Motor Vehicle/Recreational Dealer

A Motor Vehicle Dealer is any person engaged in the business of selling, offering to sell, soliciting, or advertising the sale of motor vehicles or recreational vehicles, or possessing motor vehicles or recreational vehicles for the purpose of resale, either on that person's own account or on behalf of another, either as a primary business or incidental to the person's business.

Anyone who sells more than five (5) motor vehicles in one (1) year in the State of Tennessee is required to be licensed by the Motor Vehicle Commission as a Motor Vehicle Dealer. This includes RVs, motorcycles, or any other automobile (new or used).

A motor vehicle dealer is required to employ at least one licensed motor vehicle salesperson.

Licensing Requirements

1. Established Place of Business: Applicants must have a permanent facility primarily used for selling and servicing motor vehicles. Temporary facilities and private residences are not allowed. Modular Units must be underpinned.
   1. Facility: The building must be at least 288 square feet and include a functioning restroom.
   2. Display Lot: A display lot exclusively for the dealership is required, accommodating 15 vehicles. It must be made of compacted gravel or similar materials, not grass, and should not be shared with other businesses. Three customer parking spots are also required.
      Exception for Additional Business: Dealers can run one extra business on the premises if 66% of the space is used for vehicle sales and service, and this business generates less than 33% of the dealership’s income. Records must be kept separate.
2. Surety Bond: Applicants must submit a $50,000 Corporate Surety Bond, signed by the principal owner(s). The bond must match the business name and address and include a Power of Attorney letter. It must be issued for two consecutive years and begin in the month of expected license issuance, expiring on the last day of the same month, two years later.
3. Zoning Compliance: Provide written approval from local zoning authorities. If no zoning restrictions exist, obtain a statement from a county or municipal official confirming this. The address must be reflected in the letter, and the letter must state that automobile sales are a permitted use.
4. Business Tax: A current business tax license issued by the County Clerk, and if applicable, a city county license must be obtained in the name of the licensee. The name must match exactly with the entity being licensed. If a d/b/a is being used, this must be reflected on the license. These licenses should be a “Class 2”.
5. Financial Statement: Submit a compiled financial statement prepared in the name of the business, with a minimum net worth of $10,000, prepared according to GAAP, and signed by a CPA on their letterhead with their license number included. It must be dated no earlier than twelve (12) months before the date of application.
   1. If the CPA is not licensed in the State of Tennessee, a copy of the CPA’s license must be furnished. 
6. Corporate Documentation (Corporation/LLC/LLP/Trust): Submit the entity’s charter or articles of organization. For out-of-state entities, provide a Certificate of Authority to do business in Tennessee. You must list any officer or member who owns more than 5% of the entity, and designate the percentage owned by each individual, as well as identifying the managing partner and registered agent. If a corporation is publicly traded, it must identify itself as a publicly traded company.
7. Certificate of Liability Insurance: Provide a Certificate of Liability Insurance with a minimum coverage of $300,000.00 per occurrence, indicating Garage Liability or Any Auto. It must indicate the complete name of the entity being licensed and must reflect the physical address of the entity. It must also include a policy number and policy period, and coverage must continue for the life of the license. 
8. Service Agreement: If no mechanical repair facility is located on-site, a Service Agreement with an operation repair garage, within a reasonable distance from the licensee’s location, must be provided and maintained during the licensing period. Any change in the designated facility must be reported to the Commission within 30 days of the change.
9. Sales Tax: A copy of the current Sales & Use Tax Certificate, obtained from the Department of Revenue, with the identification number and exact name and physical address of the licensed entity, must be provided. If a d/b/a or assumed name is being used, it must appear on the certificate.
10. Signage and Photos: Signs must feature letters at least eight (8) inches high and clearly display the business name. They must be permanently installed and visible from the road; banners are considered temporary and do not meet this requirement. If the dealer principal operates another business in addition to the dealership, a separate sign may be posted for that business. Photos submitted with the application must be in digital format and include the entire display lot, the business sign, posted hours and days of operation, phone number, office, and restroom facilities. Additionally, street-view photos must show the full building along with all entrances and exits.
11. Franchised Vehicle Dealers: Applicants must provide a letter of acknowledgment from the manufacturer(s) or distributor(s) confirming the award of a franchise agreement. This agreement must clearly identify the specific line-makes the applicant is licensed to sell and define the relevant market area. If the market area is not limited by geographic boundaries, the agreement must state that explicitly. The dealership name must match the entity to which the franchise was granted. In addition, a sworn statement detailing the labor rate charged to retail customers and the labor rate charged to the manufacturer(s) for warranty repairs must be submitted. Any subsequent change in labor rates must be reported in writing to the Commission within ten (10) days of the change.
12. Salesperson Requirement: For a dealership to conduct business, the dealership must have a licensed salesperson employed at the business. For information on how to apply for a Salesperson license, please see the “Salesperson” on the previous page.
13. Conviction Record: If any owner, officer, or director of a corporation has been convicted of a felony, the applicant must provide a copy of the final judgment or disposition order issued by the court in the jurisdiction of conviction. This order must include details of how the felony was resolved, the date of disposition, and the judge’s signature. Documentation of probation or parole release requirements from the place of incarceration must also accompany the order. If an expungement order has been granted, it may need to be submitted if the provided documentation indicates the felony conviction has not been fully discharged. Additionally, if the applicant has obtained a certificate of re-employability, it should be attached to the other documents related to the charge(s).
14. Floor Plan Form: Maintain and update the names of any inventory financiers, i.e., “floor planners”, with the Commission, reporting changes within 30 days.

Application & Fees

Complete the “Initial Motor Vehicle Dealer Application” online at core.tn.gov. The fee for an initial application is $600. Additionally, each franchise dealer must pay $600 per line make.

Submit all documentation before the on-site facility inspection. Final eligibility is determined after inspection and document review. If documents are not complete within 90 days, the process must restart with new fees. If requirements are unmet, re-application and inspection fees apply. Licenses are issued within 14 business days of approval.