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VACC: Disclosure and good faith key to the Franchise Code of Conduct Review

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MELBOURNE – April 15, 2013: VACC welcomed the Federal Government’s Review of the Franchise Code of Conduct and, in response to calls for submissions, contributed to two Reports. These Reports were delivered to Mr Alan Wein, appointed by former Minister for Small Business, Brendan O’Connor, to review the Code.

“We urge Mr Wein and the Federal Government to address the concerns of small business franchisees.

Ninety five per cent of Australia’s businesses are small businesses and yet, many are controlled by the remaining five per cent. Big organisations, many of which are franchisors, dictate terms, influence business decisions, exert pressure and threaten to terminate agreements if things don’t go their way,” VACC Executive Director, David Purchase, said.

The retail automotive industry presented two Reports for consideration:

New Car Dealer Report
The Australian Automotive Dealers Association (AADA) called for an automotive industry-specific Code.

New car dealers, like AADA (Vic) Chairman, and proprietor of Essendon Nissan, Tony Sitch, consider themselves different to other franchisees because of the size and scale of their investment in land, stock, equipment and branding.

“A new car dealer’s floorplan and commitment to stock is much larger than say a coffee shop. The Code needs to provide better disclosure on investment, prime market areas and good faith,” Mr Sitch said.

Automotive Retail Sector Report
The Report on behalf of the wider retail automotive industry, including automotive component part specialists, retailers, service centres, body repairers and car rental businesses was produced by VACC’s national retail automotive industry body, the Australian Motor Industry Federation (AMIF).

“Small business is not always listened to or taken seriously by their big business partners. Small business owners do not want to bring down big business; this is not David and Goliath. They simply want an even playing field and to be treated fairly,” VACC Executive Director, David Purchase, said.

“The Franchise Code of Conduct should be symbiotic as both parties need each other. The Review needs to redress the balance of power and protect small business owners,” said Mr Purchase