Media releases

Industry welcomes franchising reforms

14 February 2020

The Victorian Automobile Chamber of Commerce's national body, the Motor Trades Association of Australia (MTAA), has welcomed reforms announced by the Commonwealth Government to address a power imbalance between car manufacturers and new car dealers – a move that will better protect automotive small businesses and consumers.

The reforms, released by Minister for Industry, Science and Technology, Karen Andrews and Minister for Employment, Skills, Small and Family Business, Michaelia Cash, will see the introduction of specific regulations as part of a revitalised Franchising Code of Conduct with a penalty regime for breaches.

MTAA CEO, Richard Dudley said the regulations released for final consultation are significant and will go a long way to addressing significant problems experienced by new car retailing franchisees in the areas of capital expenditure requirements, adequate time to secure returns on substantial investments, better clarity and protections for end of franchise obligations and improved resolution mechanisms for disputes.

"These are long-standing issues and MTAA and state and territory Motor Trades Associations and Automobile Chambers of Commerce members are pleased government has agreed to our call for a specific automotive retail schedule to the Franchising Code of Conduct to address them.

"This regulatory response follows continuous representations on behalf of new car retailers for more than a decade, including input into reviews of the Franchising Code and the Australian Consumer Law. More recently we and new car, motorcycle, and farm and industrial machinery dealers have provided significant input into the Australian Competition and Consumer Commission new car retailing market study and a Joint Parliamentary Committee investigation into Franchising," Mr Dudley stated.

Mr Dudley went on to declare that the government's decision to strengthen the Franchising Code of Conduct, recognise automotive retailing with a specific schedule, and include a penalty regime for breaches, vindicates the federation and member arguments over the impacts of a significant power imbalance between some car manufacturers and dealers.

Work is still to be done however, MTAA expressing its disappointment that the motorcycle and farm and industrial machinery retail franchisees are not yet included in the Franchising Code automotive schedule.

"MTAA understands that the almost identical concerns of our motorcycle and farm and industrial machinery retailers have been recognised and we have been assured these industries' concerns will be addressed following an early review of these regulations," said Mr Dudley.