[anjan_c2007]

Since the past few years sudden exits by MNC automakers especially from the US and West have become common place. The biggest exits started with GM, followed by Harley Davidson, MAN trucks and now Ford is the latest to exit at its own convenience, inconveniencing all stakeholders concerned.

We have so many threads discussing about ASC high-handedness on our forum. But in the case of such sudden exits the hapless ASC's are totally shocked and so are the personnel who are employed by them. The customers interests are also severely hurt as they have invested in a product that enters a bear run, pricewise and has an uncertain future. Hence, every right thinking person will surely sympathise with the dealers and customers left in the lurch, post such sudden and shocking exits.

We are already discussing Ford's exit in other threads. The sore point is that Ford dealers have invested Rs 2000 crores in all the 170 dealerships and a total of 391 outlets. Dealers have also been appointed by Ford till just five months back.

Ford India employs 4,000 people in their factory and the dealerships employ 40,000 people according to th Federation of Dealers Association (FADA). A total of 1000 new Fords valued at Rs 150 crores are still in showrooms, apart from hundreds that are used as DEMO cars.

Mr Anurag Mehrotra, MD, Ford India, said that they will adequately compensate Ford dealers who continue to offer service to the customers. But such verbal assurances do not hold any ground unless there is a codified law for franchisors and franchisees to protect the latter's interests. For the franchisor, the franchisee is a customer as the Australian Competition Consumers and Commission (ACCC) recognises and the ACCC is their regulator.

Incidentally, the Parliamentary Committee for the Ministry of Industry, Government of India has recommended enactment of the Franchise Protection Act (FPA) in it's report # 303 in December 2020. It has recommended to the Ministry of Industry to enact the FPA to take care of the interests of the OEM's, auto dealers and customers as well, according to FADA. They contend that such an Act exists in Malaysia, Japan, Australia, Italy, Mexico, Brazil, China, Russia, Sweden and many other countries to adequately compensate the dealers, in such cases. Their concern lies in the fact that after GM, companies like Harley Davidson, MAN trucks, UM Lohia and multiple "Fly By Night EV makers" have exited the Indian market since 2017. Ford's is the 5th biggest exit since 2017, they say.

Details here:-

https://www.aninews.in/news/business...0210909223215/

The document in pdf file herewith gves an insight about the working of the ACCC in Australia in the interest of franchisees.

Information statement for prospective franchisees Australia.pdf

Salient points from the above ACCC document:-

Know your rights

A franchisee may have private rights of action under the Franchising Code of Conduct, the Australian Consumer Law and the law of contract. Your franchise agreement is a contract that contains many of your legal rights and obligations. You may have rights in contract law if the franchisor does not honour the agreement.

The Franchising Code of Conduct requires franchisors to disclose certain information to both potential and existing franchisees. It also sets out minimum conditions relating to the rights of the parties under a franchise agreement. It can be found at :-

www.legislation.gov.au

Dispute resolution

Franchisors must have an internal procedure for handling complaints. If you can’t agree on an outcome within three weeks, either party may refer the matter to mediation or conciliation facilitated by an independent third party. Arbitration is also an option when both parties agree to this process. Dispute resolution services are provided by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO).

ACCC’s role

The Australian Competition and Consumer Commission (ACCC) enforces the Australian Consumer Law and the Franchising Code of Conduct. The ACCC takes action for breaches of these laws where it serves the public interest. The ACCC does not take action on your behalf if something goes wrong for your franchise.

You can make a report to the ACCC through its website.

Enforcing your rights

If something goes wrong after you sign the agreement, you may need to take your own legal action to enforce your rights.

The case in point is that these developed countries have their well-oiled and efficiently functioning judicial systems. Our judicial system is quite prone to unreasonable delays and also laches in quite many court matters.

But to have a codified law to protect franchisees would be helpful, rather than having nothing at all and allowing such defaulting MNC's a free run to fly back with all their wealth and resources leaving all stakeholders in the lurch. Even the franchise customers viz. car buyers could stand to gain if the franchisor is compelled to keep it's commitments within the framework of a codified law.