THE federal government is following up on an election pledge with plans to extend the ban on unfair contract terms to all franchisees, including franchised car-dealers.

The Australian Automotive Dealer Association (AADA) said it welcomes the move which it said would protect workers.

The AADA said it represents nearly 4000 Australian new-car franchisees who were all in commercial relationships with multinational firms.

James Voortman

AADA CEO James Voortman said that extending the ban on unfair contract terms to cover the new car sector will go some way to addressing the power imbalance in our sector and help protect the over 68,000 Australians our members employ.

“This consultation is a welcome first step to legislate the Albanese government’s election commitment ban on the use of unfair contract terms and, importantly, unfair trading practices in the automotive franchising sector,” he said.

“Several senate inquiries and federal court cases have shown that franchisors will arbitrarily include unfair contract terms in their contracts, reinforcing the power imbalance which exists in the franchising sector.”

Mr Voortman said that the automotive industry was going through the most significant transition Australia has seen, with a record number of new brands entering the market and legacy manufacturers struggling to compete.

“Extending this ban to the franchising sector will ensure that Australian automotive businesses are better placed to stand up to contractual terms that unfairly favour automotive manufacturers at the expense of dealers,” he said.

The AADA said it will now continue to advocate for the Albanese government to legislate the remaining election commitment, and the missing piece of the puzzle, the ban on unfair trading practices in franchising.