Proposed franchising code reforms welcomed by ASBFEO

automotive dealsers
New luxury red shiny compact car parked in modern showroom. Car dealership office. Car retail shop. Electric car technology and business concept. Automobile rental concept. Automotive industry.

The Federal Government has proposed key reforms to the Franchising Code of Conduct, including particular changes to those in the automotive industry in an effort to mitigate the power imbalance that is benefits multinational car manufacturers over Australian dealers.

Should the proposed reforms be enacted, big businesses will face penalties of up to $10 million for willful, egregious and systemic breaches of their obligations under the Franchising Code.

The Australian Small Business and Family Enterprise Ombudsman Bruce Billson has welcomed the proposals.

“These proposed changes represent significant progress and once passed, will go a long way to levelling the playing field in the automotive franchising sector,” Billson said.” They will ensure that franchise-like arrangements where dealers are operating as the car-maker’s new vehicle sales agent still benefit from the Franchising Code protections.”

Billson heralded the changes that apply to the automotive industry as s sign of the Government’s commitment to continue working with the automotive franchising sector to examine unfair contract terms in their agreements.

“A mandatory best practice framework will help address the ongoing issue of1 multinational car manufacturers who fail to follow the current voluntary principles,” Billson said.

“Examples of small car dealers being devastated by the actions of multinational manufacturers in recent years has warranted this action. Higher fines for significant breaches of the Franchising Code will act as a big stick that will force the larger players to think twice before acting unfairly towards their franchisees.

“We also welcome the government’s interest in exploring arbitration to provide small businesses with access to binding and right-sized dispute resolution pathways that are less costly and faster than going through the court system – a theme pursued in our Access to Justice report,” Billson added.

“My office looks forward to seeing the detail of this announcement and has been pleased to see the bipartisan support for the much-needed reforms to the franchising sector.”

Billson also reiterated his call for franchisees to contact the ASBFEO for issues regarding unfair treatment by a franchisor or resolution of franchise disputes.