What Is a Franchise Dealer?

A franchise dealer is an auto seller that sells new and used cars for auto manufacturers, such as Ford and Honda. The dealership will then use the manufacturer as part of its name, such as Covert Ford or Howdy Honda.

It is important to note that only a franchised dealer can sell certified used cars from a manufacturer. Used car dealerships carry cars from many different manufacturers, but new car dealerships tend to carry only one manufacturer's products. New car dealerships may have used cars for sale, but these cars will not be certified unless the dealership is franchised with the manufacturer. Due to franchise laws in the U.S., it is illegal in most states for manufacturers to sell directly to the public. Individuals can only purchase vehicles from dealers and other individuals.