Minister for Small Business Julie Collins this week announced a comprehensive review of the Franchising Code of Conduct (the Code). Its a great opportunity to further advocate for reforms to include truck, motorcycle and farm machinery dealers in the entire suit of Code protections.
Who will lead the Code review?
Dr Michael Schaper will undertake the Code review. VACC and MTAA know Dr Schaper well. He has extensive experience with the franchising and broader small business sector.
About the terms of reference
The Code review will evaluate previous reforms and bring several reviews under one umbrella, including statutory reviews of the Franchise Disclosure Register and new car dealership protections in the Code. View the terms of reference.
The Franchising Code of Conduct Review will have regard to the following:
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The general fitness for purpose nature of the Franchising Code, which is due to sunset on 1 April 2025
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The role of the Australian Competition and Consumer Commission and the Australian Small Business and Family Enterprise Ombudsman in supporting enforcement and dispute resolution under the franchising regulatory framework
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For retail automotive, the role of the Franchising Code in regulating the automotive sector, including:
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Whether Franchising Code protections available to automotive franchisees should be extended beyond new car dealerships (for example, to truck, motorcycle and farm machinery dealerships). This is a key priority for VACC franchise members.
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The effectiveness of 2020 and 2021 reforms which:
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provided for multi‑party dispute resolution and clarified that agency models are captured by the Franchising Code
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created new obligations relating to compensation in the event of early termination, and franchisees’ capacity to make a return on investment
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provided additional protections to apply at the end of a franchise term, including notification requirements and processes for winding down
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restricted the franchisors’ capacity to require a franchisee to undertake significant capital expenditure
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clarified the operation of the Franchising Code's obligation to act in good faith in relation to new car dealerships.
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The impact of 2022 reforms, which increased certain penalties available under the Franchising Code to: the greater of $10,000,000 or three times the benefit obtained; or 10 per cent of annual turnover.
Further comments from the Minister
The Minister has further stated that ‘the Albanese Government is committed to a framework which promotes positive commercial relationships and fair trade and doesn’t unduly restrict competitive conduct’. View the Minister’s media release.
Next steps for VACC and MTAA on behalf of our new car, truck, motorcycle and farm machinery dealers
MTAA has been advised that review process will be informed by consultation, which allows all interested parties to make submissions. MTAA will make a submission on behalf of its franchise dealer members and will have a particular emphasis on the introduction of extended Franchising Code of Conduct protections for commercial vehicle, motorcycle, farm machinery and industrial machinery dealers.
MTAA will prepare a final report that includes appropriate findings and recommendations for Minister for Small Business, the Hon. Julie Collins MP, by the end of December 2023.
The Government advises it will release a consultation paper soon.