or eventual retirement strategy — the premium is worth paying. For operators prioritising cash flow on a smaller outlay, a leasehold can still make more sense.