The Retail Motor Industry organisation, which represents more than 6 000 operators in the automotive dealer, petrol station, tyre retailing sectors, will campaign for a “franchise dealers’ bill of rights” to prevent large companies from evicting them from their businesses with as little as 30 days’ notice.
The Retail Motor Industry (RMI) organisation, which represents more than 6 000 operators in the automotive dealer, petrol station, tyre retailing sectors, will campaign for a “franchise dealers’ bill of rights” to prevent large companies from evicting them from their businesses with as little as 30 days’ notice.
Jeff Osborne, the chief executive of the RMI, seeks to step up the organisation’s campaign against what the majority of its members perceive as concerted “vertical integration” in the automotive sector.
Osborne said there had been concern at what might become a trend of big manufacturers taking over dealerships as had happened with DaimlerChrysler’s acquisition last year of a 75 per cent stake in Sandown Motors, and a more recent announcement that there would be further steps by the company to move into the retail sector.
The RMI is deeply concerned that such “vertical integration” by which the manufacturer also moves into the retailing of his products, could be anti-competitive, and could harm both retailers and consumers, reported recently.
CARtoday.com reported last week that the organisation was awaiting legal opinion on whether or not pending legislation on fair contracts would meet its concerns. It was also assessing the chances of a challenge to DaimlerChrysler’s actions before the competition authorities, the report said.
“An option is that we may well elect to oppose DaimlerChrysler’s application, despite the fact that all the dealers they have approached have signed a memorandum of understanding and have indicated to us they will be supporting DaimlerChrysler’s application to the competition authorities,” said Osborne.
“The growth of small business is the backbone of the economy. However, we see the multinationals acting under shareholder pressure to find the missing money for the bottom line and that is why they are looking at downstream profit,” he said. “Many of our members have given up corporate careers, or have invested their life savings to run a small venture.”
He warned that the implication of DaimlerChrysler’s actions “might mean that a car supplier could approach a dealer and say, there is nothing wrong with the way you are running your business, but we’ll take your keys”.
Osborne suggested that, because many retailers are black businessmen, this approach could represent a setback for black economic empowerment. He said that whereas some recent entrants to the SA market such as Renault, Peugeot and Citroën could well establish links with dealerships, his main concern was to protect existing dealers who have had long-established relationships with particular manufacturers.
The main problem was the one-sided franchise agreements – which many retailers had been obliged to sign… And this did not just apply to players in the automotive vehicle retailing sector.
“They sign away all of their rights,” he said. “An oil company can give 30 days to terminate a franchise agreement without having to prove a case against the retailer,” he said. “Some service station operators work 12 hours a day, seven days a week, and an oil company can walk in and say: we want your keys.
“Fuel dealers should have the same rights as an employee in terms of unfair labour practices. We want a law that will entrench the fundamental, minimum rights for dealers,” Osborne.
The RMI has continually stated that it believed vertical integration, in whatever form, should be aggressively opposed to ensure the continued growth of an open economy where small, medium and large businesses thrived.
But if government could not be persuaded accordingly, the RMI would campaign for a capping of the manufacturers’ shareholding in any retail operations to avoid the possibility of abuse of a dominant position in the market, Osborne said.
