NSW revisits dealer franchise rules

THE thorny issue of vehicle dealer franchise agreements is set to get an airing in New South Wales under proposed new legislation to govern the motor trade.

Fair Trade NSW is seeking feedback from stakeholders on the issue, based on concerns raised by the NSW Motor Vehicle Industry Advisory Council that the current system results in “an unfair relationship between motor dealers and motor vehicle manufacturers in their franchise agreement”.

The council told the government that the dealer-manufacturer relationship was characterised by a power imbalance to the detriment of small business and ‘mum and dad-run’ motor dealerships.

It has submitted a proposal for amended legislation to enable contract term disputes between dealers and manufacturers – including importers – to be heard in the Consumer, Trader and Tenancy Tribunal.

The council argues the move would provide a low-cost alternative to expensive court action to resolve franchise disputes.

“The council has suggested that the tribunal could adjudicate on the fairness or otherwise of franchise contracts and use its best endeavours to bring the parties to a settlement that is acceptable,” said Fair Trade NSW in its ‘issues paper’ heralding the proposal for new legislation.

Under its review, Fair Trade NSW is considering a proposal to combine the Motor Dealers Act 1974 and the Motor Vehicle Repairs Act 1980, creating a consolidated act “with clear upfront aims and objectives for the efficient regulation of industry and effective consumer protection in the motor vehicle industry”.

“It is considered that by combining the two Acts it is possible to regulate the industries efficiently and maintain or improve consumer protection measures, while simplifying and consolidating compliance and related administrative costs for both business and government,” it said, adding that neither act has been comprehensively reformed for a number of years.

Such legislation would provide a single system for licensing, consumer dispute resolution, disciplinary and enforcement actions and procedures, and record keeping.

“Streamlined regulation would be particularly beneficial to those dealers trading across both sides of the industry and may promote skills development and flexibility for industry participants,” said Fair Trade NSW.

The 37-page paper covers a wide range of suggested reform to the legislation, and poses a number of questions for stakeholders to address in submissions ahead of any further action.

It asks respondents what evidence exists to support unfair contract terms in the legislation, and what the costs and benefits would be of introducing unfair contract terms provisions between dealers and manufacturers in a new consolidated act.