Much has happened recently within the automotive retail franchising sectors that has impacted the relationship between the franchisor (the manufacturer/distributor/importer) and franchisee (dealer/agent).
The dealer-manufacturer relationship is often one-sided and does not take into account the best interests of the franchisee, the franchisee’s customers, and the franchisee’s local community.
VACC has seen an increase in farm machinery dealer agreements terminated by franchisors, who the present franchisees with new agreements that include terms that may breach the Competition and Consumer Act. VACC waits for a legal opinion on those agreements and will seek the attention of the Australian Competition and Consumer Commission (ACCC) based on the outcome of that advice.
Many of the common issues VACC sees can be resolved in a larger forum of same-brand dealers. There is limited positive outcome by dealing individually. A dealer council is the best way to have a united and powerful voice.
There are several brands that have active dealer councils and coordinate with efficiency and professionalism with their franchisors.
However, there are many ‘main line’ and ‘short-line’ farm machinery and motorcycle dealers who have no formal dealer council structure, and who are actively discouraged by their franchisors from participating or establishing a franchise dealer council.
Drawing on dialogue from VACC members, the best franchise dealer councils are run independently of the franchisor with a non-dealer as chair. The dealer council has direct dialogue with the franchisor from time-to-time, but the dealer council sets the agenda and deliverables.
The dealer council does not specifically exclude the franchisor from attending meetings, but the franchisor can attend by invitation of the chair to join a franchise dealer council meeting to address a specific agenda item. This helps feed or accelerate the views of the franchise dealer network to the senior leadership teams at the franchisor and helps improve the performance of the network for the benefit of the franchise dealer, the franchisor and the consumer.
If your brand, regardless of how small, does not have a franchise dealer council, VACC and MTAA can assist with establishing one. The Franchising Code is currently undergoing a review to measure the performance of certain elements of the current code. VACC has received great support and contributions from farm, industrial, motorcycle, truck and vehicle service and repair franchise dealers to form a response to that review. With the code due to sunset on 1 April 2025, it’s important that collective views of your brands are consistent and captured in a formal capacity, like a dealer council.
There are many good reasons why your brand should form an active dealer council. The opportunity to work with your manufacturer/distributor/importer for better outcomes for all stakeholders is a key reason, along with the potential to access collective bargaining.
Contact Michael McKenna (mmckenna@vacc.com.au) for a confidential discussion on how VACC can assist with setting up your franchise dealer council.