What is a car dealership? Difference between independent and franchise dealership

What is a car dealership? Difference between independent and franchise dealership

If you decided to buy a new or used car, and you already know about which car to buy then the question arises which is the best place to buy a car? Do I buy from a franchise dealership or independent dealership? Which car dealer will be best suited for the car you want? To better understand what these choices offer you, first you need to understand what is a car dealership and the actual difference between Independent and franchise dealership. 

What is a car dealership?

A car dealership is a retail store of new and used cars. A car dealership is a place where you can go to buy a car. Car dealers buy these cars from auto manufacturers because auto manufacturers alone can’t sell the cars they need third parties to maintain that. Dealers hire salespeople for their store, and they will provide you a test drive, and detailed information so that you make the right purchase.  


One more option you can find with the car dealership is leasing. You can lease a car for a fixed time. Time depends on the car dealership. And when this lease period comes to an end you can return it to the dealers or you can buy the car at some discounts. 


For example, Audi Beverly has the dealership of Audi company and  Audi Beverly Hills is the largest dealer of Audi in the USA  for the last three years. And Midway Ford and Galpin Ford are the largest dealers of Ford Motors in the USA and they have the dealership of Ford company.

What is an Independent and Franchise dealership?

An independent and franchise dealership is two ways of approaching business through association with an automotive company that has already succeeded in the market. however, there are some differences between them.


  • Independent dealership

Independent car dealership sells any type of used car. The dealers of this type of dealership are not authorized with specific auto manufacturing companies. dealers can sell multiple types of used cars because this dealership never represents a specific brand of cars. For example, Auto Nation Inc. and Penske Automotive group.


  • Franchise dealership

 Franchise dealership sells used and new cars. The dealers of the franchise dealership have the full authorization from specific auto manufacturers to sell their cars. The dealers take the franchise of a particular brand of cars. For example, Chevrolet dealership.

Difference between independent and franchise dealership

Dealership consideration

Both independent dealerships and franchise dealership have some pros and cons; it is up to the dealers and the customers what they want from a dealership. If you want security, warranty, name-brand recognition, then franchise dealership will be the best choice, and if you want variety at one place and no restraints from the company’s side, then the independent dealership will be the best choice.  

Categories Independent dealership Franchise dealership
Variety They don’t deal with specific brands, so they have a wider variety of cars in their lots. They have to deal with a specific brand, so they have a limited number of cars.
Additional offers Independent dealerships will not offer any special discounts and related offers to the customers because it is not tied up with a specific brand On the other hand, franchise stores can offer you various special discounts and a wide range of incentives especially with financing terms that are available through the company’s manufacturer.
Own workshops Independent dealers don’t have authorized service workshops tied with the company,  Franchise dealers have their own workshops tie-up with the company and have trained technicians for the car. 
Extra charges Independent dealers do not have to pay an extra penny to the company apart from the price of the cars.  This allows him to retain more profit. Franchise dealers have to pay the royalties every month to the company, and some companies also take the fixed percentage of the sale from the dealers.
Interest rates Here, they have high or normal interest rates, because there is no upper hand. The financing process is done through the company so they have low-interest rates. For example- Nissan Motor Acceptance Corporation