“One of the most important franchising cases in Australian history”: Mercedes-Benz dealers sue luxury carmaker for $650 million

In what has been called the most significant test of franchise laws in an Australian court, Mercedes-Benz dealers are suing the parent company for $650 million over a new fixed-price sales model that dealers claim will decimate their profits.

A total of 38 franchisees of the luxury German car-maker are alleging it breached the franchising code and consumer law after it introduced a new agency model in January where the manufacturer retains ownership of the cars in the salesroom.

The franchisees became “agents” who sell the cars at a fixed price for a fixed commission — a vastly different and less lucrative model than the prior arrangement, where dealers bought cars from Mercedes and sold them to the customer for their own price.