2nd March, 2018 · Industry Relations Policy

Industry Code

Issue

The Franchising Code of Conduct (the Code) regulates the conduct of participants in franchising towards other participants in franchising. The Code aims to provide protection for all franchisees through the establishment of minimum standards of conduct and disclosure. Dealers are concerned that the existing Code is too generic and does not recognise the unique features of the automotive retail sector. The AADA believes the industry needs an Automotive Code of Conduct to address imbalance of power issues between manufacturers and dealers and be developed by reference to six principles:

  • Franchising Code of Conduct provisions to be adopted as relevant.
  • Unfair contract terms (UCT) legislative protection to be extended to motor vehicle dealers.
  • Specific industry issues to be addressed in code.
  • Unfair conduct to be prohibited.
  • Manufacturer warranty and policy documentation to uphold ACL rights without exception.
  • Access to service and repair information to be non-discriminatory.

Background

The Code was introduced in 1998 and one of the purposes of the Code was to address the imbalance of power between franchisors and franchisees. A review of the Code was conducted by Alan Wein in 2013 and it recommended that an analysis of the impact of a minimum term and standard contractual terms be undertaken prior to a future review of the Code. It was also recommended that a further review of the Code be conducted no earlier than 2020.

The Motor Vehicle Dealers and Repairers Act 2013 (NSW) (MVDR Act) provides protection for motor dealers against unfair contract dealings or unjust conduct by motor vehicle manufacturers. The MVDR Act allows a dealer or a motor industry group to apply to the Small Business Commissioner for assistance in dealing with a dispute about an unfair contract term or unjust conduct by a manufacturer.

The ACL also provides unfair contract term protections for a small business that employs less than 20 employees and the upfront price payable under the contract is no more than $300,000. AADA considers the definition of a small business is too narrow and UCT protections should be extended to all dealer franchisees regardless of turnover or size.

Key Points

  • The existing Code is generic and does not recognise the unique features of the automotive retail sector.
  • The ACCC noted imbalance of power issues between manufacturers and dealers in its new car retailing industry market study.
  • An Automotive Code will address imbalance of power issues and should be developed by reference to the six guiding principles.

Status

AADA is seeking an automotive industry code of conduct.