When buying a car, most people turn to authorized dealers for protection and peace of mind. Authorized car sellers are subject to franchise laws and other legislations applicable in the industry.
As a heavily regulated sector, the car industry has rules in place to ensure product security and performance. Regular safety reviews and product recalls are done to prevent consumers from buying vehicles that don’t measure up to specific standards.
A franchise car dealership can help consumers ensure that they get the best value for their money. Continue reading to find out more about this business model and how car buyers can benefit from one.
What Are Franchise Car Dealers?
Acting as the link between major auto manufacturers and consumers, a car dealership franchise is an entity that has committed to exclusively sell a specific automaker’s product line. They’re often named privately but also carry the name of a particular car brand in their shop, so you’ll know they’re an authorized seller of the said auto maker, according to this dealership.
Besides making profit from selling a unit, franchise dealerships can earn from post-sales services, including repair, maintenance and replacement parts. Other shops don’t only sell vehicles but also engage in financing or leasing certain units.
Why Buy From Franchise Car Dealers?
Easier Access To Car Financing
Most car buyers turn to financing options to pay for their vehicles. Borrowers can access the loan directly from their preferred bank or lending institution. Majority of car loans, however, are channeled through dealership-backed financing. For the second option, the dealership often seeks a manufacturer-recognized lending institution that, unlike other banks, offers easier terms and has less stringent requirements.
Dealers and financiers are often competing against each other, providing numerous discounts and special offers just to get more borrowers to choose their products. This highly competitive atmosphere favors first-time car buyers and borrowers who no longer need to jump through a lot of hoops to access credit services.
Buyers’ Safety And Swift Service Are Ensured
When a certain vehicle is found to go against safety and performance standards, the model is recalled so that the units can be checked for defective parts and repaired accordingly.
Franchise car dealers are authorized to perform the necessary measures to process warranties and recalls on behalf of vehicle manufacturers. This is highly beneficial in cases where the product recall covers thousands upon thousands of vehicles that need prompt servicing.
Instead of being sent back to car manufacturers, franchise dealerships—with the help of automakers—can perform the repairs themselves after receiving corrective parts from manufacturers. This results in less waiting time for consumers affected by the recall. Apart from receiving incentives and compensation from manufacturers, dealerships have the legal and moral obligation to perform such services to avoid putting their customers’ lives at risk.
Buyers Can Get GAP Insurance
Franchise car dealerships often offer guaranteed asset protection (GAP) insurance, which protects buyers from the massive depreciation of the vehicle’s value. This type of car insurance covers the difference between the actual purchase amount and its present value. GAP insurance is especially helpful for buyers who purchased the car on loan, covering their loan payments in cases where their car is involved in a serious accident or becomes the target of theft.
Take note, though, that some states regulate this type of insurance. But you can still get another type of car insurance depending on where you live and what your needs are through your dealer.
Access To High-Quality Pre-Owned Vehicles
Franchised dealers are exclusively authorized to sell certified pre-owned (CPO) cars. While used vehicles can be sold by private owners, getting one through a franchise dealership will give you peace of mind that you won’t get a ‘lemon,’ which is a vehicle that ends up being defective.
Car makers have their own set of rules for certifying a used vehicle. Dealerships have the responsibility to abide by these regulations in choosing, refurbishing, and reselling pre-owned cars.
This setup has allowed manufacturers to attract more customers by offering the same level of protection for used cars as though they were just released from the factory. Buying a certified pre-owned car is a cheaper yet viable option for consumers who can’t purchase a new vehicle but want to avoid the risks associated with secondhand car purchases.
As authorized car sellers, franchise dealerships have direct links with car manufacturers. This often translates to consumer benefits as discussed in this article, namely access to high-quality new and used cars, accessories, and replacement parts.
Dealerships often remain autonomous in their selling methods, that’s why prices, discounts, and other promotions vary from one dealership to another. As such, the benefits mentioned above are the general upsides in buying cars from franchise dealers. Before arriving at a decision, due diligence is required to be able to choose the dealership with the best offer.