Facility image compliance has become one of the most critical variables in automotive buy-sell negotiations, directly influencing purchase price allocations, return-on-investment timelines and dealer succession plans. On today’s episode of Inside M&A, Dave Cantin, Founder and CEO of the Dave Cantin Group, and Julie O’Dwyer, Director of Client and OEM Relations at Goree Architects, discuss how brand image standards impact dealership valuations.
O’Dwyer, who spent more than 30 years in architecture and previously worked as a design manager at Lithia Motors, says image compliance covers everything from signage and furniture to showroom layouts and service departments.
While manufacturers typically refresh their image programs every seven to 10 years, requirements and costs vary by brand. Some projects involve new signs, furniture and finishes, while others require a complete building replacement. O’Dwyer said contractor estimates for new construction can range from $250 to $600 per square foot. For a 40,000-square-foot dealership, that’s $10 million to $24 million before accounting for a project’s specifics. Additionally, remodels can be costly when existing structures need system or structural upgrades to meet new standards. Manufacturers may offer incentives, including payments tied to vehicle sales or additional vehicle allocations, but dealers need to evaluate those benefits against the total investment and expected return.
"I would say for new construction, you know, contractor estimates range anywhere between 250 to $600 a square foot. That's a huge range.” – Julie O'Dwyer
Meanwhile, Cantin said image compliance must be considered early in the buy-sell process, when manufacturers can press buyers to meet facility requirements as part of a transfer of ownership. His team reviews whether stores meet current standards, whether dealers are receiving available incentives and what upgrades a buyer may need to fund. Those costs can materially change an acquisition’s economics, particularly when a group is buying multiple dealerships.
Image compliance as a catalyst for buy-sell transactions
The same calculations can influence sellers, as owners facing substantial investment across several stores may reconsider their succession plans or sell an individual dealership rather than fund another round of renovations. Cantin said the issue is especially important when a dealership’s profitability has weakened and a major facility investment is approaching. Still, image compliance does not always mean building a new facility. O’Dwyer said manufacturers take different approaches, from Genesis’ preference for dedicated buildings to Nissan’s tiered program and Toyota’s newer facilities approach, which allows greater customization. Dealers also need to consider state franchise laws, local requirements, construction timelines and whether historic restrictions limit changes to existing buildings.
"A dealer has to evaluate the cost of what it's going to be to bring all of their dealerships to an image compliant capacity.”- Dave Cantin
Both guests said the investment can support the customer experience, employee retention and a dealership’s long-term value. Modern facilities increasingly emphasize open sales environments and amenities that encourage customers to spend time at the store. O’Dwyer also expects dealership design to become more varied, with some facilities incorporating restaurants, retail or other experiences tailored to the brand and local customer base.
Cantin advised dealers to understand their options before committing to a project. He said working with experienced advisers can help owners identify manufacturer incentives, explore alternatives to full reconstruction, and assess the financial impact before finalizing a transaction.
