FADA hails parliamentary panel move on franchise Act

FADA President, Mr. Vinkesh Gulati, has expressed his gratitude the Parliamentary Standing Committee headed by Dr. K Keshava Rao for recommending the enactment of a franchise protection Act for auto dealers.

India does not have a franchisee law at present due to which the OEM -Dealer agreements are highly skewed towards manufacturers, said a press release issued by the Federation of Automobile Dealers Associations (FADA) on December 22.

There are various examples, according to FADA, where auto manufacturers suddenly announced their exit from India leaving dealers high and dry with their investments going down the drain. Few examples of such exits since 2017 are General Motors India, Man Trucks (a VW Group Company), UM Lohia and Harley Davidson India.

Franchise laws, said, FADA, will level the playing field between large automakers and local dealers. Almost all auto dealerships are privately- owned proprietorship or family-owned businesses whereas automobile manufacturers are some of the biggest corporations in India and overseas. “Because of the disparity in size and power between individual dealers and manufacturers, the Government needs to accept the Standing Committee recommendation and bring in a franchise protection Act to level the playing field between auto OEMs and auto dealers”, said FADA.