The decision to start your own business is usually accompanied by a fair amount of anguish and doubt. Insecurities may prevail if you do not get all the information available to you. Follow the regulated steps and calculate carefully. It is common that rules may vary from state to state. Thus, if you have just recently moved to a new state, make sure you do your homework, and learn everything you can, so there are no surprises. Take Florida, for instance. The state administration has created a positive business environment to encourage entrepreneurship through certain regulations. Just the same, however, there are clear rules regarding consumer protection in the form of surety bonds against unfair practices.
You want to open a motor vehicle dealership
According to Section 320.27 Florida Statutes, a dealer could be any individual, corporation or partnership that wishes to sell, buy, display for sale, or deal in three or more cars in a period of 12 months. In order to operate, such a business should meet two requirements: obtain a car/motor vehicle license, issued by the state, and a $25,000 auto dealer surety bond issued by a surety bond agency. If you wonder why such an enterprise would need a surety bond and what is its purpose, the simplest way to put it is this – to protect any customer against fraud or other harmful acts by motor vehicle dealers and their employees. The bonds are usually governed by the state statutes. If a consumer files a complaint with the State of Florida, the surety bond can be claimed on. It provides reimbursement for the damages to the client, brought about by violations of the state regulations under which car/motor vehicle dealership is administered.
The State of Florida issues six motor vehicle license types. They range from wholesale and auction car dealers to independent, franchise, service and salvage business entities.
Before you file your application, make sure you get an approval from the Division of Motorist Services Regional Office for your chosen business location. Once that is done, you can submit your application along with all required documents and fees.
General license requirements
Some of the main requirements include a $300 fee for each main location and a $25,000 surety bond. You also need to provide a copy of the location lease or proof of ownership. The Department requires you to take a pre-licensing dealer training course at an approved school, so you will need to include a certificate of completion of such a course. For some of the licenses you may submit a garage liability insurance certificate which has to include $25,000 bodily injury and property damage protection and $10,000 personal injury protection. Copies of corporate paperwork such as minutes showing the election of corporate directors and a partnership agreement, if applicable, can be required of you as well.
Now, about that surety bond. It is mandatory, so you need to provide a surety bond to the State of Florida to the amount of $25,000 or a letter of credit of the same value. Depending on your license type, each bond has an expiration date set by the state. The expiration for franchise car dealers is December 31st and April 30th for non-franchise ones. Again, the bond is invented for the sake of customer protection should a dealer violate industry regulations imposed by the state. If any such violation incurs, consumers have the right to file a claim with the state and, subsequently, collect monies owed to them as a result of the dealership’s wrongdoings. Then the surety bond acts like a safeguard, and pays the consumer what is due, in case the dealer cannot – or is unwilling to – pay directly for the damages cause by its actions.
The surety bond is usually obtained relatively easy by well-qualified candidates. In addition to your surety bond application form and all the required paperwork, the surety company will want to know more about your credit history. Candidates with bad or struggling credit presuppose the existence of the standard and non-standard surety bond market. In plain English, you are qualified for the standard bond market if you have a minimum of three years previous business experience and a good/excellent credit score. Then you will be charged between 1-3% of the total bond amount needed. The non-standard market serves candidates who do not meet the aforementioned requirements and could be charged up to 25% of the total amount. To get a quote and find out where you stand, fill out an application form and go from there.