The Department of Industry, Innovation and Science is seeking input from car dealers across the nation to prepare for a proposed split from the Franchising Code of Conduct.

The newly released Regulatory Impact Statement (RIS) outlines a number of possible solutions for the tightening relationship strains between car dealers and manufacturers identified by the Australian Competition and Consumer Commission (ACCC) in 2017.

Concerns have been raised over the power imbalance seen between large car manufacturers, dealers and repairers regarding the new car retailing market.

In September, the Franchise Council of Australia (FCA) welcomed the Labour party’s proposed commitment to introducing a separate automotive code, suggesting a new code would address the industry-special challenges faced by those within the sector.

“It is important that in the preparation of any new code, the industry is comprehensively consulted and a proper balance assured that incorporates best practice compliance, consumer protection, competition and continued market innovation,” FCA CEO Mary Aldred said.

“While there may be some agreement on key concerns for dealers, as franchisees, in their dealings with car manufacturers, as franchisors, there is no firm agreement on the best way to address dealers’ concerns – whether through amendments to the Franchising Code or specific provisions within a standalone Automotive Code”.

At present, agreements between dealers and manufacturers are regulated by the Franchise Code of Conduct, however the arrangements differ from regular franchise models in two distinct ways.

Specifically, new car dealers do not pay fees or royalties to car manufacturers for the use of their brand and new car dealers typically control the location of the franchise, with many owning the land on which the dealership is located.

Source: Franchise Business – Government moves on automotive code of conduct

 6 Jan 2019