Michigan car dealerships are governed by the Secretary of State.
The Michigan Department of State regulates car dealers providing the guidelines for running a dealership. The Michigan Vehicle Code governs dealerships in Michigan and the process requires stamina, research and compliance on several levels. Dealers must obtain an authorized place of business, become licensed and meet several other requirements. Developing a business plan, marketing strategy and complying with Michigan law will help you become a successful car dealer in Michigan.
Instructions
1. Develop a business plan. A business plan should serve as the backbone of your business, providing a strategic framework for implementation and growth. Create a business plan that outlines your goals, financial health and marketing plan. Include information on vehicle types and suppliers, customer financing options and monthly vehicle maintenance expenses. Several resources exist including Businessplans.org or the Small Business Administration (SBA.gov).
2. Familiarize yourself with Michigan law. The Michigan Vehicle Code governs the requirements for dealers. Obtain a copy of the code--Public Act 200 of 1949--and the Michigan Dealer Manual to begin researching and learning the requirements under state law. Closely review the licensing requirements, dealer classes and sales tax and odometer requirements.
3. Obtain authorization for your establishment. Michigan dealers are required to operate an authorized establishment. Several requirements are in place including a permanently enclosed structure in which all documents required to run the business must be on-site. In addition, an office must be present of at least 150 square feet. Research Section 248 of the vehicle code for additional information. Contact the Michigan Secretary of State at 888-767-6424 to obtain information on authorization.
4. Obtain licensing. The Michigan Department of State requires that all dealers obtain licensing relevant to their business type. Determine your business type--new dealer, used dealer, broker, wholesaler or salvage--Michigan's Bureau of Regulatory Services regulates licensing. Complete form AR-0031 Original Vehicle Dealer License Application to apply for your license. Contact the Bureau of Regulatory Services at 810-760-2212 for information on obtaining your license.
5. Prepare additional documentation. Michigan requires the filing of a copy of a franchise affidavit, repair facility registration or agreement, zoning approval, fleet insurance certificate and zoning approval. Review the Michigan Dealer Manual for information on which documents apply to your situation. Download the required documentation by visiting the Michigan Secretary of State website at Michigan.gov.
6. Obtain a surety bond. Michigan law requires that dealers obtain a surety bond in the amount of $10,000 to protect consumers and other involved parties from monetary loss. The Michigan Secretary of State website (Michigan.gov/dleg) lists surety companies authorized to conduct business in Michigan. Contact a company to obtain your bond.
7. Obtain fleet insurance. Michigan dealers are required to maintain a "minimum of 20/40/10 fleet-type Michigan no-fault vehicle insurance" according to the Michigan Dealer Manual. The 20 and 40 refer to bodily injury liability in an accident. You may be liable for bodily injury that exceeds your insurance. Therefore, a person would receive up to $20,000 in an accident with $40,000 allowed per accident. The final number refers to $10,000, the maximum allowed for property damage. Several companies offer fleet insurance in Michigan. Conduct a search or contact the Michigan Secretary of State.
