Dealers had been misled into believing that they must conform with distinctive Peugeot 'blue box' corporate branding, which could cause problems for those with or considering multi-franchise businesses.
Peugeot will now tell its dealers that the scheme is not mandatory.
'We are delighted that the Office of Fair Trading has supported our complaint on Peugeot's branding standards for car dealers, and hopefully now Peugeot will have to be more transparent in their requirements for dealer investment,' said Alan Pulham, franchised dealer director for the Retail Motor Industry Federation (RMI).
'This is not just a win for Peugeot dealers, as it also puts in place a precedent that other manufacturers may have to follow. With the growing trend towards multi-franchising, this decision may have far-reaching positive benefits for dealers.'