(a) The commission shall prescribe and provide forms to be used for applications for licenses and for the renewals thereof to be issued under the terms and provisions of this part, and require all applicants and their enfranchised manufacturers, as a condition precedent to the issuance of a license, to provide information touching on and concerning the applicant’s character, honesty, integrity, reputation and business relationships and ability as the commission may deem necessary; provided, that every application for a new dealer‘s license shall contain, in addition to any information that the commission may require, a statement to the following facts:

Terms Used In Tennessee Code 55-17-111

  • Automobile auction: means :
    (A) Any person offering motor vehicles for sale to the highest bidder where buyers are licensed motor vehicle dealers or their duly authorized agents. See Tennessee Code 55-17-102
  • Commission: means the motor vehicle commission created by this part. See Tennessee Code 55-17-102
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Dealer: means every person engaged in the business of buying, selling or exchanging vehicles of a type required to be registered and who has an established place of business for that purpose in this state. See Tennessee Code 55-8-101
  • Established place of business: means a permanent structure or structures owned, leased or rented by a motor vehicle dealer providing signs, facilities and office space used exclusively for buying, selling, displaying, advertising, demonstrating, servicing or repairing motor vehicles or functional or nonfunctional parts of motor vehicles and where replacement parts, repair tools and equipment as well as the books and records needed to conduct the business are kept. See Tennessee Code 55-17-102
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Franchise: means an oral or written agreement for a definite or indefinite period in which a manufacturer or distributor grants to a motor vehicle dealer a license to use a trade name, service mark, or related characteristic and in which there is a community of interest in the marketing of motor vehicles or services related thereto at wholesale, retail, leasing or otherwise. See Tennessee Code 55-17-102
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Manufacturer: means any person who manufactures or assembles new and unused motor vehicles or recreational vehicles, or who maintains factory representatives. See Tennessee Code 55-17-102
  • Motor vehicle: means any self-propelled motor-driven vehicle of the type and kind required to be registered and titled under chapter 1 of this title, and includes, but is not limited to, "motor vehicle" as defined in §. See Tennessee Code 55-17-102
  • Motor vehicle dealer: means any person not excluded by subdivision (17), engaged in the business of selling, offering to sell, soliciting or advertising the sale of motor vehicles or used recreational vehicles, or possessing motor vehicles or used recreational vehicles for the purpose of resale, either on that person's own account or on behalf of another, either as that person's primary business or incidental to that person's business. See Tennessee Code 55-17-102
  • Owner: means a person who holds the legal title of a vehicle, or in the event a vehicle is the subject of an agreement for the conditional sale or lease thereof, with the right of purchase upon performance of the conditions stated in the agreement and with an immediate right of possession vested in the conditional vendee or lessee, or in the event a mortgagor of a vehicle is entitled to possession, then the conditional vendee or lessee or mortgagor shall be deemed the owner for the purpose of this chapter and chapter 10, parts 1-5 of this title. See Tennessee Code 55-8-101
  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • Person: means every natural person, partnership, corporation, association, trust, estate, or any other legal entity. See Tennessee Code 55-17-102
  • Precedent: A court decision in an earlier case with facts and law similar to a dispute currently before a court. Precedent will ordinarily govern the decision of a later similar case, unless a party can show that it was wrongly decided or that it differed in some significant way.
  • Sale: means the issuance, transfer, agreement for transfer, exchange, pledge, hypothecation, mortgage in any form, whether by transfer in trust or otherwise, of any motor vehicle or interest therein or of any franchise related thereto, as well as any option, subscription or other contract, or solicitation looking to a sale, offer or attempt to sell in any form, whether spoken or written. See Tennessee Code 55-17-102
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Street: means the entire width between boundary lines of every way when any part thereof is open to the use of the public for purposes of vehicular travel. See Tennessee Code 55-8-101
  • Vehicle: means every device in, upon or by which any person or property is or may be transported or drawn upon a highway, excepting devices used exclusively upon stationary rails or tracks. See Tennessee Code 55-8-101
  • vehicle salesperson: means any person who is not excluded by subdivision (17), and who is:
    (A) Employed by a licensed motor vehicle dealer who is engaged in the business of effecting or attempting to effect the sale or purchase of motor vehicles or used recreational vehicles owned by some other person to residents of the state, for which service some form of remuneration is expected, whether the remuneration be designated as a salary, fee commission, rental, or otherwise, and regardless of whether the remuneration is paid by the buyer, seller, or a third party. See Tennessee Code 55-17-102
(1) The name and residence address of the applicant and the trade name, if any, under which the applicant intends to conduct business;

(A) If the applicant is a co-partnership, the name and residence address of each member thereof, whether a limited or general partner, and the name under which the partnership business is to be conducted;
(B) If the applicant is a corporation, the name of the corporation and the name and address of each of its principal officers, directors and all persons owning more than five percent (5%) of outstanding shares of stock issued by the corporation;
(2) A complete description, including the city, town, or village with the street and number, if any, of the permanent, established place of business and other and additional place or places of business as shall be operated and maintained by the applicant in conjunction with the permanent, established place of business;
(3) A financial statement prepared in accordance with generally accepted accounting principles by a certified public accountant or public accountant dated not earlier than twelve (12) months prior to the date of the application and copies of the most current financial information furnished to the manufacturer, distributor or their representatives under the terms of any franchise agreements;
(4) The trade name or trade names or line-make or line-makes of the new motor vehicle or vehicles that the applicant is or has been franchised to sell or exchange and the name or names and address of any manufacturer or distributor who has enfranchised the applicant;
(5) Whether the applicant proposes to sell new or used motor vehicles or both;
(6) Evidence that the motor vehicle dealer applicant is the holder of a current business tax license indicating that the applicant’s business is that of a motor vehicle dealer;
(7) A duly executed service agreement on forms provided by the commission with a factory authorized service or repair garage within a reasonable distance from the applicant’s established place of business, if the motor vehicle dealer applicant does not have facilities at the dealer’s established place of business to service or repair motor vehicles; and
(8) A statement that the applicant is or applicants are or intend to be primarily engaged in business as a motor vehicle dealer and that this activity constitutes or will constitute the principal business of the applicant or applicants.
(b) All applications for licenses required to be obtained under this chapter shall be verified by oath or affirmation of the applicant or applicants.
(c) All applications shall be accompanied by the payment of the fee prescribed by § 55-17-112. In the event that any application is denied or the license applied for is not issued, seventy-five percent (75%) of the license fee shall be refunded to the applicant or applicants.
(d) In addition to the requirements enumerated above, each automobile auction or branch thereof must submit with its application a corporate surety bond in the amount of fifty thousand dollars ($50,000) on forms provided by the commission. Every bond shall provide for suit thereon by any person, including the state, who has a cause of action under this chapter. Every bond shall also provide that no suit may be maintained to enforce any liability on the bond unless brought within two (2) years after the event giving rise to the cause of action.
(e) A dealer must submit a change of address, ownership, employment, trade name, or line-make of motor vehicle a dealer is franchised to handle to the commission, in writing, within thirty (30) days from the date of the change. A dealer must notify the commission of the termination of a salesperson’s employment, in writing, within thirty (30) days of the termination.
(f) If a motor vehicle salesperson desires to change employment from one (1) dealer to another, then that salesperson must submit a transfer application to the commission. The salesperson may begin employment with another dealer upon submitting the transfer application and paying any associated fees.
(g)

(1) Each application for a license or renewal of a license of a motor vehicle dealer shall be accompanied by evidence satisfactory to the commission that the dealer has a surety bond in the amount of at least fifty thousand dollars ($50,000) in force. A letter of credit shall not be satisfactory evidence of a surety bond in the required amount.
(2)

(A) The bond is for the benefit of any person who suffers loss because of either:

(i) Nonpayment by the dealer of a retail customer’s prepaid title, registration or other related fees or taxes; or
(ii) The dealer’s failure to deliver in conjunction with the sale of a vehicle a valid vehicle title certificate free and clear of any prior owner‘s interests and all liens except a lien created by or expressly assumed in writing by the buyer of the vehicle.
(B) The aggregate liability of the surety to all persons shall in no event exceed the amount of this bond.
(3) In lieu of a corporate surety on the bond required by subdivision (g)(1), the commission may allow the dealer to secure the bond by depositing collateral in the form of a certificate of deposit, as accepted and authorized by the banking laws of this state, that has a face value equal to the amount of the bond. The collateral may be deposited with or executed through any authorized state depository designated by the commission. Interest on any deposited certificate of deposit shall be payable to the dealer who has deposited it as collateral, or to a person as the dealer or the certificate may direct.
(4) No license so issued shall be transferable, and a separate license shall be required for each separate place of business and shall be prominently displayed in the place of business operated by the person to whom the license is issued.
(5) Any surety is required to provide sixty (60) days’ notice of cancellation of the bond or certificate of deposit or letter of credit to the commission.
(h)

(1) All applications for issuance or renewal of a motor vehicle dealer license shall contain an attestation that the applicant will comply with each of the following requirements:

(A) The applicant shall maintain the surety bond required by subsections (d) and (g), as applicable, in full force and effect during all times that the license is active; and
(B) The applicant shall notify the commission upon a change in ownership or location of the dealership as required by § 55-17-113.
(2) Additionally, all applications for issuance or renewal of a motor vehicle dealer license shall contain the following statement, immediately following the attestation required by subdivision (h)(1):

FAILURE TO MAINTAIN A SURETY BOND AS REQUIRED BY T.C.A. § 55-17-111, OR NOTIFY THE MOTOR VEHICLE COMMISSION OF A CHANGE IN THE OWNERSHIP OR LOCATION OF THE DEALERSHIP AS REQUIRED BY T.C.A. § 55-17-113, MAY RESULT IN THE ASSESSMENT OF A CIVIL PENALTY AND/OR SUSPENSION OR REVOCATION OF THE MOTOR VEHICLE DEALER LICENSE.

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