Can a Mississippi motor vehicle manufacturer's wholly owned subsidiary get a dealer's license, including in markets where the manufacturer already has franchised dealerships?

Plain-English summary

The Executive Director of the Mississippi Motor Vehicle Commission asked two questions about manufacturer-affiliated dealerships:

1. Can a vehicle manufacturer's wholly owned subsidiary qualify for a Mississippi motor vehicle dealer's license?
2. If a manufacturer already has franchised dealerships, can a subsidiary later obtain its own dealer's license?

The AG worked through Mississippi's Motor Vehicle Commission Law (§ 63-17-51 et seq.). Section 63-17-55(b) defines "motor vehicle dealer" as any "legal entity, not excluded by paragraph (c) of this section, who holds a bona fide contract or franchise in effect with a manufacturer, distributor or wholesaler of new motor vehicles, and a license under the provisions of the Mississippi Motor Vehicle Commission Law." Section 63-17-55(c) lists exemptions (court-appointed receivers, public officers, certain manufacturer-employee transactions) but does not exempt or prohibit manufacturer-owned subsidiaries.

So the AG read the statute as not categorically prohibiting subsidiary dealer licenses. The subsidiary still had to be a "legal entity" (an LLC qualifies) and hold a "bona fide contract or franchise in effect with a manufacturer." The Motor Vehicle Commission, not the AG, would decide on a case-by-case basis whether the entity qualified.

For the second question, the AG also said no statutory bar existed. But the AG explicitly declined to address whether existing franchise agreements would create contractual issues. That was a contract-interpretation question outside the AG's authority.

Currency note

This opinion was issued in 2021. 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.

What the opinion said for each audience, at the time

For Mississippi franchise dealers in 2021

The AG read Mississippi's licensing statutes as containing no express prohibition on a manufacturer's wholly owned subsidiary obtaining a dealer's license, including after the manufacturer already had franchised dealerships in the state. The opinion addressed only the licensing statute. It expressly declined to decide whether the practice would be affected by existing or future franchise agreements, because interpreting those agreements was beyond the AG's authority.

For vehicle manufacturers and their subsidiaries

Under the opinion, a wholly owned subsidiary (the request described an LLC) was a "legal entity" and was not within the exemptions in § 63-17-55(c), so the licensing statute did not categorically bar it from holding a dealer's license. The subsidiary still had to hold "a bona fide contract or franchise in effect with a manufacturer, distributor or wholesaler of new motor vehicles" and meet all applicable statutory and regulatory requirements, and whether it did was a fact question for the Commission.

For the Mississippi Motor Vehicle Commission

The opinion confirmed there was no categorical statutory bar, while leaving the merits to the Commission. Whether a particular applicant is a "legal entity" and holds a "bona fide contract or franchise" are fact questions the opinion said the Commission, not the AG, decides.

For franchise dealer attorneys

The opinion resolved only the licensing question. It did not address whether a subsidiary dealership would conflict with existing or future franchise agreements; the AG said interpreting those agreements was outside its authority.

Common questions

Q: What did the opinion actually decide?
A: Two things. First, Mississippi's Motor Vehicle Commission Law contains no express prohibition on issuing a dealer's license to an entity simply because it is a wholly owned subsidiary of a vehicle manufacturer, so long as the subsidiary meets all applicable statutory and regulatory requirements. Second, there is likewise no statutory provision preventing such a subsidiary from getting a license after the manufacturer already has franchised dealerships in the state. The AG did not decide whether franchise agreements would affect the practice.

Q: What's the "bona fide contract or franchise" requirement?
A: Section 63-17-55(b) requires the dealer to hold a "bona fide contract or franchise in effect with a manufacturer, distributor or wholesaler of new motor vehicles." For a manufacturer-owned subsidiary, this would be an intra-corporate contract between the parent (manufacturer) and the subsidiary (dealer). Whether such an arrangement is truly "bona fide" is a fact question for the Commission.

Q: Does this affect existing franchise agreements?
A: The AG specifically declined to address that. The opinion said that determining whether the practice is impacted by existing or future franchise agreements would require interpreting those agreements, which is beyond the authority of the AG's office.

Q: Are there other Mississippi statutes that might restrict this?
A: The opinion was limited to § 63-17-51 et seq. (the Motor Vehicle Commission Law). It did not analyze any other statute, and it cautioned that any applicant still has to meet all applicable statutory and regulatory requirements for a license.

Q: Why does Mississippi treat manufacturers slightly differently in § 63-17-55(c)?
A: Subsection (c) has a special set of exclusions for vehicle manufacturers operating "projects" under § 57-75-5(f)(iv), which is a Mississippi economic-development statute. The 2021 opinion noted these exclusions exist but they did not address manufacturer subsidiaries holding dealer licenses for general retail purposes. The exclusions are narrow (limited employee leases, end-of-lease auctions, special-tag dispositions).

Q: Does this mean a manufacturer subsidiary is guaranteed a license?
A: No. The opinion only said the Motor Vehicle Commission Law does not categorically prohibit a manufacturer's wholly owned subsidiary from obtaining a dealer's license. The subsidiary still has to meet all applicable statutory and regulatory requirements, and the Commission decides on the facts whether a particular applicant qualifies.

Background and statutory framework

The Mississippi Motor Vehicle Commission Law (§ 63-17-51 et seq.) governs the licensing of motor vehicle dealers in the state, and § 63-17-55(b) defines "motor vehicle dealer." Under the opinion, the definition has three elements relevant here: the dealer is a "legal entity," it is "not excluded by paragraph (c) of this section," and it "holds a bona fide contract or franchise in effect with a manufacturer, distributor or wholesaler of new motor vehicles."

The AG's analysis was textual, applying the rule from City of Tchula that "[w]here the language in a statute is plain and unambiguous," there is no occasion to add to the law as written. Section 63-17-55(c) lists exemptions (court-appointed receivers, public officers, certain manufacturer employees, and a motor vehicle manufacturer operating a "project" as defined in § 57-75-5(f)(iv)), but it "contains no exemption for an entity that is a wholly owned subsidiary of a motor vehicle manufacturer." On that reading, the licensing statute does not categorically bar a subsidiary from holding a dealer's license.

The opinion noted that the § 63-17-55(c)(iv) carve-out for a manufacturer operating an economic-development "project" is narrow: it covers limited employee leases of three or fewer vehicles, end-of-lease dispositions through direct employee sales or auction, and dispositions of vehicles for which the manufacturer obtained distinguishing-number tags under § 27-19-309(8). The opinion did not treat that carve-out as addressing a subsidiary holding a dealer's license for general retail purposes.

Citations and references

Statutes:

• Miss. Code Ann. § 27-19-309(8), distinguishing-number tags for motor vehicle manufacturers
• Miss. Code Ann. § 57-75-5(f)(iv), Mississippi Major Economic Impact Act, motor vehicle manufacturer projects
• Miss. Code Ann. § 63-17-51 et seq., Mississippi Motor Vehicle Commission Law
• Miss. Code Ann. § 63-17-55(b), definition of "motor vehicle dealer"
• Miss. Code Ann. § 63-17-55(c), exemptions from dealer-licensing requirement
• Miss. Code Ann. § 63-17-55(i), definition of "manufacturer"

Cases cited:

• City of Tchula v. Mississippi Public Service Commission, 187 So. 3d 597, 599 (Miss. 2016), no occasion to add to plain language

Prior AG opinions cited:

• MS AG Op., Barefield (Feb. 22, 1990), particular-applicant licensing question is a fact issue for the Commission

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2021/04/W.Jernigan_February-16-2021-Motor-Vehicle-Dealer-License-for-Subsidiary-of-Manufacturer.pdf

Original opinion text

February 16, 2021

William Jeffrey Jernigan, Esq.
Executive Director
Mississippi Motor Vehicle Commission
1755 Lelia Drive, Suite 200
Jackson, Mississippi 39216

Re: Motor Vehicle Dealer License for Subsidiary of Manufacturer

Dear Mr. Jernigan:

The Office of the Attorney General has received your request for an official opinion.

Questions Presented

1. Does a vehicle manufacturer's wholly owned subsidiary (i.e., an LLC) qualify for a motor vehicle dealer's license under Mississippi law?
2. If a vehicle manufacturer or distributor currently has franchised dealerships, may a subsidiary that is wholly owned by such manufacturer or distributor later obtain a vehicle dealer's license?

Brief Response

In response to your first question, as you note in your request, "it doesn't appear to be directly prohibited." We, too, find no statutory prohibition to a wholly owned subsidiary of a vehicle manufacturer obtaining a motor vehicle dealer's license in Mississippi, so long as the subsidiary meets all applicable statutory and/or regulatory requirements for obtaining such license.

In response to your second question, we know of no statutory provision explicitly preventing a manufacturer's or distributor's wholly owned subsidiary from obtaining a dealer's license at some point after the manufacturer or distributor has franchised dealerships within Mississippi, so long as such subsidiary meets all applicable statutory and/or regulatory requirements for obtaining such license. Determining whether this practice is impacted by existing or future franchise agreements entered into by the manufacturer requires us to interpret such agreements, which is beyond the authority of this office.

Applicable Law and Discussion

At the outset, we note that whether a particular applicant qualifies for a license from the Mississippi Motor Vehicle Commission (the "Commission") is a question of fact to be addressed by the Commission. See MS AG Op., Barefield at *1 (Feb. 22, 1990) ("Whether a particular person or business is required to obtain a license under the Motor Vehicle Commission Law is a factual issue that cannot be determined by this office.").

Addressing your first question, the Mississippi Code defines "Motor vehicle dealer" in the following manner:

any person, firm, partnership, copartnership, association, corporation, trust or legal entity, not excluded by paragraph (c) of this section, who holds a bona fide contract or franchise in effect with a manufacturer, distributor or wholesaler of new motor vehicles, and a license under the provisions of the Mississippi Motor Vehicle Commission Law . . . .

Miss. Code Ann. § 63-17-55(b) (emphasis added). Section 63-17-55(c), in turn, exempts the following from the definition of "motor vehicle dealer":

(i) Receivers, trustees, administrators, executors, guardians or other persons appointed by or acting under judgment, decree or order of any court;
(ii) Public officers while performing their duties as such officers;
(iii) Employees of persons, corporations or associations enumerated in paragraph (c)(i) of this section when engaged in the specific performance of their duties as such employees; or
(iv) A motor vehicle manufacturer operating a project as defined in Section 57-75-5(f)(iv)[1]; and the provisions of the Mississippi Motor Vehicle Commission Law shall not apply to:
1. a. Any lease by such a motor vehicle manufacturer of three (3) or fewer motor vehicles at any one time and related vehicle maintenance, of any line of vehicle produced by the manufacturer or its subsidiaries, to any one (1) employee of the motor vehicle manufacturer on a direct basis; or
b. Any sale or other disposition of such motor vehicles by the motor vehicle manufacturer at the end of a lease through direct sales to employees of the manufacturer or through an open auction or auction limited to dealers of the manufacturer's vehicle line or its subsidiaries' vehicle lines; or
2. Any sale or other disposition by such a motor vehicle manufacturer of motor vehicles for which the manufacturer obtained distinguishing number tags under Section 27-19-309(8).

Miss. Code. Ann. § 63-17-55(c). Section 63-17-55(c) contains no exemption for an entity that is a wholly owned subsidiary of a motor vehicle manufacturer.

Pursuant to Section 63-17-55(b), a "motor vehicle dealer" is, in part, (1) "any . . . legal entity;" (2) not excluded by Section 63-17-55(c); and that (3) "holds a bona fide contract or franchise in effect with a manufacturer, distributor or wholesaler of new motor vehicles." First, whether a particular entity seeking a license is a "legal entity" is a question of fact that this office cannot decide by official opinion. However, in your request, you reference the motor vehicle manufacturer's wholly owned subsidiary being an LLC, which is a "legal entity." Second, as set forth above, Section 63-17-55(c) contains no exemption for a manufacturer's wholly owned subsidiary. Finally, whether the subsidiary "holds a bona fide contract or franchise in effect with a manufacturer, distributor or wholesaler of new motor vehicles" is a question of fact to be determined by the Commission.

"Where the language in a statute is plain and unambiguous," there is no occasion for this office "to add to the law as the Legislature has written it." City of Tchula v. Mississippi Pub. Serv. Comm'n, 187 So. 3d 597, 599 (Miss. 2016). This Office's authority to respond to opinion requests is limited to the interpretation of state laws as written and passed by the Legislature. Based on a plain reading of the Mississippi Motor Vehicle Commission Law, codified at Section 63-17-51 et seq., there is no express statutory prohibition on a motor vehicle dealer's license being issued to an entity on the basis that such entity is a wholly owned subsidiary of a vehicle manufacturer. However, any applicant for a motor vehicle dealer's license must meet all applicable statutory and regulatory requirements associated with obtaining such license.

In response to your second question, we know of no statutory provision preventing a manufacturer's or distributor's wholly owned subsidiary from obtaining a dealer's license at some point after the manufacturer or distributor has franchised dealerships within Mississippi, so long as such subsidiary meets all applicable statutory and/or regulatory requirements for obtaining such license. Determining whether this practice is impacted by existing or future franchise agreements entered into by the manufacturer requires us to interpret such agreements, which is beyond the authority if this office.

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,

LYNN FITCH, ATTORNEY GENERAL

By: /s/ Gregory Alston
Gregory Alston
Special Assistant Attorney General

[1] "Manufacturer" is defined as "any person, firm, association, corporation or trust, resident or nonresident, who manufactures or assembles new motor vehicles." Miss. Code. Ann. § 63-17-55(i).