Buying from a Franchise Dealer: The pros and cons

By Marin Pretorius

 

If you're interested in buying a new car, chances are that you'll have to do so at a franchise dealership. These are the dealers who signed a contract with a manufacturer or importer (or even more than one), earning the right to sell that supplier's products and services to the public. Some franchise dealers form part of a dealer group as well, so everything we discussed before <insert link to other article on this subject here> regarding dealer groups also holds true here.

That contract counts for a lot

Manufacturers and importers (also known as OEMs) all have corporate standards as far the car-buying experience goes. This obliges the dealers to meet certain minimum requirements regarding the showroom premises, workshop facilities and equipment, and parts availability.

As a result, you should always (theoretically) have access to a competent service department, receive reasonably prompt service, and all this without having to wait weeks for basic parts to arrive. These standards aren't exclusive to new cars either, because almost all franchise dealers have a pre-owned division on site as well.

Meeting those requirements cost money

While it's nice to have almost the same experience as you would when buying a new car, that experience comes at a cost. All those manufacturer-mandated requirements carry a fairly serious pricetag, and this expense will have to be added to your car's price.

This is also why labour is generally charged at a higher hourly rate at franchise dealerships than at independent service centres – keeping up with the latest equipment and training is expensive, and there's interest to be paid for that service parts conveniently kept in stock. 

What about the negotiations?

That depends entirely on the dealership and their corporate policies. For franchise dealers outside of a larger dealer group, their relative independence may allow them to be more generous during the negotiation process. This is just a rule of thumb, and it ultimately still depends on the individual dealer.

Many franchise dealers have an extra draw in their Certified Pre-Owned (CPO) programs. This is where you'll find low-mileage, late model cars at often-generous discounts, complete with available warranty- and service plan extensions. And speaking of discounts, some manufacturers subsidise sales of some of their key models. As an example, many tens of thousands of rands are lavished on almost all double-cab bakkies every month, in the form of trade-in assistance, accessory packs, and plain old-fashioned discounts.

Much of the reason for buying from a franchise dealer has to do with peace of mind, possibly bigger discounts when buying new, and an almost-new-car buying experience at a reduced cost when buying pre-owned. Manufacturer-enforced service standards just sweetens the deal.