As with any entrepreneurial venture, there is a laundry list of things you must do before you can open your own car dealership in the state of Arizona. The regulations vary depending on the nature of your dealership, be it one that offers new vehicles to the public or wholesale fleets, but every path requires that you submit an application, undergo a criminal record check, and pay a series of fees.

Anyone who sells, exchanges, or accepts trade-ins for new cars or buys used cars to resell them, or who sells four or more used cars in a 12-month period, must have a dealer license and renew it annually.

A dealer license costs $100 to obtain and renew, plus $50 for each branch office within the same county. Add a $15 application fee and a $24-per-person background check fee.

Application

You can obtain an application by contacting the Arizona Motor Vehicle Division (MVD) at (602) 712-7571 and asking for the Dealer Licensing Unit. The completed application must contain the notarized signatures of all responsible parties (the individual, partners, or an officer of the corporation).

Further, you must submit a separate application for each license type you wish to hold. The types of licenses are as follows:

• Franchised motor vehicle dealer (new cars)

• Wholesale auto auction dealer

• Used motor vehicle dealer

• Automotive recycler

• Broker

• Title service company

Criminal Record Check

Each dealer applicant must also undergo a criminal record check. The provision applies to individual owners, partners, company officers, and those who own 20% or more of the company.

The application for the background check, which can be acquired at your local Motor Vehicle Division (MVD) or third-party office, requires a personal history form and fingerprints. Those who have undergone an MVD criminal record check in the past five years or who are already licensed to sell automobiles may forgo the procedure.

The MVD is strict in its check, so it will automatically deny anyone who has been convicted of fraud or an auto-related felony within the last 10 years or any other type of felony within the last five years.

If you fall into one of those categories and are consequently denied a license, you can request an appeal from the MVD. If the MVD upholds the denial, you may appeal to the Maricopa County Superior Court.

You may pay for the criminal record check with a cashier's check or money order payable to the Arizona Department of Public Safety, but the other application fees must be paid to the MVD by check.

Bonds

In addition to the application, criminal record check, and application fees, prospective automobile vendors must bond their dealerships with an insurance or bonding company authorized to do business in Arizona.

If you will sell new and/or used vehicles, you must obtain a bond for $100,000. Title service companies, brokers, wholesale dealers, and wholesale auctioneers must bond for $25,000. Automotive recyclers need bond for only $20,000.

With the exception of title service companies, you will need a separate original bond for each application and for each county in which you will have an established place of business. Furthermore, you must attach a power of attorney for the attorney-in-fact to the bond.

The bond must be signed by the individual, all partners (if a partnership), or one corporate officer (if incorporated). Bonds may not be handwritten.

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