Small business ombudsman welcomes franchise reforms for auto sector

By Sarah Stowe | 12 Mar 2021 View comments

Bruce Billson, the newly-minted Australian Small Business and Family Enterprise Ombudsman, has in his first week in office welcomed the government’s proposed reforms to the Franchising Code of Conduct.

The change include changes specific to the automotive industry and if passed will apply penalties of up to $10 million for wilful, egregious and systemic Code breaches by franchisors and big business operators.

The suite of reforms aims to address the power imbalance between franchisors and franchisees, and multinational car manufacturers and Australian dealers.

Referencing the car dealership sector, Billson said the proposed amendments represent “significant progress” that will significantly level the playing field in the automotive franchising sector.

”They will ensure that franchise-like arrangements where dealers are operating as the car-maker’s new vehicle sales agent still benefit from the Franchising Code protections.

“The changes that apply to the automotive industry are welcome as is the Government’s commitment to continue working with the automotive franchising sector to examine unfair contract terms in their agreements,” Billson said.

“A mandatory best practice framework will help address the ongoing issue of multinational car manufacturers who fail to follow the current voluntary principles.

Examples of small car dealers being devastated by the actions of multinational manufacturers in recent years has warranted this action.

“Higher fines for significant breaches of the Franchising Code will act as a big stick that will force the larger players to think twice before acting unfairly towards their franchisees,” he added.

“We also welcome the government’s interest in exploring arbitration to provide small businesses with access to binding and right-sized dispute resolution pathways that are less costly and faster than going through the court system – a theme pursued in our Access to Justice report.”

Billson said the bipartisan support for the reforms to the franchising sector was welcomed by the office of ASBFEO.

“I continue to encourage franchisees who believe they have been unfairly treated by a franchisor or are engaged in a franchise dispute to contact my office for assistance,” he said.