Consumer group slams U.S. franchise regulations

An outspoken consumer advocacy group in the U.S. took aim at the heart of the dealership franchise model with a new report that calls franchise regulations “corporate welfare.”

The American Consumer Institute Center for Citizen Research claims that franchise regulations cost new vehicle purchasers in the U.S. an additional $47.5 billion more per year “due to regulations that limit dealership competition.”

The group’s president Steve Pociask writes in a ‘ConsumerGram’ that “because many state laws work to increase vehicle costs and set geographic restrictions that limit price competition, they serve to transfer income from the buying public to the dealerships.”

The report also claims that a number of other laws are being enacted and proposed that bring more harm to consumers.

“Successful automobile dealerships provide quality services to consumers that fully meet their needs,” says the report. “Success is not dependent on state legislatures for help.”

You can read that 10 page report summary here.

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