45Franchise agreement must provide for compensation for early termination—new vehicle dealership agreements

45 Franchise agreement must provide for compensation for early termination—new vehicle dealership agreements

(1) This section applies to a new vehicle dealership agreement. (2) A franchisor must not enter into a new vehicle dealership agreement unless the agreement: (a) provides for the franchisee to be compensated if the agreement is terminated before it expires because the franchisor: (i) withdraws from the Australian market; or (ii) rationalises its networks in Australia; or (iii) changes its distribution models in Australia; and (b) specifies how the compensation is to be determined, with specific reference to the following: (i) lost profit from direct and indirect revenue; (ii) unamortised capital expenditure requested by the franchisor; (iii) loss of opportunity in selling established goodwill; (iv) costs of winding up the franchised business.

Civil penalty:

(a) for a contravention by a body corporate—the amount under section 17; or
(b) for a contravention by a person who is not a body corporate—$500,000.

(3) A franchisor must not enter into a new vehicle dealership agreement unless the agreement contains provision for the franchisor to buy back or compensate the franchisee for the things mentioned in subsection (4) if: (a) the agreement is not renewed and the franchisor does not enter into a new new vehicle dealership agreement with the franchisee; or (b) the agreement is terminated before it expires because the franchisor: (i) withdraws from the Australian market; or (ii) rationalises its networks in Australia; or (iii) changes its distribution models in Australia.

Civil penalty:

(a) for a contravention by a body corporate—the amount under section 17; or
(b) for a contravention by a person who is not a body corporate—$500,000.

(4) For the purposes of subsection (3), the things are new road vehicles, spare parts and special tools. (5) A franchisor must not enter into a new vehicle dealership agreement that contains a provision that purports to exclude any compensation to which the franchisee may be entitled, other than under the agreement, if the agreement is terminated before it expires other than because the franchisee has breached the agreement.

Civil penalty:

(a) for a contravention by a body corporate—the amount under section 17; or
(b) for a contravention by a person who is not a body corporate—$500,000.