Making franchise agreements fairer

Public news

The MTA and dealership members have been advocating for many years in regards to the unsuitability of the Franchising Code of Conduct in addressing the significant power imbalance between new car dealers and manufacturers.

On the 24th of January, the MTA facilitated Working Groups for dealers in an effort to highlight concerns outlined in the Federal Government’s Regulatory Impact Statement (RIS) which proposed options in regards to a proposed Automotive Franchising Code of Conduct. The MTAA’s CEO, Richard Dudley was in attendance at these Working Groups and the MTA is currently working with the national body to finalise a submission in response to the options outlined within the RIS on behalf of dealers.

The MTA has strongly recommended that any solutions to the issues being experienced in automotive franchising agreements must equally apply to motorcycle, heavy vehicle, tyre and farm machinery retailers who experience similar difficulties. These issues were discussed during the Working Groups and the submission will reflect their needs as well.

The Government indicated through the RIS that the power balance being experienced by dealers can be quantified into three areas, all of which were addressed in the Working Groups:

  • End of term arrangements where dealers are being provided insufficient time to prepare when an agreement is not renewed
  • Capital expenditure and dealers not being provided meaningful or precise disclosure
  • Dispute resolution and highlighting that it can be difficult for car dealers to undertake multi party dispute resolution

Following the Working Groups, the MTA and MTAA are also working through assumptions contained in the RIS that could have negative impacts for dealers.

The lodgement of the MTAA’s final submission to the Federal Government will be on the 13th of February and following, an Industry Roundtable will be held in Canberra. Consultations with the Australian Small Business and Family Enterprise Ombudsman will take place in regards to the development of policies and a final stage RIS will be prepared prior to these final decisions being made.

With the Federal Election in May and both the Federal Government and Opposition in favour of an Automotive Franchising Code of Conduct, the objective is to secure a bipartisan agreement to the structure of the Code prior to the election so that implementation can occur seamlessly.

For any information in regards to the Automotive Franchising Code of Conduct, please click here to contact Nathan Robinson, the MTA’s Industry Policy Specialist.