Surety Bond Encyclopedia

New Franchise Motor Vehicle Dealer ($50,000) Bond - Statewide in Arkansas

Brief Summary

The $50,000 is right for a new franchise motor vehicle dealer, and the number most applicants miss is the branch bond. A.C.A. 23-112-302 requires a corporate surety bond of $50,000 for a new motor vehicle dealer, $25,000 for new motorcycle, all terrain vehicle and low speed vehicle dealers and motor vehicle lessors, and a separate $25,000 bond with each branch license application. Add a second rooftop and you add a bond. The license itself runs only through December 31 of the current year, so a bond bought in the fall is covering a short first stretch.

Arkansas requires an application for a new motor vehicle dealer license to be accompanied by the filing with the Motor Vehicle Commission of a corporate surety bond in the penal sum of $50,000. The bond is executed in the name of the State of Arkansas for the benefit of any aggrieved party and is conditioned upon the applicant complying with the Arkansas Motor Vehicle Commission Act.

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How to Apply for a New Franchise Motor Vehicle Dealer ($50,000) Bond:

File an original, signed and notarized $50,000 corporate surety bond with the Arkansas Motor Vehicle Commission
Execute the bond in the name of the State of Arkansas for the benefit of any aggrieved party
File a separate $25,000 bond with each branch license application
Provide proof of liability coverage on all vehicles offered for sale, at least at the level required by the Motor Vehicle Safety Responsibility Act
Submit a copy of the franchise or dealer sales and service agreement and a relevant market area statement
Include the manufacturer notification letter
Provide color photographs of the showroom, parts area, service area, office, lot and sign
Include the notarized affidavit from the principal owner or agent and the dealership contact sheet
Pay the $100 initial license fee
File salesperson, manager and finance personnel applications with the dealership application
Renew before the Certificate of License expires on December 31

Detailed Information About the Arkansas New Franchise Motor Vehicle Dealer ($50,000) Bond:

The amounts, by license

A.C.A. 23-112-302 sets them out.

New motor vehicle dealer: $50,000
New motorcycle dealer, new all terrain vehicle dealer, new low speed vehicle dealer, and motor vehicle lessor: $25,000
Each branch license application: $25,000

The Commission's own application packet states the same split in plain terms, $25,000 for cycle dealers and $50,000 for all other dealers, with the bond required as an original, signed and notarized. Nothing scales by units sold or revenue.

What the bond does and how it pays

It is conditioned upon the applicant complying with the chapter, and it runs to the State of Arkansas for the benefit of any aggrieved party. Proceeds are paid upon receipt by the commission of a final judgment from an Arkansas court of competent jurisdiction against the principal and in favor of an aggrieved party. Aggregate liability of the surety for all claimants cannot exceed the amount of the bond, regardless of how many years the bond has been in force. That last clause matters. Ten years of continuous coverage does not stack into ten bonds.

The separate insurance requirement

The application packet requires proof of liability coverage on all vehicles offered for sale, in an amount equal to or greater than what the Motor Vehicle Safety Responsibility Act, A.C.A. 27-19-101 et seq., requires. The bond does not satisfy that and the insurance does not satisfy the bond.

Dates and fees

Certificates of License are valid through December 31 of the current year, so the license year ends on a fixed date rather than running twelve months from issuance. The initial license fee listed in the application packet is $100. New certificates issued during a franchise change or a relocation are provided at no charge.

What else goes in the file

A completed typed application with all required documents, a copy of the franchise or dealer sales and service agreement, a relevant market area statement, a manufacturer notification letter, color photographs of the showroom, parts area, service area, office, lot and sign, a notarized affidavit from the principal owner or agent, and a contact sheet covering dealership, management, sales, advertising and complaint contacts. Salesperson, manager and finance personnel applications are filed alongside the dealership application. None of that reduces or replaces the bond.

The bond gets the license issued. Buyers still have to find the store. Any licensed dealer can also claim a free listing at BestAutoDealerIn.com, a directory searchable by zip code and state, with a backlink that helps your own SEO, sends referrals, and gets a blog post written about your dealership.

Eligibility and Requirements for a Arkansas New Franchise Motor Vehicle Dealer ($50,000) Bond:

Corporate surety bond in the penal sum of exactly $50,000 for a new motor vehicle dealer
State of Arkansas as obligee, filed with the Motor Vehicle Commission
Bond conditioned upon the applicant complying with the Arkansas Motor Vehicle Commission Act
Original bond, signed and notarized, with the business name matching the application exactly
Aggregate surety liability capped at the bond amount for all claimants regardless of years in force
Proceeds paid only on a final judgment from an Arkansas court against the principal
Credit review of the owners, which shapes the rate rather than eligibility for most applicants at this bond size

Arkansas New Franchise Motor Vehicle Dealer ($50,000) Bond FAQs:

Is the Arkansas dealer bond always $50,000?

No. A.C.A. 23-112-302 sets $50,000 for a new motor vehicle dealer and $25,000 for new motorcycle dealers, new all terrain vehicle dealers, new low speed vehicle dealers and motor vehicle lessors. Each branch license application also carries a $25,000 bond.

Do I need another bond for a second location?

Yes. The statute requires a corporate surety bond in the penal sum of $25,000 filed with each branch license application, on top of the dealership bond.

Does the amount rise with sales volume?

No. The figures are set by license type, not by units sold, revenue or inventory.

Can a customer collect on the bond directly?

Not without a court judgment. Proceeds are paid upon receipt by the commission of a final judgment from an Arkansas court of competent jurisdiction against the principal in favor of an aggrieved party.

Does the bond stack over the years?

No. Aggregate liability of the surety for all claimants cannot exceed the amount of the bond, regardless of the number of years the bond is in force or has been in effect.

Is the bond the only financial filing?

No. The application packet requires proof of liability coverage on all vehicles offered for sale, in an amount at least equal to what the Motor Vehicle Safety Responsibility Act requires.

When does the license expire?

Certificates of License are valid through December 31 of the current year, so the license year closes on a fixed date rather than running a full twelve months from issuance.

What does the license cost?

The Motor Vehicle Commission's initial application packet lists an initial license fee of $100. New certificates issued during a franchise change or relocation are provided at no charge.

What determines the premium?

Arkansas does not set premium. A surety prices the $50,000 bond off underwriting: the owners' personal credit, business financials, time in the industry, and any prior claims or license discipline. Because branch locations each add a $25,000 bond, count your filings before comparing quotes.

How do buyers find my dealership online?

A free listing at BestAutoDealerIn.com puts any licensed dealer in a directory searchable by zip code and state. The listing carries a backlink that supports your own SEO, sends referrals, and listed dealerships can get a blog post written about them.