FADA bats for 'Franchisee Protection Act' amidst Harley-Davidson's India exit

With iconic American brand Harley-Davidson announcing its exit from India, the development has once again raised the dangers about lack of franchisee-protection related legislation in India.

Commenting on the development Vinkesh Gulati, President, Federation of Automobile Dealers Association (FADA) said,  “Had there been a ‘Franchise Protection Act’ in India, brands like these would not have abruptly closed their operations leaving their channel partners and customers in a fix” .  The US luxury motorcycle manufacturer is the fourth automobile brand after General Motors, MAN Trucks and UM Lohia to shut shop within the last three years in India. 

India’s dealer fraternity has, for long, been demanding passing of the Franchise Act so as to safe-guard the interests of showroom owners, customers and employees. In December 2019, FADA had urged the government to introduce the ‘Franchisee Protection Act' after closure of UM Lohia. The dealers’ lobby group had also issued a legal notice to UM Lohia alleging fraud and dishonesty on part of the company and its management. 

Gulati claims that Harley-Davidson has not yet formally informed any of its dealer partners about its closure plans. The company has a total of 35 dealerships across the country with each of them investing around Rs 3-4 crore. Further, each dealership on an average employs about 50 people. With the business shutting down, around 1,800-2,000 people   may end up losing their jobs.  

Harley-Davidson Inc, in an official statement issued on September 24, said it is shutting down its manufacturing facility in Bawal, Haryana and significantly reducing the size of its sales office in Gurgaon as part of its global restricting initiative. Further, the company’s dealership network will continue to serve customers through the contract term. The company added that it is communicating with its customers in India and will keep updated on its future support.