What Is a Franchised Used Car Dealer?

Only Source for Certified Pre-Owned Cars

Salesman and woman looking inside car in showroom
(Hero Images/Getty Images)

So, you’re interested in buying a used car. Franchised dealerships are the only dealers that can sell you a manufacturer certified pre-owned used car.

Franchised Dealership

By definition, a franchised dealership is an auto seller that sells new and used cars for auto manufacturers such as Ford, General Motors, Honda, and other major brands. The manufacturer is often listed in the dealership’s name (i.e. Hoffman Ford).

They are also known as: new car dealers, used car dealers, automobile dealers. As an example, only a franchised dealer can sell a certified used car from a manufacturer.

Franchised dealerships can only sell their own products when it comes to certified pre-owned. For example, you can only buy a certified pre-owned Camaro from a franchise Chevrolet dealership.

Why are they called franchise dealerships? Because, just like McDonald’s for example, auto manufacturers sell the rights to sell their products (i.e. cars) based on factors like geographic location and population density. That’s why you don’t see a Ford dealership in every town. You used to, it seemed, but not anymore because manufacturers have consolidated dealerships to reduce costs. It’s expensive to maintain a network of dealers, especially when some of those dealers are relatively low volume.

The important thing about franchised dealers, beyond their ability to sell certified pre-owned, is most have extensive service facilities. They can perform warranty work on your certified pre-owned used car. You don’t have to go through the hassle of submitting claims against your warranty.

Just to make things slightly confusing, Volkswagen dealers do sell certified pre-owned used cars that are not Volkswagen through their WorldAuto program. The cars that aren’t Volkswagens, though, are being sold with the insurance policies but you do have the advantage of having the warranty work done at Volkswagen dealerships across the country.

Other Kinds of Used Car Dealers

There are used car dealers known as independent dealers as well as independent franchise dealers. Independent franchise dealers would be, for example, your Chevrolet dealer that sells used Fords, Audis, and Hyundais on their lots. They are still franchised new car dealers but they are selling products not related to their franchises.

An independent used car dealer is a dealer who has no affiliation with an automobile manufacturer. There are larger independent used car dealers like CarMax and AutoNation, which is a large nationwide chain of new and used car dealers. Independent dealers will sell you any kind of used car, regardless of who made it.

As mentioned, they might sell certified pre-owned used cars as well, but these are backed by warranty insurance programs.

That doesn’t mean there is anything wrong with the cars. There isn’t. It just means they are going to have different protection than manufacturer certified pre-owned cars.

It’s important to state that the large majority of used car dealers are honest business people. But they are trying to make a buck. Their profits are usually going to come first because they have to in order to pay their employees and themselves.