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Franchise protections should cover repairers; MTAA

As the national franchising system undergoes a major review, the automotive peak body wants key protections to be extended to automotive repairers.

The Motor Trades Association of Australia has lodged a submission responding to the federal government’s plans to overhaul the franchising code.

The 2023 Franchising Code Review, announced in August by Minister for Small Business Julie Collins, will review the Competition and Consumer Regulation Code of 2014

Dr Michael Schaper, who recently completed a review into the MVIRI Code of conduct, the key guideline governing the relationship between insurers and repairers will lead the overhaul.

The MTAA’s key requests are that the review extends the protections offered to dealers under the code to franchise automotive aftermarket repairers and that it mandates a service and parts agreement relating to the motor vehicle dealer agreements falling within code.

The MTAA also wants the code extended to cover motorcycle, farm machinery, industrial machinery and truck dealers.

MTAA has joined forces with a group of peak bodies for the changes including the Victorian Automobile Dealers Association, Farm and Industrial Machinery Dealers Association, the Australian Automotive Dealers Association, Australian Small Business and Family Enterprise Ombudsman and the Australian Chamber of Commerce and Industry.

MTAA CEO Geoff Gwilym said the submission was about working toward the best-case outcomes for retail automotive franchising.

“The entire Australian franchising system is now under review. As a result, franchisees across the nation are nervous,” Gwilym says.

“They require layers of protection. The MTAA calls for a fair go for all automotive industry franchisees. We hope the Code Review will deliver that for all.

“The Code Review will evaluate previous franchising reforms and bring several reviews under one umbrella, including statutory reviews of the Franchise Disclosure Register and specific new car dealership protections contained within Part 5 of the Code.

“This is especially important for the farm and industrial machinery, motorcycle, truck and mechanical repair franchise sector,” said Mr Gwilym.

“New car dealers often receive public attention with franchising but, behind the scenes, the vital agricultural, truck and motorcycle sectors have experienced unfair franchisor behaviour, which has cost livelihoods.”

The MTAA is also advocating that the code should recognise the right of dealers to compensation for established goodwill and a minimum five-year term for their dealer agreements to provide more certainty regarding a return on their investment.

These protections will be of key importance for car dealers following a decision by the Federal Court last month that rejected a $650 million compensation claim against Mercedes-Benz for replacing its traditional dealership model with a fixed-price, direct-to-customer agency model.

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