Knowing that Dealers are facing many challenges in business, and that there have been important changes to franchising laws in recent years, AADA CEO James Voortman had an opportunity at the AADA Convention & Expo to interview HWL Ebsworth Partner, Evan Stents.
Franchising laws changed as of 1 July 2021. We know that Dealers are not confronted by franchising agreement issues every day, but the interview with Evan is a timely reminder of the changes specifically for automotive franchising.
Evan expands on the following substantial, material, and important changes:
- The Holden amendment – an obligation for Manufacturers to compensate Dealers when they withdraw from the market, rationalise the network, or change the distribution model mid-term.
- Extension of the requirement for good faith and for terms of Franchise Agreements to be fair and reasonable.
- AgencyÂ is included in the definition of Motor Vehicle Dealership.
- Dispute resolution includes conciliation, mediation and arbitration and allows collective mediation.
- Terms of Franchise agreements must provide a reasonable return on investment.
Evan reiterated the importance of Motor Dealer Councils, and noted their role has become critical as now Dealers are permitted to become class exempt to negotiate with their franchisors. Dealer Councils should apply for a class exemption.