Government introduces new Franchising Code of Conduct to protect Australia’s family-owned automotive industry

Image Credit: Australian Government | Department of Industry, Science, Energy and Resources

The Federal Government will introduce a suite of reforms for automotive dealerships designed to protect Australia’s family-owned automotive businesses and their employees from the growing power imbalance with multi-national car companies.

Under the Franchising Code of Conduct, large and profitable multinational car companies that undertake systemic breaches of the Code, including unilaterally changing contracts, poor compensation and reneging on warranties, could receive a fine of up to $10 million.

In addition, the existing voluntary automotive principles will be made compulsory to address concerns multi-national manufacturers won’t follow voluntary principles, with the Government to also explore mandatory binding arbitration provisions within the new code, similar to those in the Media Bargaining Code, which were developed to curtail the power of the Big Tech platforms.

Making the announcement, Prime Minister Scott Morrison said the new measures will ensure that the Franchising Code keeps pace with changes to business practice by explicitly recognising that dealers operating as a manufacturer’s agent in relation to new vehicle sales are still protected by the Franchising Code.

“We stand up for Australian jobs and Australian businesses. We stood up to Big Tech companies and we will stand up to multi-national car companies who are riding roughshod over many family-owned Australia car dealers,” the Prime Minister said.

“By protecting these businesses, we will be protecting the thousands of jobs that rely on the sector, including many apprentices.

“Car sales are surging and it’s further proof that the Australian economy is on the comeback. We need to ensure Australian family-owned automotive businesses continue to reap the rewards of this growth and the support from our supercharged instant asset write-off.”

Minister for Employment, Skills, Small and Family Business Michaelia Cash said Australia’s automotive dealers employed more than 60,000 Australians, including 4,000 apprentices, and contributes more than $12 billion to the economy.

“This is a decisive suite of reforms for automotive dealerships and the many local businesses, apprentices, charities and broader communities that they in turn support,” Ms Cash continued.

“The Government is fully committed to enacting reforms that are impactful and deliver for the nation and regions where transport is integral for economic and social needs.”

“This is a landmark set of reforms for the automotive industry, building on the critical work done by the Government, most recently with the announcement of the automotive principles to deliver for consumers in December 2020.

“I am looking forward to working together with the industry to ensure the reforms made will better the overall experience of consumers, who ultimately drive the demand that underpins the viability of the automotive sector.”

Image Credit: <a href=””>Australian Government | Department of Industry, Science, Energy and Resources</a>