All that stands between you and your dream is a Dealer License.
So why is it so dang hard to get one? There are several hoops you have to jump through in order to get a Dealer License, and at first it may seem to be a ridiculous waste of time. But if you look at it from the perspective of the people doing the regulations, and the industry itself, it actually makes a lot of sense.
So let’s break down why you need to go through the process – and what the process actually is.
1. It helps the integrity of the industry.
It may seem like anyone should be able to sell any number of cars that they want, but making sure that only those that are actually serious and have the financial ability to have an office space makes it so that a consumer is less likely to encounter someone who wants to hide who they are – or where they got the vehicles in the first place. That’s why the first main criteria – having a place of business – is so important. It takes money and dedication to get at least 96 feet of showroom and a separate 96 feet of office space to start your business. It also keeps out those who aren’t serious or those who aren’t trustworthy from making the investment to go official. And with the other requirement that you have to have a sign with letters at least three inches in height, they are making sure you aren’t hiding who you are and what you do.
These requirements are attempts at having an industry populated by professionals who are serious about selling cars, not amateurs or people who want to hide who they are.
And the requirement that dealers take a 12 hour licensing course is in this same vein. Dealers should know the ins and outs of the industry and its regulations, so demanding that they take a course is in line with this thought. This really isn’t that bad if you compare it to other industries: you must complete 20-40 hours to be an insurance agent and 90 hours of coursework to be a real estate agent.
2. It makes sure dealers are covered.
Prospective dealers are required to have the correct liability insurance for your new business. The reason for this is the same reason that anyone is required to have liability insurance to drive – it makes sure that others are protected from a prospective dealer’s negligence. Without this requirement someone could set up shop with a dealer license but have no money left over and, if they were responsible for an accident or scam or something else that left a customer high and dry, there would be no guaranteed recourse like insurance to make that customer whole again.
Having insurance is a way of protecting would-be clients and others that interact with new businesses. Operating without one is in itself a negligent act. Not only that, it exposes the dealer to the risk of having to pay directly for accidents or lawsuits that they are responsible for. Without insurance, opening a new dealership is a much riskier proposition than it could be.
3. It makes sure dealers will obey laws and regulations.
New dealers have to get a bond in order to set up shop and start selling vehicles. While this just seems like another regulatory obstacle to doing business, this is actually another way to protect the public. Surety bonds are agreements bound by cold hard cash that says new dealer will abide by the laws and regulation of the state in which he or she resides. With a bond in place, we know anyone with a dealer license is bound by law and money to be trustworthy – or at least has something big to lose if they are not.
Bonds are the ultimate way that consumers know they can trust a business that is appropriately bonded and licensed. That is why they are used in many industries, from construction to car dealers to even individuals working directly with the court.
We can help you with both liability insurance and bonds.
Now that you know why you have to meet these requirements, it’s nice to be able to do most of the hard work in one place. While we can’t file your paperwork, buy an office or take a test for you (because, you know, that’s illegal), we can walk you through the simple process of getting liability coverage for your new business and a bond set up to make you official. It’s all part of our mission to help new business owners get started and stay protected once they are (if you’ll forgive the pun) on the road.
If you’re curious to see how Alliance can help you set up your new business, fill out the form below or call the number at the top of the page. It’s hard enough to get started, so why not do it all in one place?