Ohio's Motor Vehicle Franchise System is GOOD for Ohio
Benefits of Ohio's Franchise System
Economic Impact Data
In 2022 OADA conducted a statewide survey of Ohio dealer members and the tremendous impact they have on their local communities and the state of Ohio's economy; the results were staggering.
Benefits of the Franchise System
- The vehicle franchise system benefits all consumers—individuals, businesses, and fleet
- Fierce competition within and between auto brands drives down vehicle prices, financing rates, and parts & service, and increases customer service standards for consumers.
- Locally owned and operated dealerships provide consumer convenience for purchases and service.
- Especially important for completing safety recalls and performing warranty work.
- Dealers are consumer advocates on warranty work, as dealer and consumer interests are aligned. Manufacturers view warranty work as an expense.
- Franchised dealers reduce risk for consumers. Should a manufacturer no longer exist in the market (Oldsmobile, Pontiac, Saturn, and Suzuki, for example), locally owned and operated dealerships continue to service these vehicles for consumers.
- Franchised dealers are regulated under Ohio’s Consumer Sales Practices Act, which the Ohio Attorney General enforces to protect consumers from unfair or deceptive acts.
- Franchised dealers are required under law to fulfill vehicle title and registration requirements on behalf of their customers, which benefits consumers on purchases as well as in transactions involving a trade-in vehicle.
Benefits to State & Local Economies
- More than 803 locally owned and operated franchised motor vehicle dealerships exist throughout Ohio. Collectively, they:
- Employ more than 55,000 Ohioans directly and create countless jobs indirect Dealership jobs can’t be outsourced.
- Pay more than $4.5 billion in annual wages.
- Collect more than $2 billion in tax revenue for the state.
- Donate and contribute more than $32 million each year to civic and charitable causes.
- The franchise system has fostered the investment and success of numerous Ohio-based manufacturers including Honda, GM, and Stellantis (formerly FCA/Chrysler), as well as BMW Financial Services and Toyota Financial Services.
Good for Manufacturers
- Franchised dealers reduce risk and expense for their manufacturers while increasing manufacturer cashflow.
- Dealers are not “middlemen.” They do not add expense or “suffocate” manufacturers. Rather, they invest heavily in their manufacturers (facilities, real estate, tools, training, equipment) to represent the brand(s), relieving the manufacturer of these sales and service expenses.
- Dealers purchase every vehicle and part before it arrives at the dealership, thus creating immediate cashflow for the manufacturer. It is not a consignment business.
- Franchised dealers add market-specific sales and service value to the customer relationship for traditional vehicles and EVs alike.
- Dealers provide localized, market-specific knowledge of how best to sell and service a manufacturer’s vehicles. This includes local, state, and national compliance burdens and ordinances. Dealers address these issues, allowing manufacturers to maintain focus on the development, assembly, and marketing of great vehicles.
- Manufacturers have tremendous flexibility with the franchise At their own discretion, manufacturers:
- Determine who their independent franchised dealer(s) will be.
- Decide the geographic locations of these dealership(s). In some cases the manufacturer even owns the real estate and is the franchisee’s landlord.
- Establish the requirements for franchisees including standards, policies, procedures, requirements, and other stipulations their franchisee(s) must abide by in order to qualify as a Manufacturers determine the term of each agreement and performance standards for their franchisee(s). Manufacturers also reserve the right to terminate dealer(s) for good cause, which is recognized under Ohio law.
Local Economic Benefits
Why Motor Vehicle Franchise Laws?
Warranty Work, Safety Recalls and Service
NADA President and CEO Mike Stanton sat down to discuss the coming transition to electric vehicles and the role of dealerships in making that transition a reality.
The Big Lie - For years, one of the great myths that has persisted about the auto industry has been that franchised dealers don’t want to sell electric vehicles.