FRANCHISE Motor Vehicle Dealer ($25,000)-Shepherd Bond - Statewide in Florida
Table of Contents
Brief Summary
A franchised dealership in Florida cannot open its doors until FLHSMV has a $25,000 dealer bond or letter of credit in hand. The bond is the faster and cheaper of the two options. You pay a premium, the surety backs the $25,000, and the original bond goes straight into your license application.
Section 320.27(10), Florida Statutes, requires a $25,000 surety bond or irrevocable letter of credit from every applicant dealer of new or used motor vehicles before the Department of Highway Safety and Motor Vehicles issues a license. Franchised dealers are included. The bond protects any person in a retail or wholesale transaction who suffers a loss from the dealer's breach of a written sale contract or violation of chapter 319 or 320.
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How to Apply for a FRANCHISE Motor Vehicle Dealer ($25,000)-Shepherd Bond:
- Confirm the dealership's legal name and licensed location match the FLHSMV application, form HSMV 86056.
- Supply owner details for the surety's credit and financial review.
- Accept the quote and pay the premium.
- Receive the signed $25,000 bond on form HSMV 86020.
- Submit the original bond with the license application.
- Renew the bond or file a continuation certificate for each license period ending December 31.
Detailed Information About the Florida FRANCHISE Motor Vehicle Dealer ($25,000)-Shepherd Bond:
One amount for every dealer type
Florida does not scale this bond by franchise status, sales volume or number of lots. The figure in section 320.27(10) is $25,000 for any applicant dealer of new or used motor vehicles. A franchised motor vehicle dealer, meaning one that buys, sells or services vehicles under an agreement as defined in section 320.60(1), posts the same $25,000 as an independent dealer.
What a claimant can recover
The bond is written to FLHSMV for the benefit of retail and wholesale customers. It covers losses caused when the dealer fails to honor a written contract for the sale or exchange of a vehicle, or breaks the rules in chapters 319 and 320. The surety's aggregate liability in any one year is capped at the $25,000 penalty sum.
Paperwork the department expects
FLHSMV prescribes form HSMV 86020 for the motor vehicle dealer surety bond. A dealer that prefers cash backing can instead file an irrevocable letter of credit from a Florida authorized bank on form HSMV 86057. Either one goes in with the license application, form HSMV 86056.
Renewal timing
Franchised dealer licenses expire December 31. At the start of each new license period the dealer delivers a new bond or a continuation certificate. Whenever a bond is renewed, changed or replaced, a copy must reach the department within 10 calendar days.
Eligibility and Requirements for a Florida FRANCHISE Motor Vehicle Dealer ($25,000)-Shepherd Bond:
- Penalty sum of $25,000.
- Florida Department of Highway Safety and Motor Vehicles as obligee.
- Surety company authorized to do business in Florida.
- Department approved bond form HSMV 86020, or letter of credit form HSMV 86057 as the alternative.
- Copy of any renewed, changed or new bond to FLHSMV within 10 calendar days.
Florida FRANCHISE Motor Vehicle Dealer ($25,000)-Shepherd Bond FAQs:
No. Both file a $25,000 bond under section 320.27(10). The franchise agreement affects the license type and its December 31 expiration, not the bond amount.
Florida accepts a $25,000 irrevocable letter of credit from a bank authorized to do business in the state, on form HSMV 86057. It ties up the full amount, which is why most dealers use a bond.
The premium depends on the surety's underwriting of the owners and the business, with personal credit carrying the most weight. A quote shows your actual figure.
The bond tracks the license period. Deliver a new bond or continuation certificate each period and send FLHSMV a copy of any change within 10 calendar days.
