AUSTRALIA Law and Practice Contributed by: Warren Scott, Stewart Levitt, Erik Purcell and Lachlan Speirs, ARCHER SCOTT Lawyers
New vehicle dealership agreements There are specific parts of the Code that only apply to new vehicle dealership agreements. These are agree - ments where one party is a motor vehicle dealership that deals mostly in new passenger vehicles or new light goods vehicles, or both. When another mandatory industry code applies The Franchising Code does not apply to a franchise agreement that is covered under another mandatory industry code, such as the Oil Code of Conduct. Exceptions are the Unit Pricing Code and the Food and Grocery Code. If sales covered by the agreement are less than 20% of turnover The Franchising Code does not apply if the agreement is for goods or services that are: • substantially the same as those supplied by the franchisee for at least two years immediately before entering the franchise agreement; and • likely to provide no more than 20% of the fran - chisee’s gross turnover for goods or services in the first year of the franchise. Co-operatives registered under a State or Territory law The Franchising Code does not apply to franchise agreements that form part of arrangements under which the franchisee is a member of a co-operative registered under the Co-operatives National Law or the Co-operatives Act 2009 (WA). Mutual entities The Franchising Code does not apply to franchise agreements that form part of arrangements under which the franchisee is a member with voting rights of a mutual entity. 1.3 Definition of a Franchise Agreement The definition of a franchise agreement is set out in Section 5 (1) of the Franchising Code of Conduct, as an agreement: • that takes the form, in whole or part, of any of the following:
(a) a written agreement; (b) an oral agreement; (c) an implied agreement; and • in which a person (the franchisor) grants to another person (the franchisee) the right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan substantially determined, controlled or suggested by the franchisor or an associate of the franchisor; and • under which the operation of the business will be substantially or materially associated with a trade mark, advertising or a commercial symbol: (a) owned, used or licensed by the franchisor or an associate of the franchisor; or (b) specified by the franchisor or an associate of the franchisor; and • under which, before starting or continuing the busi - ness, the franchisee must pay or agree to pay to the franchisor or an associate of the franchisor an amount including, for example: (c) a fee based on a percentage of gross or net income, whether or not called a royalty or fran - chise service fee; or (d) a training fee or training school fee; • but excluding: (a) payment for goods and services supplied on a genuine wholesale basis; (b) repayment by the franchisee of a loan from the franchisor or an associate of the franchisor; (c) payment for goods taken on consignment and supplied on a genuine wholesale basis; or (d) payment of market value for purchase or lease of real property, fixtures, equipment or supplies needed to start business or to continue busi - ness under the franchise agreement. A motor vehicle dealership agreement is taken to be a franchise agreement regardless of whether the ele - ments of the definition set out above are satisfied. (a) an initial capital investment fee; (b) a payment for goods or services;
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