Greater Western Sydney announced on Twitter on Tuesday that it had withdrawn its multi-million dollar offer to the Hawks forward, based on advice that he would accept a rival offer from the Swans.
Franklin's manager Liam Pickering, who also manages both Hawthorn coach Alastair Clarkson and Swans coach John Longmire, is understood to have informed the expansion club of his client's decision on Tuesday morning.
Greater Western Sydney CEO Dave Matthews said Pickering had told the club Franklin intended to accept an offer from the Swans.
In a statement, Matthews said the Giants had put forward what they considered a sensible and attractive offer to Franklin.
"Contrary to media reports, that offer was $1.2 million a year over six years," Matthews told gwsgiants.com.au.
"It appears he has a significantly higher financial offer which we would not have been prepared to make based on our due diligence. We have every confidence in our list management strategy but we cannot compromise it for the sake of one individual.
"We have been patient and shown a lot of respect through the process. This decision now allows us to pursue other options during the forthcoming trade period.
AFL.com.au also understands Fremantle has made fresh inquiries, but is unlikely to win the race for the star's services.
Hawthorn remains an outside chance to retain Franklin, but is yet to make a statement.
Franklin, 26, is expected to formally announce his plans in the next two days.
It was reported by News Limited on Tuesday morning that the Swans had made a $7 million, five-year offer to Franklin, who is a restricted free agent.
The retirements of Jude Bolton, Mitch Morton and Martin Mattner, and the impending departure of Jesse White, have freed salary cap space at the Swans, but it is likely they will also need to offload another player, expected to be ruckman Shane Mumford.
The Swans' apparent acquisition of Franklin comes just a year after it swooped on another big money key forward, Kurt Tippett, and is sure to bring the controversial cost of living allowance, which sees the club given a 9.8 per cent salary cap bonus, under further scrutiny.
Franklin was expected to meet with Clarkson on Tuesday.
The Essendon supplements scandal was the year's biggest story, but from the moment that Franklin uttered those familiar intentions to "put off contract talks until the end of the year", speculation about his future never stopped.
When it emerged during the season the Giants were set to offer a staggering $10-12 million long-term deal for the superstar, many felt his shift to western Sydney had become a when, rather than if, proposition.
But the Swans appear to have trumped the Giants with their late bid.
The two-time Coleman Medal winner and four-time All Australian has spent plenty of time in the harbour city, stating in August: "I like Sydney. I obviously like Sydney a lot.
"But I enjoy myself in Melbourne and obviously love Hawthorn Football Club.
"As I've said from the start of the season, I'll leave that for the end of the season and from there make my mind up on what I'm going to do.
"But at this stage it's Hawthorn where I want to be.''
Hawthorn stated throughout the season it wanted to retain its biggest star, but also started planning for life without him, reportedly withdrawing its contract offer in early September.
The Hawks have an excellent record when Franklin isn't in the line-up and while his departure will hurt, few will expect it to have a seismic impact on the premiers' on-field prospects.
Selected fifth in the 2004 NAB AFL Draft, Franklin played 182 games over nine seasons for the Hawks, kicking 580 goals.
The GIANTS have withdrawn their offer to Buddy Franklin based on advice that he will accept an offer from the Swans.
— GWS Giants (@GWS_Giants) October 1, 2013