How to Become a Honda Dealer

YOSHIKAZU TSUNO/AFP/GettyImages

Starting a dealership is a very risky but advantageous business investment because there is a lot of money in the large-ticket items. Honda has a long history of success. Becoming a Honda dealer, though, can be confusing because there is so much that goes into it.

Becoming a Honda Dealer

Determine how much money you have for the business. Although Honda does not have a franchise fee, it suggests that having a considerable amount of capital is important because a dealership involves so many business expenses.

Find a location that isn't already served by a Honda dealer. Honda will deny the application if another Honda dealer is nearby. Find land that has ample space for all your merchandise, and consider the area's demographics. Although Honda doesn't have a predetermined distance between dealerships, what can be a safe bet is that there won't be more than two or three Honda dealerships in a county unless it is a heavily populated county. On the flip side, there might only be one in the entire county. If you're unsure if the area you've picked is good, call Honda and the company will be able to give you a more definite answer.

Put together your business plan and present it to Honda. The company will want to see your capital and location. The more information you provide, the more likely the company will support your application. When talking about it with Honda, know which products you want to sell. If you choose to sell cars, you have to carry all Honda's car models. The same goes for all the other Honda lines.

Hire a lawyer to help put together contracts and employment paperwork. Having a lawyer who understand the auto business will speed the process. The lawyer will ensure that all the details that you and Honda agree upon are in both side's interests, not just Honda's.

If you are approved, take advantage of all the information that Honda provides on becoming a better salesperson as well as how to run a dealership even better. Take advantage of everything Honda provides because it will make the dealership run better which will, in turn, result in more profit for you and Honda.

Tip

Getting money can be difficult. Some lending institutions use a 3:1 system. If you have $250,000 set up, for example, the lending institution will provide $750,000. It wants to see that you have the means to run this business.

Honda likes to see that you have business skills. If, when presenting your business plan, you don't seem to know what you're doing, Honda won't consider you. So the best bet is to really understand the car business and come prepared with as much information as you can muster.

Warning

Running a dealership is very difficult and having the money for it can be a daunting task. Ensure all the paperwork for the dealership is carefully drafted.

Stay up to date on what Honda is offering and how it is improving its products.