Your Full Guide to Getting Your Tennessee Dealer License [2021]

Published: Mar 17, 2021

tennessee dealer license

 

Thinking of launching a car dealership in Tennessee? You’ll need to get a Tennessee dealer license if you want to sell more than 5 vehicles per year. 

You can obtain the following license types from the Motor Vehicle Commission at the Tennessee Department of Commerce and Insurance: 

  • Franchised motor vehicle dealer – for selling both new and used vehicles
  • Used motor vehicle dealer – for selling only used vehicles
  • Franchised motorcycle dealer – for selling both new and used motorcycles

In the guide below, you can find all the necessary information to get your Tennessee auto dealer license. 

1. The Tennessee Dealer License Requirements

You’ll need to meet all the requirements set by the Tennessee Motor Vehicle Commission to obtain your license. 

Business and Tax Registration

Your first step is to register a business entity with the Division of Business Services. This is where you also need to register an assumed name (DBA) if you plan to use one. 

You’ll need to provide a copy of the charter or articles of organization of the entity with your application. 

tennessee dealer license requirements

Other registrations you’ll also need include:

 

  • Business Tax License from your county and/or city administration (if applicable)
  • Sales & Use Tax Certificate from the state Department of Revenue
  • Federal Employer Identification Number (FEIN) from the Internal Revenue Service (IRS)

Established Place of Business

In your license application, you’ll have to showcase that you have a permanent facility primarily used for sales and servicing of motor vehicles.

Your established place of business should have the following:

  • An office of a total 288 square feet with functioning restroom accommodation
  • Display lot accommodating a minimum of 15 motor vehicles for sale and 3 for customer parking
  • Written approval from the local zoning or land-use authority for your business location 
  • Business signs with letters a minimum of 8 inches in height including your full dealership name
  • Photos from a “street view” showing the building in its entirety, and all entrances and exits

If you don’t have a mechanical repair facility on site, you’ll have to provide a Service Agreement with an operation repair garage located nearby. 

Financial Statements

You’ll need to present a compiled financial statement in the name of your business. It should be prepared by a Certified Public Accountant (CPA) and should be dated within the last 12 months. 

The statement should demonstrate you meet the minimum net worth requirement of $10,000. 

In addition, the principal owner, directors, and all persons who own more than five percent (5%) of the company will need to fill out the financial background disclosure form

Franchised Vehicle Dealers Documents

If you’re applying for a franchised dealer license, you’ll have to obtain franchise agreements from the Manufacturers or Distributors of the product or line-make.

2. Complete the Tennessee Dealer License Application

Once you’ve gathered all required documents, it’s time to prepare the application form and pay the relevant fees. 

Make sure to check the Minimum Dealer Requirements guide before applying.

Tennessee License Application Forms

You’ll need to submit your application form online through the MVC’s portal.

You’ll also have to complete and file salesperson applications, including the Eligibility Verification Forms for each. 

Licensing and Registration Fees

Tennessee dealer license fees

The license fees depend on the license type and are the following:

  • Franchised motor vehicle dealers and franchised motorcycle dealers – $400 per line make 
  • Used motor vehicle dealers – $400
  • Salesperson license – $35

You can pay the fees by cash, check, money order, or certified check. 

3. Provide a Surety Bond and Insurance 

You’ll have to obtain a $50,000 dealer surety bond to complete your licensing process. It ensures you will comply with all Tennessee motor vehicle dealer laws in your operations. 

You can get your Tennessee auto dealer bond online right away. You’ll then have to submit it in the official bond form.

You’ll need to get a Certificate of Liability Insurance with a minimum of $300,000 per occurrence too. 

You may also need worker’s compensation insurance depending on your hiring arrangements. 

4. Submit and Receive Your Tennessee Dealer License

Once you have submitted your TN dealer license application and all required documents, the Motor Vehicle Commission will schedule an inspection of your dealership

If the Field Enforcement Agent doesn’t identify any problems with your business location, the Commission will perform a final review of your application

If approved, your Tennessee motor vehicle dealer license will be issued. You’ll receive it no later than 14 business days after the approval of your application.

You can verify your license online via the Motor Vehicle Commission’s search

5. Conclusion

The whole process of obtaining your Tennessee car dealer license is likely to take between 6 to 8 weeks if there are no irregularities in your application. 

You’ll need to renew your license annually. Make sure to do so at least 10 days before the expiration date of your license.

Do you have further questions about the licensing and bonding for Tennessee auto dealers? Don’t hesitate to post your queries in the comments section below!

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Victor Lance is the founder and president of Lance Surety Bond Associates, Inc. He began his career as an officer in the U.S. Marine Corps, serving two combat tours. As president of Lance Surety, he now focuses on educating and assisting small businesses throughout the country with various license and bond requirements. Victor graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan's Ross School of Business.