The Licensing Process to Operate a Car Dealership in Texas

 Posted on November 10, 2023 in Business Law

If your dream is to own and operate your own car dealership, one of the crucial first steps is obtaining the required Texas DMV occupational licenses. The state has strict regulations in place for motor vehicle sales, so working with experienced legal and compliance advisors is highly recommended when pursuing your goal of getting set up to sell cars. A Texas lawyer can help you with the legal side of things.

Understanding the Licensing Options

The Texas Department of Motor Vehicles (TxDMV) offers two main occupational license options for those looking to legally deal automobiles in the state:

• Independent Motor Vehicle Dealer License - For individuals operating smaller independent dealerships. Allows buying, selling, or exchanging 5-10 vehicles per year.
• General Distinguishing Number (GDN) - For larger full-service dealerships. Required for selling over ten vehicles annually and having a physical lot location. Additional endorsements may be needed for services like financing.

Meeting the Required Qualifications

To qualify for licensure, all applicants must meet requirements like being at least 18 years old, passing background checks, and providing proof of completed dealer education. Independent dealers must show proof of surety bond. Larger GDN applicants have additional requirements like a $25k bond and permanently enclosed office space at the dealership.

Submitting the License Application

The TxDMV provides detailed checklists of all documents and forms needed to submit a complete dealer’s license application. This includes the core application, surety bonds, educational certificates, photographs, fees, and additional endorsement forms if the dealer plans to offer services like financing. Navigating the paperwork maze is much smoother with legal guidance.

Passing Inspections and Background Checks

After submitting the license application, the TxDMV reviews it for completeness and performs background checks on all dealership personnel. They will also schedule an inspection of the physical facilities. These inspections ensure the location meets all building, zoning, and signage requirements. Any issues or deficiencies must be addressed before final license approval.

Maintaining Compliance Post-Licensure

Even once licensed, the state closely monitors dealership practices and can impose fines or suspensions for sales regulations and standards violations. Ongoing compliance is critical, so having reliable legal advice can keep new dealerships operating successfully within the strict regulatory environment.

Contact a San Antonio, TX Small Business Lawyer

While the licensing process can be complex for car dealers, it is a crucial step in legally and securely launching your business. Starting off compliant reduces future risk. Working with a Bexar County, TX small business attorney can help expedite the process by doing everything right the first time. Do not let the paperwork stand in the way of your dealership dreams. Call Geoff Mayfield, Attorney at Law at 210-535-0870 for a free consultation.