Driving past several car dealerships, you may think they all look about the same. On closer examination, though, you will see there are a number of significant differences between them, with implications for both shoppers and would-be dealers.
What’s the Difference?
A franchise dealership carries new inventory from one or more manufacturers. They may also carry used vehicles, either bought as trade-ins during sales of new vehicles or purchased through other methods. The dealership typically offers manufacturer-approved service and maintenance as well.
An independent dealership sells exclusively used vehicles. It cannot purchase new vehicles from a manufacturer, although the dealership may have access to used vehicles that are as new as the current model year. Any service or maintenance done by an independent dealer is not under the supervision of any manufacturer.
Apart from the inventory, you’ll be able to distinguish between the two by their names. A franchise dealer will have a local element plus the manufacturer’s name, such as Taylor Chevrolet or Mountain Toyota. An independent dealer will have no manufacturer’s name, so it may be anything like Lakefront Motors or Interstate Used Cars.
Advantages of Franchise Dealers
As you shop for a vehicle, you’ll find several ways that franchise dealers may be the better choice. Think about whether each of these would be important to you.
The most obvious benefit of shopping with a franchise dealer is that it carries brand-new cars. They have never been titled to anyone else and likely have just a dozen miles or so on the odometer. You don’t have to worry about a previous owner failing to maintain or repair the vehicle properly.
It also makes your pre-shopping process easier. Whether you’ve used online reviews or just talked to friends, you’ve probably narrowed down the list of preferred makes and models, and all you have to do is visit the appropriate dealership to find what you want.
One of the most important things you must know about a vehicle warranty is that it will be voided if you have work done by any other service center. That’s why you need to take it back to a dealership for repairs and service, and that’s the advantage that franchise dealers have when selling warrantied vehicles.
In that same area, franchises can offer certified pre-owned vehicles that have been inspected per the manufacturer’s specifications. This offers protection to used car buyers that is comparable to what new car buyers have.
Manufacturers have arrangements with lenders to provide guaranteed financing for qualifying buyers. Some manufacturers even operate their own financing branches. This gives you lots of options for getting a good interest rate and other loan terms.
The lending department at the dealership will know these options from top to bottom, and they’ll be able to work with a variety of lenders to get you the best possible deal.
Advantages of Independent Dealers
Likewise, independent dealers carry their own set of benefits that can help buyers. Compare these to your needs to see whether an independent dealer might be your best choice.
With no franchise fees or specialized training required for service technicians, independent dealers do not have as many up-front costs. Many independent dealers are also smaller, which means their costs for land and buildings may be lower.
The benefit of that for you is that the dealership has fewer costs to add onto the sale price of their vehicles. Whether it’s a car dealership, a restaurant, or any other business, the savings from lower overhead make it possible to charge the customer less.
Because they are not committed to any one manufacturer, independent dealerships are free to sell whatever vehicles they want. It is not out of the question for them to have inventory that includes used vehicles of the previous or even the current model year from any number of manufacturers. That gives you plenty of selection as you shop, putting more makes in front of you.
This also frees up the sales staff to be more direct about different makes. Because they do not have to support any given manufacturer, they can provide their honest opinion about their inventory.
If one of your goals is to support local businesses, independent dealerships are just for you. With no linkages to international manufacturers, each local dealership has the freedom and finances to invest locally. This could be anything from your local youth sports team to your 5K run/walk event. That’s not to say that franchises don’t do these things, but there may be constraints on exactly what they can do.
Local owners also keep the profits in the community. A dollar earned at an independent dealership is spent locally instead of heading out of town to a large corporate entity. This builds the local economy and strengthens your community.
So What’s the Best Dealership for You to Visit?
In the end, like any major purchase, car buying is all about your particular situation. The point here is not to tell you what is best for everyone, but rather to help you understand the benefits of each type of dealership.
Think about the type of vehicle that you want, including make, model, and whether it’s new, used, or CPO. Think about what type of service support you want and consider whether the dealerships you’re considering do the kinds of things in the community that you want them to do – if there are any. Of course, think about financing as well. With your priorities in mind, the decision will be easy.
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Always remember to run a VINsmart report on any used vehicle before making a purchase. A VINsmart report runs a complete history on the vehicle including whether it has ever been reported as stolen, involved in a major accident, or listed as a totaled vehicle.
VINsmart reports will also give you a registration history and mileage at registration. It reports any significant incidents related to the vehicle, such as being involved in a fire or flood.
When purchasing a used vehicle, the best way to ensure you make a good purchase is to know the vehicle’s complete history.