NEW FRANCHISE Motor Vehicle Dealer ($25,000) Bond - Statewide in North Dakota
Table of Contents
Brief Summary
New and used dealers in North Dakota post the same $25,000 bond, so holding a franchise does not change the amount. What the franchise changes is the license itself. A new motor vehicle dealer license covers new vehicles only for the makes you hold a bona fide franchise or contract for. Get the bond on NDDOT form SFN 2933 and it should be the fastest part of the application.
NDCC 39-22-05 requires every motor vehicle dealer license applicant, new or used, to furnish a continuous $25,000 surety bond running to the State of North Dakota before the license is issued. A new motor vehicle dealer must also prove a bona fide contract or franchise with a manufacturer or distributor under NDCC 39-22-16. Licenses expire December 31, and the state will not renew a dealer with fewer than eight retail motor vehicle sales in the previous year.
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How to Apply for a NEW FRANCHISE Motor Vehicle Dealer ($25,000) Bond:
- Gather the franchise agreement or contract with each manufacturer or distributor whose new vehicles you will sell.
- Secure an established place of business with an enclosed building of at least 250 square feet and a display lot of at least 2,500 square feet.
- Have the surety execute the $25,000 Motor Vehicle Dealer Bond on SFN 2933.
- Complete SFN 2932 for a new motor vehicle dealer license and attach the bond, franchise documentation and proof of garage liability insurance.
- Pay the $100 license fee and the nonrefundable $100 initial inspection fee.
- Allow 4 to 6 weeks for the NDDOT inspection before the license is issued.
Detailed Information About the North Dakota NEW FRANCHISE Motor Vehicle Dealer ($25,000) Bond:
Same bond as a used dealer, different license
NDCC 39-22-05 sets a single amount, $25,000, for motor vehicle dealer applicants. It does not change for new versus used, sales volume or the number of franchises. NDDOT uses one form, the Motor Vehicle Dealer Bond, SFN 2933, for both license types.
The difference is in NDCC 39-22-16. An applicant for a new motor vehicle dealer license must show a bona fide contract or franchise in effect with a manufacturer or distributor of the new vehicles it proposes to sell. The licensed new dealer may deal in used motor vehicles and in those new motor vehicles for which it holds a franchise. A new vehicle acquired outside those franchise lines becomes subject to the registration provisions of chapter 39-04, the title provisions of chapter 39-05 and the motor vehicle excise tax.
What the bond guarantees
The bond is conditioned on the dealer faithfully complying with North Dakota law that regulates dealers. It indemnifies any person dealing with the dealer in connection with a motor vehicle against loss caused by the dealer's failure to comply, including failure to furnish a proper and valid certificate of title. An injured party can proceed against the dealer and the surety without making the state a party. The surety's aggregate liability may never exceed the amount of the bond.
The surety may cancel as to future liability by certified mail to the dealer and the department. Thirty days after the notice is mailed, the bond is void as to new liability.
Fees, place of business and renewal
The dealer license fee is $100 per year and includes one dealer plate. Additional plates are $20 each. A first time new or used dealer applicant pays a nonrefundable $100 initial inspection fee. Under NDCC 39-22-15 the established place of business must include a permanent enclosed building of at least 250 square feet, and the primary display lot must cover at least 2,500 square feet. A residence, tent or temporary stand does not qualify. New and used dealers must also keep garage liability insurance.
Under NDCC 39-22-18 every dealer license expires December 31. The department may not renew a dealer that made fewer than eight retail motor vehicle sales during the previous year, and a renewal filed after expiration carries an extra $100 fee.
Forms
File the bond on SFN 2933 with the Application for Dealer's License, SFN 2932, at the North Dakota Department of Transportation, Motor Vehicle Division, 608 E Boulevard Ave, Bismarck ND 58505-0780. NDDOT asks applicants to allow 4 to 6 weeks for the inspection before the license is issued.
Eligibility and Requirements for a North Dakota NEW FRANCHISE Motor Vehicle Dealer ($25,000) Bond:
- Continuous $25,000 surety bond under NDCC 39-22-05.
- State of North Dakota as obligee.
- Surety company licensed and qualified to do business in North Dakota.
- Bona fide contract or franchise with a manufacturer or distributor under NDCC 39-22-16.
- Garage liability insurance kept in force.
- At least eight retail motor vehicle sales in the prior year to qualify for renewal.
North Dakota NEW FRANCHISE Motor Vehicle Dealer ($25,000) Bond FAQs:
No. NDCC 39-22-05 sets $25,000 for every motor vehicle dealer applicant, and NDDOT uses the same form, SFN 2933, for new and used licenses.
Yes. NDCC 39-22-16 lets a new motor vehicle dealer deal in used motor vehicles and in the new motor vehicles covered by its franchise or contract.
NDCC 39-22-16 requires proof satisfactory to the department of a bona fide contract or franchise in effect with a manufacturer or distributor. The license application, SFN 2932, asks for the franchise agreements for a new dealer license.
Not by itself. Under NDCC 39-22-18 the department may not renew a dealer that made fewer than eight retail motor vehicle sales during the previous year. Licenses expire December 31.
Any person who deals with the dealer in connection with a motor vehicle and suffers loss because the dealer did not comply with North Dakota dealer law, including failure to furnish a valid certificate of title. Total liability is capped at $25,000.
