How to Open a New Ford Dealership

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There’s serious money to be made in the car industry, with many dealership owners earning salaries in the six-figure range. Ford holds a large share of the car-buying market, second only to General Motors among U.S. automotive manufacturers. In a town where there isn’t already a Ford dealership nearby, opening one of your own can be the first step toward the financial independence you’ve always wanted.

Conduct Research

Before you fully make up your mind, put in the time required to carefully research the details of opening a dealership. You’ll need to take a state-mandated dealer certification course, which requires passing an exam. You’ll also need to find the right location and make sure the property is available for sale or lease. Most automotive manufacturers have specific requirements for dealership locations. Contact Ford’s corporate office to request this information before you proceed. The more you learn about the business in general and about Ford’s specific requirements for its franchisees, the better positioned you’ll be to get the go-ahead to open a dealership.

You should also look into the area in which you want to open a dealership. Discover the average household income, nearest similar dealerships, and demographics. Do the people match Ford's target customer? How much does land cost? Is the population large enough or growing quickly? Knowing the answers to these questions can help you think through potential problems and create a feasible plan.

Write a Business Plan

Before you can apply for financing and get your dealership off the ground, you need a formal business plan. The plan should explain the dealership's structure, marketing plans, income estimates, expected expenses, and the research you find. Make sure to check your plan several times for factual, formatting, and spelling errors because you will use this to apply for financing. The SBA and other resources have templates for business owners.

The business plan not only helps lenders and investors understand how you will succeed, but it also helps you wrap your head around it. Just filling out the necessary sections of a business plan forces you to find ways to avoid potential problems and build a better dealership.

Gather Financing

It takes millions of dollars to open a franchise dealership, including building cost and inventory. If you have this money lined up before you contact Ford, you’ll be much more likely to get a “yes.” Visit a lender to determine how much you can expect to borrow. If possible, get preapproved for a business loan at that branch. Also, plan how you’ll make that cash infusion stretch, since the average cost of running a dealership is $4.6 million per year.

Complete a Franchise Application

Once you’re ready to get started, contact Ford and ask for an application to become a dealer. Once approved as a franchisee, you’ll be asked to sign legal documentation agreeing to Ford’s terms. Among other things, this agreement outlines Ford’s right to terminate its relationship with you at any time should your dealership prove unsatisfactory. This means that you must ensure strong sales and a commitment to a positive customer experience, among other obligations. Although it will require a small investment on your part, a quick review from an attorney can save you headaches down the line.

Embrace Ford’s Vision

Once you’ve signed on to be a Ford dealer, you’ll be part of the overall Ford culture. The company has recently stressed the importance of its dealerships in sharing its long-term vision. This includes crowdsourced shuttle services, ridesharing, drones and autonomous vehicles as part of its City of Tomorrow proposal. Successful dealerships will pay close attention to this vision and get involved in making it happen in their own communities.

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About the Author

Stephanie Faris is a novelist and business writer whose work has appeared on numerous small business blogs, including Zappos, GoDaddy, 99Designs, and the Intuit Small Business Blog. She worked for the State of Tennessee for 19 years, the latter six of which were spent as a supervisor. She has written about business for entrepreneurs and marketing firms since 2011.