Can a car manufacturer sell new vehicles directly to Kansas customers without going through a franchised dealer?

Plain-English summary

The Kansas Department of Revenue asked whether vehicle manufacturers that sell directly to consumers, without using independent franchised dealers, could legally sell new vehicles in Kansas under the state's Vehicle Dealers and Manufacturers Licensing Act. The question matters most for manufacturers whose business model skips the traditional dealer network entirely.

The Attorney General concluded the Act does not allow it. To sell new vehicles, a seller must qualify as a "new vehicle dealer," which the statute defines as a dealer who is a party to a franchise agreement with a manufacturer or distributor. A manufacturer selling its own vehicles cannot be "a party to" an agreement with itself in the sense the statute requires, so it can never qualify for a new-vehicle dealer license. The opinion reinforced this reading with several other provisions: the statute requires anyone selling new vehicles to show it has "a bona fide franchise agreement," and a separate delivery statute requires new vehicles to be delivered by a dealer who is party to a franchise agreement, meaning a manufacturer without such an agreement could never even lawfully hand over a car it sold directly. The opinion acknowledged one statute that specifically restricts direct sales by certain manufacturers and distributors without mentioning manufacturers who lack franchise partners at all, but concluded that provision is a narrow carve-out for limited circumstances, not a signal that non-franchised manufacturers are free to sell directly, since reading it that way would conflict with the Act's overall licensing structure.

What this means for you

Vehicle manufacturers considering a direct-to-consumer sales model in Kansas: the opinion holds you cannot obtain a new vehicle dealer license without a franchise agreement, and without that license (or a franchised dealer to deliver the vehicle), the Act blocks direct retail sales of new vehicles in the state entirely.

Franchised dealers and dealer associations: the opinion confirms the Act's licensing structure protects the dealer-manufacturer franchise model as the exclusive path to selling new vehicles in Kansas, consistent with the Kansas Supreme Court's description of the Act as "all-encompassing legislation on motor vehicle sales."

State licensing and revenue officials processing dealer license applications: the opinion provides a basis for declining to license a manufacturer applicant that lacks a franchise agreement authorizing it to sell its own vehicles.

Common questions

Why can't a car manufacturer just apply for its own dealer license in Kansas?
Because the statute's definition of "new vehicle dealer" requires the dealer to be "a party to an agreement" with a manufacturer or distributor that authorizes it to sell that manufacturer's vehicles; a manufacturer selling its own cars has no separate counterparty to be a party with, so it cannot meet that definition, according to the opinion.

Doesn't a separate statute on direct sales suggest manufacturers without dealer networks are exempt from the ban?
The opinion considered that argument and rejected it, concluding that statute is a narrow exception addressing specific regulated entities in limited circumstances, not a broader license for any manufacturer to bypass the franchise dealer system.

What happens if a manufacturer without a franchise network tries to deliver a car directly to a Kansas buyer?
The opinion notes that a separate delivery statute requires new vehicles to be delivered by a dealer who is a party to a franchise agreement for that vehicle's line-make, so a manufacturer without any franchised dealer would have no lawful way to deliver the vehicle even if a sale were otherwise arranged.

Background and statutory framework

The Kansas Vehicle Dealers and Manufacturers Licensing Act, K.S.A. 8-2401 et seq., is a comprehensive licensing scheme the Kansas Supreme Court has called "all-encompassing legislation on motor vehicle sales." It requires anyone engaged in the business of a vehicle dealer to obtain a license, and it specifically requires anyone selling new vehicles to hold a license tied to a franchise agreement with the vehicle's manufacturer or distributor, per K.S.A. 8-2401(b), 8-2404(q), and related sections. K.S.A. 8-2439(a) reinforces this framework by requiring that new vehicles be delivered only by a dealer who is party to a franchise agreement for that line-make.

The opinion also addressed K.S.A. 8-2438, which expressly restricts direct-to-consumer sales by certain regulated entities such as first- and second-stage manufacturers and distributors, without naming manufacturers that operate entirely outside the franchise system. Rather than reading that silence as permission, the opinion applied the interpretive principle that statutes should be read as a harmonious whole and concluded K.S.A. 8-2438 carves out a limited set of exceptions to a general prohibition established elsewhere in the Act, so the overall licensing scheme still forecloses non-franchised direct sales.

Citations and references

Statutes:
- K.S.A. 8-2401 (incl. (a), (b), (k), (v)); 8-2402; 8-2403(a)
- K.S.A. 8-2404 (incl. (a), (e)(1), (f), (g), (q))
- K.S.A. 8-2438 (incl. (a)); 8-2439(a)

Cases:
- Blue v. McBride, 252 Kan. 894, 850 P.2d 852 (1993)
- In re Est. of Strader, 301 Kan. 50, 339 P.3d 769 (2014)
- State v. Arnett, 307 Kan. 648, 413 P.3d 787 (2018)

Source

• Landing page: https://www.ag.ks.gov/reports-resources/ag-opinions
• Original PDF: https://www.ag.ks.gov/home/showpublisheddocument/22944/638784276862300000

Original opinion text

March 24, 2025

ATTORNEY GENERAL OPINION NO. 2025-7

Ted E. Smith
Chief Counsel, Kansas Department of Revenue
109 SW 9th St.
PO Box 3506
Topeka, Kansas 66601

Re: Automobiles and Other Vehicles—Licensure of Vehicle Sales and
Manufacture—Licensure of Vehicle Sales and Manufacture;
Definitions

        Automobiles and Other Vehicles—Licensure of Vehicle Sales and
        Manufacture—License Required

        Automobiles and Other Vehicles—Licensure of Vehicle Sales and
        Manufacture—Ownership and Operation of New Vehicle Dealership by
        Certain Entities Prohibited; Exceptions

        Automobiles and Other Vehicles—Licensure of Vehicle Sales and
        Manufacture—Delivery of Motor Vehicles to Persons in State; Who
        Authorized to Deliver

Synopsis: The Kansas Vehicle Dealers and Manufacturers Licensing Act is an
all-encompassing licensing regime for the sale of motor vehicles in
Kansas. Because the Act permits only dealers that operate under an
agreement with a manufacturer or distributor to obtain a license to sell
new vehicles, a manufacturer may not engage in direct-to-consumer
retail sales. Cited herein: K.S.A 8-2401; K.S.A. 8-2404; K.S.A. 8-2438;
K.S.A. 8-2439.

                                *               *              *

Dear Mr. Smith:

As Chief Counsel for the Kansas Department of Revenue, you ask whether the
Kansas Vehicle Dealers and Manufacturers Licensing Act1 prohibits vehicle
manufacturers that do not use franchise partners from selling their vehicles directly
to retail consumers. As explained below, we believe the best interpretation of the
Act is that it prohibits these direct sales.

The Act is a comprehensive scheme, through which the legislature sought "to
provide for fair and impartial regulation of those persons engaged in
manufacturing, distributing or selling of vehicles."2 The legislature specifically
targeted the sale of vehicles "to insure protection against irresponsible vendors and
dishonest or fraudulent sales practices and to assist, provide and secure a stable,
efficient, enforceable and verifiable method for the distribution of vehicles to
consumers in the state of Kansas[.]"3 As the Kansas Supreme Court has recognized,
the Act is "all-encompassing legislation on motor vehicle sales."4

In determining whether the Act prohibits direct-to-consumer retail sales like the
ones you mention, we are bound by the "plain and unambiguous" meaning of the
relevant statutes.5 We can neither "speculate" nor "read into the statute language
not readily found there."6 And we must consider and give effect to "the entire [A]ct,"
striving, "as far as practicable, to reconcile the different provisions so as to make
them consistent, harmonious, and sensible."7 When the legislature has expressly
defined a term, we employ its definition.8

The Act prohibits any person from "engag[ing] in the business of a vehicle dealer
unless such person has complied with" the Act.9 Because a "vehicle dealer," outside

1 K.S.A. 8-2401 et seq.
2 K.S.A. 8-2402.
3 Id.
4 Blue v. McBride, 252 Kan. 894, 919, 850 P.2d 852, as modified on denial of reh'g (1993). Although
you reference decisions involving similar laws in other states, we confine our analysis to the plain
meaning of the Kansas statutes because their language is determinative. Additionally, the
regulation of vehicle sellers is a complex issue, meaning there may be slight, but material,
variations in the various statutory schemes. See State v. Bowie, 268 Kan. 794, 800, 999 P.2d 947
(2000) ("We agree that the statutory scheme differs from state to state, and we need not look beyond
the Kansas statutory scheme and Kansas cases for resolution of this issue.").
5 In re Est. of Strader, 301 Kan. 50, 55, 339 P.3d 769 (2014) (internal quotation marks omitted).
6 Id. (internal quotation marks omitted).
7 In re Marriage of Ross, 245 Kan. 591, 584, 783 P.2d 331 (1989).
8 Cf. State v. Dooley, 308 Kan. 641, 656, 423 P.3d 469 (2018) ("When our Legislature does not define

a term or phrase, we ascertain legislative intent by giving common words their ordinary meanings.").
9 K.S.A. 8-2403(a).

certain limited exceptions, is "any person who . . . is engaged in the business of
buying, selling or offering or attempting to negotiate a sale of an interest in
vehicles,"10 the Act sweeps broadly.

The Act mandates that all vehicle dealers obtain a license from the Kansas Division
of Vehicles.11 And it specifies that, unless certain exceptions apply, "[n]o person may
engage in the business of . . . selling . . . new motor vehicles, either directly or
indirectly, unless such person holds a license . . . for the make or makes of new
motor vehicles being . . . sold."12 The legislature has defined a "new motor vehicle"
as "any motor vehicle that has never been titled or registered and has not been
substantially driven or operated."13 And it has defined a "new vehicle dealer" as:

    any vehicle dealer who is a party to an agreement, with a first or
    second stage manufacturer or distributor, which agreement authorizes
    the vehicle dealer to sell, exchange or transfer new motor vehicles . . .
    made or sold by such first or second stage manufacturer or distributor
    and obligates the vehicle dealer to fulfill the warranty commitments of
    such first or second stage manufacturer or distributor.14

A manufacturer that does not use franchise partners would not qualify as a new
vehicle dealer because there is no agreement to which the manufacturer would be "a
party." In other words, the Act's licensing requirement prohibits the same entity
from both making and selling new vehicles in Kansas.15 Accordingly, a
manufacturer that uses only direct sales cannot obtain the necessary license to sell
its new vehicles, and so it cannot sell its vehicles in Kansas.

Other sections within the Act bolster the conclusion that direct sales are prohibited.
For example, K.S.A. 8-2404(q) mandates that any dealer selling "new vehicles in
this state must satisfactorily demonstrate" that it "has a bona fide franchise
agreement with the first or second stage manufacturer or distributor of the vehicle,
to sell, exchange or transfer the same or to cause to be sold, exchanged or
transferred." This provision limits new vehicle sales to dealers who are franchise
partners. And K.S.A. 8-2404(f)–(g) contemplate that new vehicle dealers have
franchise agreements, indicating that new vehicles may only be sold by franchise
partners, not manufacturers.

10 K.S.A. 8-2401(a).
11 K.S.A. 8-2404(a).
12 K.S.A. 8-2404(q). The Act provides the specific fee for new vehicle dealers. See K.S.A. 8-2404(e)(1).
13 K.S.A. 8-2401(v).
14 K.S.A. 8-2401(b) (emphasis added).
15 In Blue, the trial court (which was reversed on other grounds) recognized the practical reality of

the Act: "Every new car that enters Kansas must go from a manufacturer to a licensed dealer who
enjoys a franchise from that manufacturer." 252 Kan. at 927, 850 P.2d at 876 (Allegrucci, J.,
dissenting) (internal quotation marks omitted).

Importantly, K.S.A. 8-2439(a) requires that all new vehicles be delivered "by a new
vehicle dealer who is a party to a franchise agreement for the same line-make
vehicle as that to be delivered[.]" Under this statute, if a manufacturer could
otherwise engage in direct sales, then that manufacturer could not deliver its
vehicles to purchasers because it is not a party to any franchise agreement. Indeed,
because there is no franchise agreement, the new vehicle could never be delivered.
That would be an absurd result, which must be avoided to the extent possible.16
K.S.A. 8-2439(a) is incompatible with direct sales by manufacturers, and it further
establishes that these sales are prohibited.

Notably, K.S.A. 8-2438 expressly addresses direct-to-consumer sales, and it
prohibits them by certain regulated entities (e.g., first and second stage
manufacturers, distributors), none of which include manufacturers that do not use
franchise partners.17 Arguably, this exclusion could indicate these manufacturers
may engage in direct sales, i.e., because these manufacturers are not captured by
the express statutory prohibition, they are free to sell directly to consumers. But we
believe this argument isolates and puts too much weight on this single section,
which results in a strained interpretation.18

Other sections within the Act, as previously discussed, establish that manufacturers
may not directly sell their new vehicles to consumers because they cannot obtain
the requisite license. The more harmonious interpretation is that K.S.A. 8-2438 is
an express delineation of the extremely limited circumstances (none of which
appear relevant to your inquiry) in which the regulated entities may engage (or
otherwise be involved) in direct sales. Indeed, K.S.A. 8-2438 begins by recognizing
that it is an exception to the general rule, which it then lays out before proceeding
to its strict exceptions.19 K.S.A. 8-2438 does not upend the licensing regime. To the
contrary, it complements the rest of the Act because it generally prohibits the
regulated entities from owning an interest in, operating, or otherwise acting as a

16 See State v. Arnett, 307 Kan. 648, 654, 413 P.3d 787 (2018) (recognizing that statutes "must" be
construed "to avoid unreasonable or absurd results"); State v. Keel, 302 Kan. 560, 574, 357 P.3d 251
(2015) (recognizing that courts "presume that the legislature does not intend to enact meaningless
. . . legislation" (quoting State v. Turner, 293 Kan. 1085, 1088, 272 P.3d 19 (2012)).
17 For example, a manufacturer that only engages in direct sales would not be a "first stage

manufacturer" under the Act because it does not "manufacture[], assemble[] and sell[] new vehicles
to new vehicle dealers for resale in this state." K.S.A. 8-2401(k) (emphasis added).
18 See State v. Wilson, 267 Kan. 550, 557, 987 P.2d 1060 (1999) (recognizing "that courts will not give

strained meanings to legislative language through a process of imaginative hypothesizing; a
common-sense interpretation of the statute is the guiding principle").
19 See K.S.A. 8-2438(a) (beginning with "[e]xcept as provided by this section, and notwithstanding

any other provisions of the vehicle dealers and manufacturers licensing act").

new vehicle dealer or dealership, thereby solidifying the need for separation
between the vehicle maker and the vehicle seller.20

In sum, the Act prohibits manufacturers that do not use franchise partners from
engaging in direct-to-consumer retail sales of new motor vehicles in Kansas.

                                           Sincerely,

                                           /s/ Kris W. Kobach

                                           Kris W. Kobach
                                           Attorney General

                                           /a/ Adam T. Steinhilber

                                           Adam T. Steinhilber
                                           Assistant Solicitor General

20 This broad prohibition means that a first or second stage manufacturer (or other regulated entity)

cannot circumvent the general prohibition on direct sales by having a subsidiary dealership.