Fair contractual relations
A European framework for franchising
A possible instrument to fix unbalances in the dealer contract
Existing unbalances in the automotive dealer contract
After the expiry of the Motor Vehicle Block Exemption Regulation - MVBER - in May 2013 an increasing number of unfair contractual practices have been recorded in the relation between automotive dealers and their manufacturers. CECRA has been denouncing them to the European authorities over the past years, but no legislative initiatives have been taken by the European Commission.
Dutch Franchise Code (a self-regulation tool)
Back in February 2016 a group of business associations spontaneously adopted the Dutch Franchise Code, a self-regulation tool that contains rules and principles which render the contract between the supplier and the customer more transparent and balanced (i.e. obligation for the franchisor not to stand in the way of a request by the franchisee to close-down or transfer the business on unreasonable grounds). In February 2017 the Dutch government has published a draft bill that gives the Dutch Franchise Code a statutory basis. Due to the recent change of government the draft bill has not been adopted yet.
BOVAG’s efforts to include the automotive dealer contract within the scope of the Dutch Franchise Code
Attracted by the highly advantageous rules laid down by the Dutch Franchise Code, CECRA’s Dutch member BOVAG has made quite some efforts, over the past months, to prove that the automotive dealer contract is de facto a franchising contract. According to BOVAG the dealer contracts provide the importer/manufacturer with far-reaching inspection, intervention and sanctioning capabilities which allow them to monitor and maintain the identity and brand image.
European Parliament Resolution on the functioning of franchising in the retail sector
In September 2017, the European Parliament - under the impulse of the Dutch MEP, Dennis de Jong – adopted with a large majority a European Parliament resolution on the functioning of franchising in the retail sector. The aim of this (non-binding) initiative is to highlight the existing loopholes when it comes to franchising contracts in the EU, and to stress the need for more legal certainty and a better protection of both the franchisee and the franchisor all around Europe.
The European Parliament initiative as a political opportunity to highlight and possibly fix the unbalances in the automotive dealer contract
Once informed about the initiative of the European Parliament, and under the impulse of BOVAG, CECRA has opened a constructive discussion with the MEP promoting the resolution, Dennis de Jong.
The dialogue held with the European Parliament has been an excellent opportunity to highlight, once again, some of the contractual practices that negatively affect the quality of the European automotive dealer’s daily business.
The way forward
As a result of the Parliament resolution a public consultation might be launched by the European Commission in the next months to evaluate the European stakeholders’ views on this topic, and an official answer to the points raised in the resolution should be given by the European Commission.
In the light of these upcoming events, CECRA is currently exploring the opportunity to provide one or more personal testimonies from automotive dealers who have recently been facing unfair practices in the relation with the manufacturer/importer.
Moreover, CECRA is also trying to establish a dialogue with other European business associations who hold the same interests in regard to the franchise contract.