Discussion paper a step towards franchise balance

The AADA has welcomed the release of the Morrison Government’s discussion paper on the second stage of the Automotive Franchising reforms.

The paper will specifically investigate the merits of a stand-alone code, options for mandatory binding arbitration and the need to extend existing protections to other automotive industry franchisees.

AADA CEO, James Voortman, said the discussion paper was a significant step in reforming the imbalances of power between Dealers and Manufacturers, providing an opportunity for the industry to come together and build on the progress that has been made towards a fair and reasonable set of rules that govern relations between Dealers and Manufacturers.

“The consideration of options for compulsory binding arbitration is such an important element of this process given the experience of Holden Dealers in their dispute with General Motors. The prospect of a drawn out and costly legal battle resulted in most Holden Dealers accepting inadequate compensation packages,” Mr Voortman said.

“Even the request by the then Minister Michaelia Cash for General Motors to attend arbitration was flat out refused by the Detroit-based Manufacturer.

“You need only look at the Holden and Honda Dealers who are currently involved in protracted court battles with their franchisors to understand why the current system favours larger multinational corporations over Australian businesses.”

The paper also flags extending the automotive franchising regulations which have been put in place over the past year to cover other categories of vehicle Dealers, such as truck Dealers and Motorcycle Dealers.

“Many of our members are also truck Dealers and we know they face the same challenges in their franchising relationships, often from the same Manufacturers. The AADA will thus strongly support the extension of these protections to those truck Dealers as well as motorcycle and farm machinery Dealers,” Mr Voortman said.

“We also look forward to working with the Government in considering the merits of a stand-alone Automotive Code relative to the current approach.
“Car Dealers across Australia are incredibly appreciative of the efforts of the Morrison Government and the work of the Small Business Minister Stuart Robert. All of the reforms that have been progressed to date are fair and will establish an appropriate standard already being set by some of the Australia’s most reasonable Manufacturers.”