Ombudsman welcomes proposed franchising reforms, hefty fines

The Australian Small Business and Family Enterprise Ombudsman Bruce Billson has welcomed the government’s proposed reforms to the Franchising Code of Conduct, including changes specific to the automotive industry.

Under the proposed amendments to franchising laws, big businesses will face penalties of up to $10 million for wilful, egregious and systemic breaches of their obligations under the Franchising Code.

The suite of reforms seeks to specifically mitigate the power imbalance between multinational car manufacturers and Australian dealers.

“These proposed changes represent significant progress and once passed, will go a long way to levelling the playing field in the automotive franchising sector,” Mr Billson says.

“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.

“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.

“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.

“My office looks forward to seeing the detail of this announcement and has been pleased to see the bipartisan support for the much-needed reforms to the franchising sector.

“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.”

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