What is a Florida New/Franchise Motor Vehicle Dealer Bond?
Florida defines motor vehicle dealers as any person, firm, company, corporation, or other entity that buys, sells, leases, displays for sale, or deals in three or more motor vehicles in any 12 months. If you fall under this category, you must obtain a license issued by the state to operate. For franchise dealers to get their license, they must post a Florida New/Franchise Motor Vehicle Dealer Bond with the Florida Department of Highway Safety and Motor Vehicles – Division of Motorist Services (FLHSMV).
The Florida franchise dealer surety bond is a three-party contract between the principal (the auto dealer purchasing the bond), the obligee (the FLHSMV), and the surety company that writes the bond.
Why do new/franchise auto dealers need a surety bond?
Without obtaining a surety bond, you cannot get your dealer license, and operating without a license is illegal. Florida law requires auto dealers to get a bond to protect the public from licensed dealers that commit unethical or fraudulent acts. Such acts include but are not limited to:
- false or misleading information regarding the sale or financing of motor vehicles
- tampering with the odometer
- misrepresenting a demonstrator car (test driving vehicle) as a new motor vehicle and selling it as a new vehicle without giving written notice to the customer
- failure to comply with the proper transfer of a vehicle’s title
If a motor vehicle dealer commits a fraudulent or illegal act that results in loss or injury to an individual, that individual may make a claim against the bond to receive financial compensation. The bonded dealer is financially responsible for reimbursing the surety company for all valid claims that get paid out. In addition, engaging in any activity prohibited by the statutes may result in the revocation of the dealer’s license.
Bond details
The new/franchise dealer bond has a required bond amount of $25,000. This bond also has a unique expiration date that runs concurrently with the license term dates. Meaning your franchise dealer bond will expire annually on December 31st. You will want to make sure to renew your bond for every year you wish your license to remain active.
How much does a Florida New/Franchise Motor Vehicle Dealer Bond cost?
The cost of the new or franchise dealer bond in Florida depends primarily upon the credit of the individual applying. You’ll be assigned a premium rate by the surety company based on your credit, and when you multiply that premium rate by the bond amount, you’ll have calculated your premium. For individuals with excellent credit, we’ve seen this bond issued for as little as $188.
Obligee information
The obligee, which is the entity that requires you to get a surety bond, for the Florida franchise dealer bond is the Florida Department of Highway and Safety Motor Vehicles. You can contact them by calling (850) 617-3003 or find your county’s regional office here.
How to get your Florida Franchise Dealer Bond
To get your Florida franchise dealer bond, simply fill out the application on our website, and you’ll get your free quote within 24 hours. If at any point you have questions, reach out to our surety experts at info@ezsuretybonds.com or call us at 1-866-546-4605.
Frequently asked questions
How to get a New/Franchise Dealer License in Florida?
Florida categorizes franchise dealers as businesses that sell new (and used) automobiles under an agreement with a manufacturer. The state requires all franchise dealers to get the appropriate license. You can find more detailed information on how to get a Florida auto dealer license here. But essentially, you must:
- Obtain a business location and pass the business location inspection
- Register your business
- Complete the pre-licensing dealer training course
- Obtain liability insurance
- Obtain your $25,000 dealer surety bond
- Submit your license application and all required fees
How many types of auto dealers are there in Florida?
The state of Florida has several classes of auto dealers, such as:
- Vehicle Franchised dealer (VF)
- Vehicle Independent dealer (VI)
- Vehicle Wholesale dealer (VW)
- Service Facility (SF)
- Salvage Dealers (SD)
- Vehicle Auction dealer (VA)
- Recreational Motor Vehicle dealer (RV)
If you’re unsure which category your business falls under, you can find more information to help you here.
I purchased my Florida New/Franchise Motor Vehicle Dealer Bond—now what?
After purchasing your new dealer or franchise dealer bond through us, we’ll send you the original bond through the mail. In most cases, the principal (that’s you) must sign the original bond before shipping it to the obligee. Before mailing out your original bond, be sure to check your obligee’s surety bond filing requirements.
