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Dealers could challenge 'compulsory' name changes

Vehicle manufacturers that require franchised vehicle dealers to change their trading name to conform to corporate branding could be exceeding their authority, according to the Retail Motor Industry Federation (RMI).

Some manufacturers operate a branding standard where the dealer is identified by the name of the franchise, and the name of the town, which provides the manufacturer with nationwide brand uniformity. Dealers that have traded under their own name in the past may be required to adopt the branding as a franchise condition.

However, according to Sue Robinson, director of the RMI's National Franchised Dealers Association, the practice may contravene the block exemption regulation: "Changing the name to a reflect brand and town may restrict a retailers ability to multi-franchise and may not be justifiable, particularly if the retailer already has a well established trading name in the area."

"For a long time, manufacturers have taken an interest in what dealers are called, arguing that the name needs to be consistent with customer expectations and brand standards. However, under the new legislation, such standards must be objectively justifiable and must not restrict the ability to multi-franchise. We have taken legal advice and our advisers believe these standards are potentially challengeable. They don't believe a manufacturer has the right to tell a retailer what their business should be called."

"However we still don't know for certain how a court will interpret this matter because it has not yet been challenged."

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