1st November, 2018 · Industry Relations Policy

Industry Code

AADA Position

The AADA believes the industry needs an Automotive Code of Conduct to address the imbalance of power between Manufacturers and Dealers, and the absence of protection against unconscionable behaviour by the franchisor.

Background

There is a power imbalance in the automotive industry between car Manufacturers (franchisors) and franchised new car Dealers (franchisees) that disadvantages both dealership businesses and consumers who purchase new vehicles from Dealers. Many Dealers enjoy good relations with their respective Manufacturers and work in a mutually beneficial partnership, but there remain many instances where Dealers are subjected to treatment resembling a master/servant relationship.

The Franchising Code of Conduct only offers limited protection to new car Dealers. For a variety of reasons, car Dealers are entering agreements which contain oppressive contractual clauses and unfavourable termination/non-renewal/end of term arrangements.

Franchised new car Dealers are very different from the typical franchisees in terms of the scale of their investments and the nature of their business. Similarly, Car Manufacturers are also very different from the typical franchisors in terms of scale, as they are very powerful off-shore multinational corporations.