11th November, 2019 ยท Media Release

Franchised Car Dealers Welcome Options
to Reform Franchising

The peak body representing Australia’s franchised new car Dealers has welcomed the Government’s release of a draft Regulation Impact Statement (RIS) to address Australia’s franchising system.

“There is a clear imbalance in power between new car Dealers and the global Manufacturers to which they are franchised,” said AADA CEO James Voortman.

“The release of today’s RIS is another important step in achieving greater fairness in the relations between franchisees and franchisors,” he said.

“We are encouraged by a number of options put forward in this RIS, but none is more important than the proposal to introduce an obligation on the franchisor to ensure franchisees receive a return on significant capital expenditure,” he said.

“Franchised new car Dealers are required to invest large sums of capital in facilities and equipment, but all too often they are provided with shorter-term Dealer Agreements, making it almost impossible to recover one’s investment,” said Mr Voortman.

“The RIS has also provided options to limit the ability of franchisors to unilaterally vary agreements; expand the options for dispute resolution and clarify franchisees rights in terms of goodwill,” he said.

Achieving better protections for franchised new car Dealers in their relations with OEMs is the AADA’s highest priority. The AADA will be pursuing this goal through various government processes, including:

  • the establishment of automotive specific franchising regulations;
  • reform of the Franchising Code of Conduct;
  • class exemptions for franchisees to engage in collective bargaining;
  • reform to unfair contract terms;
  • reforms to the relations between suppliers and Manufacturers in relation to the Australian Consumer Law.

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