Dealers are increasingly buying their own parts wholesale franchises in attempts to pocket margin they once paid third-party vendors and better control supply chains.

Mighty Auto Parts, a wholesale parts supplier with franchised distributorship territories, is one of the bigger players working with dealership groups. It will reach partnerships with 29 franchisees in December, up from six in 2020.

“We want to add between five and seven new franchises a year,” said Chris Adams, Mighty Auto Parts’ chief revenue officer.

Mighty Auto, founded in 1963, grew its dealer relationships relatively rapidly the past six years, aligning with the COVID-19 pandemic and supply-chain disruptions that followed. Adams also credits word of mouth.

“From our perspective, the volume in that [new] market goes up fairly drastically, almost immediately, because there’s a built-in demand with their own dealerships,” Adams said.

What dealers get from partnership

Adams said such a partnership gives dealers better supply chain control. If there’s a sudden, global shortage of lubricants, for example, a dealer’s Mighty Auto warehouse could be stocked, insulating them from problems in a wider network.

There’s also a consolidation of vendors for everything from steering wheel covers and tire repair kits to wiper blades. And instead of paying vendors for all those items, dealers instead keep that spending in-house. Adams compared it to auto retailers that launch their own rental car business or insurance operation.

There is a cost. Mighty Auto puts the initial investment range at $240,500 to $517,600, a total that will ultimately “depend on the market and depend on the dealer itself,” Adams said. For a group with 50 dealerships, the startup inventory will cost significantly more than a group with 10 locations.

He said good candidates for a Mighty franchise typically — but not always — have eight or more service centers. The dealer will also need at least 8,000 square feet of warehouse space for the operation, plus two or more dedicated employees and at least two vehicles, Adams said.

Dealerships now represent about 30 percent of Mighty’s franchise system, while traditional entrepreneurs make up about 25 percent, and quick lube shops and tire stores roughly split the rest.

Even with plans to add more dealers to its network yearly, there is a ceiling to Mighty’s auto retailer growth.

Because it’s wholesale only — not retail — Mighty has large territories, Adams said. One Mighty franchise covers all of Atlanta, for example. Mighty has about 130 markets in the U.S. and 100 of them are spoken for.

Adams said markets that are not covered are sprinkled throughout the country. Sacramento and San Diego are open, but most of California is otherwise licensed. Boston is open, but most everywhere else in New England is licensed. “So there are some big markets still available, but there’s not a geography reason for that,” Adams said. “It’s just we haven’t found the right fit in those markets.”

Dealership groups’ experiences

Zeigler Automotive Group in Kalamazoo, Mich., added a Mighty franchise Nov. 3, and Powerhouse Automotive Group in Albany, Ga., is expected to have a Mighty franchise live in mid-December, Adams said.

Vaden Automotive bought its first Mighty franchise in 2016 in its hometown of Savannah, Ga. The group, with 14 dealerships representing 11 brands in Georgia and South Carolina, added another Mighty franchise in 2025 in Brunswick, Ga., and a third in March in the Orlando area.

Vaden spotted an “opportunity to internalize some of our purchases,” said Dawn Newsome, Vaden’s vice president of fixed operations. “If you think about being able to provide yourself with air filters and oil filters and cabin filters, shop supplies, janitorial supplies … then you kind of internalize that margin that you’re otherwise giving away to a third-party vendor.”

Vaden doesn’t have any Florida dealerships, so it sells to independent repair facilities. In Savannah and Brunswick, its own dealerships represent about half of its Mighty sales, with the other half going to independent repair shops.

One early challenge for Vaden was getting buy-in from its stores to purchase Mighty products — something it has overcome. Large parts retail chains do a good job of building relationships with and selling products to their stores, Newsome said, and those links can be difficult to break.

Buy-in also was an initial hurdle when Ken Ganley Automotive Group launched its franchise in Valley View, Ohio, in 2023, said Tom Hecht, general manager of Mighty of Northern Ohio. Now, business is clipping along, Hecht said.

“Everything’s getting much more streamlined for us,” he said. “We’re finding different avenues to help out our dealerships, and we keep growing with them pretty much every month.”

Hecht said its Mighty sales volume rose about 20 percent in 2025 over 2024, and it’s on track to rise another 10 percent this year.

Vaden’s Mighty sales rose 7 percent year over year at its Savannah location in 2025 and increased 4 percent at its Brunswick location over the same period.

A frequent concern of dealers that consider adding a Mighty franchise is how it could affect automaker rebate programs, in which their shops get rebate money on the back end by selling automaker-specific parts. Adams said dealers can still fulfill manufacturer parts programs for their brands while filling in everything else for the used vehicles from other brands that they handle.

That’s how Vaden has been approaching it. Newsome said if a customer comes into a Chevrolet store to buy a filter, they ensure that customer gets the Chevrolet part. “Where we do our best work with Mighty is on our non-OEM makes,” she said.

So, in that Chevy store, if a Honda or Jeep comes in on trade, it can support those with Mighty parts. “We’ve been able to thread that line so that we can satisfy both sides,” she said.

Growth in wholesale parts franchises expected to continue

Robert Dresen, who owns Team Fixed Ops consultancy, said he sees having a wholesale parts distributorship franchise as an opportunity to cut the downtime of waiting for parts.

“When I have a high-volume used-car department, if I’m doing a lot of turn on recon, having less expensive or more economical components at my disposal to turn that, and get a 24- to 48-hour recon turn, that’s huge money,” he said.

Dresen said he thinks the trend of dealers owning their own parts franchises such as Mighty Auto Parts will continue to grow.

“Watch for it to only double in the next three years, if not more,” he said. “It’s going to be caught on to as another source of revenue by so many dealer groups with the ability to do it.”