If a Georgia franchised new-car dealer (say, a Lincoln-Mercury franchise) sets up a temporary location in another county to sell only used cars, does it need a used-car dealer license from the Used Motor Vehicle Dealers Board?

Plain-English summary

The Professional Licensing Division asked whether a franchised motor-vehicle dealer (the kind that has a manufacturer franchise to sell new cars) is subject to regulation by the Used Motor Vehicle Dealers and Used Motor Vehicle Parts Dealers Board when it sets up a temporary used-car-only sales location in a county other than the county where its franchise is located. The licensing scheme is in Chapter 47 of Title 43 (the Used Motor Vehicle Dealers' and Used Motor Vehicle Parts Dealers' Registration Act). Anyone selling used motor vehicles is presumed to need a used-car dealer license unless they fall within an exemption. The relevant exemption in O.C.G.A. § 43-47-2(17)(B)(i) covers "[f]ranchised motor vehicle dealers and their wholly owned and controlled subsidiaries operating in the county in which their franchise is located or operating as a direct dealer of a manufacturer." The AG held that a franchised dealer selling only used cars at a temporary out-of-county location does not satisfy either prong: not in the franchise county, and not "operating as a direct dealer of a manufacturer" (which requires sales of new vehicles). So the dealer needs a used-car license from the Board.

Currency note

This opinion was issued in 2001. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical context

The Used Motor Vehicle Dealers' and Used Motor Vehicle Parts Dealers' Registration Act, Chapter 47 of Title 43, makes it unlawful to operate as a used motor vehicle dealer in Georgia without first obtaining a license from the used car division of the Board (O.C.G.A. § 43-47-7). A "used motor vehicle dealer" is defined in § 43-47-2(17)(A) as a person who, for commission or with intent to make a profit or gain, engages in the listed sales activities or is engaged wholly or partly in the business of selling used motor vehicles.

The exemption in § 43-47-2(17)(B)(i) excludes franchised motor vehicle dealers and their wholly owned and controlled subsidiaries operating in the county where the franchise is located or operating as a direct dealer of a manufacturer. The opinion considers whether an out-of-county, used-only temporary site falls within either part of that language.

The Court of Appeals in Chancellor v. Gateway Lincoln-Mercury, Inc., 233 Ga. App. 38 (1998), had relied on the franchise-dealer exemption to conclude that the franchised dealer in that case was not subject to the Act. The opinion's question presented a different fact pattern: a franchised dealer selling only used cars at a temporary location in a county other than the franchise county.

The first prong was easy. If the dealer was selling at a temporary out-of-county site, it was not "operating in the county in which their franchise is located." So that prong could not save the dealer.

The second prong required interpreting "direct dealer of a manufacturer." The Act does not define the term, but the Georgia Motor Vehicle Franchise Practices Act (Article 22, Chapter 1, Title 10) defines "manufacturer" as "any person who performs the major portion of the assembly of a new motor vehicle" (O.C.G.A. § 10-1-622(9)). Reading "direct dealer of a manufacturer" through that lens, the AG concluded that the term refers to direct sales of new motor vehicles by or on behalf of the manufacturer. A franchised dealer that is selling only used vehicles is not engaged in direct sales of new vehicles, and therefore is not "operating as a direct dealer of a manufacturer" within the meaning of the exemption.

The result is that a franchised motor vehicle dealer engaged exclusively in used-car sales at a temporary out-of-county site is not exempt under § 43-47-2(17)(B)(i) and is subject to the Act's licensing requirements. The opinion says that §§ 43-47-2(15.1) and 43-47-8.2 were not relied on because they were not essential to answering the questions presented.

For franchised dealers planning out-of-county used-car events at the time

The opinion states that a franchised dealer selling only used cars at a temporary location outside its franchise county is a used motor vehicle dealer and is subject to the Act's licensure requirements.

For Secretary of State licensing staff at the time

The opinion concludes that the Board has jurisdiction over the described out-of-county, used-only temporary operation when the dealer is not operating as a direct dealer of the manufacturer.

For automotive industry attorneys at the time

The opinion's analysis turns on the exemption's franchise-county condition and its direct-dealer-of-a-manufacturer language. It concludes that a dealer selling only used vehicles outside the franchise county does not satisfy the latter condition because a direct dealer of a manufacturer must be involved in the direct sale or distribution of new motor vehicles.

Common questions

Q: What if the franchise dealer is selling new vehicles at the temporary location?
A: The opinion does not decide that scenario. It decides that a franchised dealer selling only used vehicles at a temporary location outside its franchise county is not operating as a direct dealer of a manufacturer for purposes of the exemption.

Q: Does the opinion decide whether a wholly owned subsidiary is exempt?
A: No. It quotes an exemption covering franchised motor vehicle dealers and their wholly owned and controlled subsidiaries, but the opinion analyzes the described franchised dealership's used-only, out-of-county operation.

Background and statutory framework

The Act requires a license to operate as a used motor vehicle dealer. The opinion applies the Act's definition and the exemption in § 43-47-2(17)(B)(i) to a franchised dealer selling only used cars at a temporary location outside the franchise county. It concludes that the dealer is subject to the Act's licensure requirements when it is not operating as a direct dealer of the manufacturer.

Citations and references

Statutes:

• O.C.G.A. § 43-47-2(16), (17) (definitions)
• O.C.G.A. § 43-47-7 (licensing requirement)
• O.C.G.A. § 43-47-8.2 (temporary sites)
• O.C.G.A. § 10-1-622(9) (manufacturer defined under Franchise Practices Act)

Cases:

• Chancellor v. Gateway Lincoln-Mercury, Inc., 233 Ga. App. 38 (1998)

Source

• Landing page: https://law.georgia.gov/opinions/2001-7

Original opinion text

You have asked my opinion whether O.C.G.A. § 43-47-2(15.1)1 and (17)(B) allow the Used Motor Vehicle Dealers and Used Motor Vehicle Parts Dealers Board to have jurisdiction over a franchise dealership which is selling used cars at a temporary location in a county other than the county where the franchise dealership is located. If the answer to this question is no, you then ask whether a franchise dealership ever falls under the jurisdiction of the Used Motor Vehicle Dealers and Used Motor Vehicle Parts Dealers Board. For the reasons outlined below, it is my opinion that the Board has jurisdiction over a franchise dealership which is selling only used cars at a temporary location in a county other than the county where the franchise dealership is located if the dealer is not operating as a direct dealer of the manufacturer. Because the answer to the first question is yes, this opinion does not address the second question. The authority for the Used Motor Vehicle Dealers and Used Motor Vehicle Parts Dealers Board to regulate the sales of used motor vehicles is contained in Chapter 47 of Title 43 of the Official Code of Georgia, the Used Motor Vehicle Dealers' and Used Motor Vehicle Parts Dealers' Registration Act ("Act"). Under O.C.G.A. § 43-47-7, it is unlawful to operate as a used motor vehicle dealer in this state without first obtaining a license from the used car division of the Board. A used motor vehicle dealer is "any person who, for commission or with intent to make a profit or gain of money or other thing of value, sells, exchanges, rents with option to purchase, offers, or attempts to negotiate a sale or exchange of an interest in used motor vehicles or who is engaged wholly or in part in the business of selling used motor vehicles, whether or not such motor vehicles are owned by such person." O.C.G.A. § 43-47-2(17)(A). Used motor vehicles are defined as those vehicles that previously have been the subject of a retail sale. See O.C.G.A. § 43-47-2(16). The Act provides for numerous exceptions for persons who might otherwise fall under the definition of a used motor vehicle dealer. Relevant to this discussion is O.C.G.A. § 43-47-2(17)(B)(i), which provides that a used motor vehicle dealer does not include "[f]ranchised motor vehicle dealers and their wholly owned and controlled subsidiaries operating in the county in which their franchise is located or operating as a direct dealer of a manufacturer." See generally Chancellor v. Gateway Lincoln-Mercury, Inc., 233 Ga. App. 38 (1998) (relying on O.C.G.A. § 43-47-2(17)(B)(i) to conclude that the appellee, a franchised motor vehicle dealer, was not subject to the Act). Your query requests that I consider a scenario where a franchised motor vehicle dealer is engaged in the sales of used motor vehicles at a temporary location in a county outside the county in which the franchise is located. Obviously, if the franchised motor vehicle dealer is not operating in the franchise county, then it cannot satisfy the first condition for the O.C.G.A. § 43-47-2(17)(B)(i) exemption. The question is then whether the dealer can be considered to be operating as a direct dealer of a manufacturer. There is no provision in the Official Code of Georgia that defines the term "direct dealer." However, the Georgia Motor Vehicle Franchise Practices Act, located in Article 22, Chapter 1, Title 10 of the Official Code of Georgia, gives some insight. For purposes of the Georgia Motor Vehicle Franchise Practices Act, a manufacturer is "any person who performs the major portion of the assembly of a new motor vehicle." O.C.G.A. § 10-1-622(9). From the plain language of O.C.G.A. § 43-47-2(17)(B)(i), a direct dealer of a manufacturer must be one involved in the direct sale or distribution of new motor vehicles. Consequently, a franchised motor vehicle dealer who is not engaged in the sale of new motor vehicles but rather solely engaged in the sale or distribution of used motor vehicles cannot be considered to be operating as a direct dealer of a manufacturer. Therefore, a franchised motor vehicle dealer engaged exclusively in the sale of used motor vehicles outside the county in which its franchise is located is not exempt under the provisions of O.C.G.A. § 43-47-2(17)(B)(i). In summary, it is my official opinion that a franchised motor vehicle dealer solely engaged in the sale of used cars at a temporary location in a county outside the county in which the franchise is located is a used motor vehicle dealer and is subject to the licensure requirements of the Used Motor Vehicle Dealers' and Used Motor Vehicle Parts Dealers' Registration Act. Prepared by: MAXIMILLIAN J. CHANGUS Assistant Attorney General 1 This subsection and the corresponding section O.C.G.A. § 43-47-8.2, referring to the operations of used motor vehicle dealers at temporary sites, are not relied on in reaching the conclusion in this opinion, as they are not essential to answering the posed questions.