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Are car dealerships franchises?

On Behalf of | Apr 23, 2024 | Franchise Business Models

When many people think of becoming a franchisee, they imagine running a fast-food restaurant. You may be considering your options because you want to be a business owner, but you want the name recognition and other benefits that come with starting a franchise. So you may assume that your options are going to be in fast food or small retail shops.

But what about car dealerships? These are often referred to as “dealers” or “dealerships”, rather than franchises. But is it essentially the same thing?

It depends on the dealership structure

The answer differs from one dealership to the other. When the dealership is directly connected to a car manufacturer, it is a franchise location. It will usually reference the name of that manufacturer in the name of the dealership.

For instance, if your name is John Smith and you’re looking to start a Ford dealership, you may end up starting John Smith Ford. You would be legally authorized to run a Ford location, you would take delivery of Ford vehicles from the factory and you would work as an outlet to sell those vehicles to the public.

However, there are also private auto dealerships. Often, these focus on used cars. The owner isn’t restricted to selling one type of vehicle. They will buy and sell any used cars that they can. This may simply be a local small business, not a franchise location.

As you can see, there are certainly a lot of options when you’re looking to open a business. If you are considering becoming a franchise owner, be sure you know about all the necessary legal steps.

NOTICE: This blog is intended solely for informational purposes and should not be construed as providing legal advice. Please feel free to contact us with any questions you may have regarding this blog post.