FTC Review of Auto Dealer Franchise Rules

Automobile retail in America runs on franchise law: manufacturers sell to independent dealers, and dealers sell to you. State laws often ban manufacturer-owned stores except in limited cases.

Dealers argue franchises create local jobs, invest in showrooms, and advocate for customers during warranty fights. They have political clout through state dealer associations.

Critics—including some EV startups and consumer groups—say the system adds markup, blocks transparent online pricing, and forces buyers through haggling many dislike.

The FTC held workshops examining whether franchise restrictions violate competition principles when manufacturers want agency models—where the dealer earns a fee but the factory sets the price.

Electric vehicles sharpen the fight: they need less routine service, threatening dealer profits from maintenance bays. OEMs tried allocating fewer EVs to dealers who refused new sales programs, triggering lawsuits alleging coercion.

Right-to-repair and data access overlap with antitrust: if only authorized dealers get diagnostic tools, independents cannot compete on service.

Enforcement remains fragmented. The FTC may bring targeted cases; states may rewrite franchise statutes. No ongoing matter has abolished dealer franchises nationwide.

Franchise rules can add thousands of dollars to the price you pay and limit how you shop online.

EV policy intersects with competition—service-heavy dealer income affects how fast legacy brands push electric models.

Independent repair shops depend on access to parts and software; restrictions look like vertical restraints.

State-by-state variation means your rights depend heavily on where you buy.

Franchise laws and OEM policies restrict intrabrand and interbrand competition.

Dealers use political protection to block direct sales and transparent pricing.

Allocation and warranty reimbursement rules coerce dealers accepting disadvantageous EV terms.

Repair restrictions raise consumer costs and limit independent service competition.

Dealers say franchises prevent manufacturer monopoly over retail and preserve local accountability.

They argue state legislatures legitimately chose the model for consumer protection.

OEMs rely on dealers for capital-intensive inventory and test drives.

They warn direct-only sales could reduce rural access.

Compare total price—including doc fees—across dealers; franchise rules do not eliminate shopping around within a brand.

If you want a direct-sales EV brand, check whether your state allows it; laws differ sharply.

For repairs, ask whether independent shops can access software needed for your model.

FTC action, if it comes, may target specific OEM-dealer policies—not your existing warranty overnight.