Tennessee Auto Dealer License Guide

Auto dealer licenses in Tennessee are handled by the Division of Regulatory Boards under the Tennessee Department of Commerce and Insurance.

• Franchise Vehicle Dealer - includes right to sell used cars and trucks at same location
• Used Vehicle Dealer - includes right to sell used cars
• Franchise Motorcycle Dealer - includes right to sell used motorcycles at same location)

All auto dealers are required to have a permanent facility that meets the following requirements:

• Used exclusively for the motor vehicle dealership
• Physically separate from other business operations and does not include a private residence
• Provides functioning restrooms
• A minimum area of 288 square feet and include a restroom
• A landline phone number posted on a window or sign and listed in the directory
• Open at least three days a week for a minimum 12 hours in total, with at least eight of these hours between Monday-Friday
• A lot accommodating 15 motor vehicles of the dealership’s product line, with an additional three spaces for customer parking
• The lot should consist of compacted gravel, chert, stone or similar materials and not include grass
• A permanent sign with the name of the dealership in letters larger than 8 inches

Applicants are required to send pictures that show the entire display lot, sign, hours of operation, posted landline phone, office, restrooms and all exits and entrances.

The business location must meet local zoning requirements and approval from your local zoning or land use authority should be included in your application. In localities without zoning requirements, a written statement that you fulfill all the requirements must be obtained from an authorized county or municipal official.

Auto dealers are required to obtain liability insurance with a minimum coverage of $300,000.

The cost of a Tennessee auto dealer bond is a small percentage of the total bond amount. The bond cost varies depending on your financial strength, e.g. personal credit. You can also take a look at our most frequently asked surety bond questions.

• Fill out our online application form to obtain a free bond quote for your auto dealer license. It takes 5 minutes and you will be able to lock your rate for the next 90 days (in case you want to purchase the bond).

You are required to have a two-year surety bond which is signed by the owner or all partners (if your business is a partnership). A completed surety bond form is also required with your application.

Bond Amount Required: $50,000

To complete your application process, you need to obtain additional forms and documentation:

• A current business tax license which has been issued by the county clerk, as well as a city license if applicable
• A current Certificate of Registration/Sales & Use sales tax certificate with ID number and name
• Financial Background Disclosure: This form must be completed by the principal owner or each partner, if the business is a partnership. For an LLC, the principal owner must sign the form and provide it to the Motor Vehicle Commission.
• A financial statement compiled by a CPA, indicating a minimum net worth of $10,000, accompanied by a compilation letter on the CPA’s letterhead, which includes the CPA’s license number
• A conviction record: If any owner or member of a corporation has been convicted of a felony, the applicant is required to provide a copy of the final disposition papers.
• A Service Agreement with an operational repair garage within a reasonable distance from your business location must be provided and maintained during the licensing period, unless a repair facility exists on site
• Franchise Vehicle Dealers are required to present a letter from the motor vehicle manufacturer(s) confirming the franchise agreement

Note: A salesperson license is required for all employees who will perform this task. Applications are available online and the fee is $35 per license. If a salesperson is already licensed, they must apply to move their license to their new employer.

Submit your completed application form to the Division of Regulatory Boards, together with your bond and other required documentation.

Fees:

• Motor Vehicle Franchise Dealer: $400.00 per line make
• Used Motor Vehicle Dealer: $400.00

Mail your completed application and all supporting documentation to:

Tennessee Motor Vehicle Commission

500 James Robertson Parkway

Nashville, Tennessee 37243-1153

After you have submitted all documentation, there will be a physical inspection of your place of business. A final review of application documents and facility findings will be conducted after this inspection has taken place.

Note: A  $400.00 fee will apply if an applicant has to be re-inspected.