Running a local car dealer takes a lot of capital investment to pay for inventory and trained personal. With the franchise law, the government is encouraging, and protecting, the local business's upfront investment. This creates revenue, employment, and consumer supply to a local area. If the manufacturers dictated the price, as apposed to suggesting it (MSRP), it could starve the dealers, eliminate consumer choice, and lower local government revenue. (Local, in this case, can be considered city, county, or state government)