Is It Time to Rethink the Automotive Franchise Model?

I was thinking about the automotive franchise model and how dealerships under the same manufacturer compete against each other.

When you look around, there are other industries with similar franchise or dealer distribution models: heavy equipment, manufactured homes, commercial trucks, recreational vehicles, business-to-business equipment, tools, and office equipment.

Then I started thinking about traditional franchises like McDonald’s, Subway, and Chick-fil-A. Corporate may allow locations to have overlapping or fuzzy territory boundaries, but you typically don’t see one location dramatically undercutting another location selling the exact same product.

Automotive retail has operated differently for decades.

A customer can shop multiple dealerships selling the exact same vehicle from the exact same manufacturer and receive different pricing, incentives, fees, and experiences. Dealerships are not just competing against other brands — they are competing against their own brand family.

Part of why this structure continues is dealer protection laws. These laws were originally designed to protect independent businesses from powerful manufacturers, preventing automakers from simply replacing dealers after they invested millions into facilities, employees, and communities.

That purpose made sense.

But the question today is whether those same protections are also slowing innovation and preventing a more customer-focused purchasing experience.

Look at the complexity of a lemon law buyback situation. The customer bought the vehicle from the dealer. The manufacturer built the vehicle. The dealer performs warranty repairs. The manufacturer ultimately controls many of the decisions. The customer is stuck navigating the middle.

Who owns the problem?

The customer shouldn’t have to figure that out.

If automotive manufacturers moved toward a direct-to-consumer model, what could change?

• More consistent pricing
• Stronger margin control
• Better production and inventory planning
• Less dependence on end-of-month quotas and incentives
• Clearer ownership of customer issues
• A simpler process when something goes wrong

Dealerships have created thousands of successful businesses, jobs, and community relationships. Many provide outstanding service.

But purchasing a vehicle is one of the largest financial decisions people make, and the process should be designed around the customer first.

The future of automotive retail may not be about protecting how things have always been done.

It may be about building a better way forward.