Section 4: Main & Branch Location Requirements, Off-site Displays, Temporary Branches
Location Requirements
Wholesale vs. Retail
Wholesale dealers need only an office. Retail dealers need an office, a display area, and a sign. All locations must meet city business license requirements and zoning requirements
Office
Both wholesale and retail dealers must have an office at their established place of business to engage in dealership activities. V.C. 11713(f )
- The construction of the office of the principal place of business and each branch location must not be temporary, transitory or mobile in nature. [C.C.R. §270]
- Exception: A trailer coach office is okay if not part of inventory and not subject to sale.[C.C.R. §270]
- An office in a home or residential unit is okay if approved by city planning, and if the office is on the ground floor, with a direct entrance from the outside.
- It is during the process of getting your business license that your town, city, or county will determine if your intended location is zoned for auto sales, retail or wholesale. Normally home offices are not zoned for auto retail. Your city or town does not want you to run a used car dealership in a housing development. So, generally, you will not be able to get a retail dealer license with a home office.
- It is, however, often possible to get a wholesale dealer license with a home office. Wholesale dealers only need an office, and only sell to dealers. Most wholesale business is done at the auctions, so the impact on the neighbors is usually zero and okay with your city or town.
- The office must be occupied continuously or at regular periods. A sign with your regular office hours on it that can be seen from outside will work.
- Practically speaking, a functioning office includes, but is not limited to, a desk or table, filing cabinet, and phone (cell phone is okay).
- The books and records of the business must be kept at the office of the established place of business for four years. [V.C. §320]]. The Report of Sale forms may be inspected at anytime during your regular business hours by a DMV Inspector.
Display Area
A retail dealer must have an established place of business which has an office and display area situated on the same property. [C.C.R. §270]
- Size: The display area shall be of sufficient size to physically accommodate vehicles of a type for which the dealership is licensed to sell. [C.C.R. §270.08] Space for two vehicles is normally considered sufficient by the DMV Inspectors to meet this standard, but one space can be sufficient if you can convince the Inspector you will only have one vehicle in inventory at a time.
- Indoor or Outdoor: The display area may be indoor or outdoor, and can have any type of surface, grass, gravel, dirt, asphalt, etc.
- Exclusivity: The display area must be clearly for the exclusive use of the dealer for display purposes only, and must meet the signing requirements as identified in CVC 11709 (a), as discussed below in the Sign Requirements section. [C.C.R. §270.08] This means only vehicles that are currently for sale may be parked in your display area.
- Additional display areas: Additional display areas are permitted within a 1,000 foot radius of the principal place of business or branch location w/out separate licensing. [C.C.R. §270.08]
Sign Requirements
- Signs are required for retail dealers and/or auto brokers only. The sign(s) must be erected or posted at each place of business providing the dealer’s name and location, and the address of the established place of business. [V.C. §11709(a), and C.C.R. §270.08]
- Each sign shall be not less than two feet square per side displayed and shall contain lettering that can be read from 50 feet away.
- Exception: Wholesalers involved only in the sale of vehicles between dealers. [V.C. §11709] No sign is required.
- Each sign must be permanent in nature, erected on the exterior of the office or display area. [C.C.R. §270.06]
- Each sign must be able to withstand reasonable weather conditions. [C.C.R. §270.06]
Other Posting Requirements
- Regular Business Hours: Every dealer shall have posted in a place conspicuous to the public the dealer’s regular business days and hours. These postings must be such that they can be read by a consumer from outside the dealership office.
- Inspection Notice: Every retail dealer offering vehicles for sale must post a notice not less than eight inches high and 10 inches wide, in a place conspicuous to the public that states the following:
- “The prospective purchaser of a vehicle may, at his or her own expense and with the approval of the dealer, have the vehicle inspected by an independent third party either on or off the premises.” [V.C. §11709.1]
- A retail dealer must also conspicuously/obviously display a notice, not less than eight inches high and 10 inches wide, in each sales office and sales cubicle where written terms of specific sales or lease transactions are discussed or executed with prospective purchasers or lessees, which states the following:
- “THERE IS NO COOLING-OFF PERIOD UNLESS YOU OBTAIN A CONTRACT CANCELLATION OPTION.
- California law does not provide for a “cooling-off” or other cancellation period for vehicle lease or purchase contracts. Therefore, you cannot later cancel such a contract simply because you change your mind, decide the vehicle costs too much, or wish you had acquired a different vehicle. After you sign a motor vehicle purchase or lease contract, it may only be canceled with the agreement of the seller or lessor or for legal cause, such as fraud.”
However, California law does require a seller to offer a 2-day contract cancellation option on used vehicles with a purchase price of less than $40,000, subject to certain statutory conditions. This contract cancellation option requirement does not apply to the sale of a motorcycle or an off-highway motor vehicle subject to identification under California law. See the vehicle contract cancellation option agreement for details.
Branch Locations
A branch is any location, other than the principal place of business of the dealer, maintained for the sale or exchange of vehicles. A branch location must comply with Vehicle Code sections 320 and 11709. [C.C.R. section 270.02]
When is a Branch Required? A branch location license is required for any location, other than the principal place of business, where vehicles are displayed and sales are offered, attempted, solicited, negotiated, or otherwise transacted. [V.C. section 11709 and C.C.R. section 270.08]
Branch Location Requirements
Basically, the rules for the dealer’s main location also apply to the branch location. If you have a wholesale branch, you need an office. If you have a retail branch, you need the office, display area, and signs and notices required of retail dealers.
Procedure
A branch location can be applied for by completing Form OL21, “Application for Modifications to Occupational License” and submitting it to the Occupational Licensing Dept. of the DMV. The application form can be found on the DMV’s website here.
Notice of Changes to Dealer’s License
Dealers must notify the DMV immediately of any change in address, or addition of a branch location.
Every dealer must notify the DMV within 10 days of any change in the ownership or corporate structure of the licensee. Failure to notify the DMV can result in cancellation of the dealer’s license.
Off-Site Vehicle Displays
General Rule – No Off-Site Displays
The general rule is that a dealer may not display a vehicle for sale at a location other than its established place of business authorized by the DMV. V.C. 11713(r). This section, however, does not apply to the demonstration of the qualities of a motor vehicle by way of a test drive. There is also an exception to this rule where a dealer can display vehicles off-site, for up to 30 days, but no sales can be transacted at the display location.
Exception to General Rule: Off-Site Displays okay up to 30 days, but no selling.
A dealer may display vehicles at a fair, exposition, or similar exhibit if:
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- No sales are offered, attempted, or otherwise transacted (no deposits or trade-ins either) at the location.
- The display does not exceed 30 days.
- The location is open to all dealers without discrimination as to type, make, year or manufacturer.
- The vehicles display signs providing the dealer’s name and address in letters three inches high or higher, and provide the statement: “No sales permitted, or deposits accepted at this location”. [V.C. §11709 and C.C.R. §270.08]
Temporary Branch Locations
Temporary Branch Locations are locations, other than the dealer’s licensed dealership location, where vehicles are displayed and sold for up to 30 days. The most common form of these Temporary Branch Locations are weekend “tent sales” held in large parking lots. To have one of these sales, a dealer must obtain a Temporary Branch Location Permit. The procedures for how to obtain the permit, and the rules for conducting these sales, are set forth below.
- A Temporary Branch Location may be operated for a time period not to exceed 30 days.
- Fees: $70.00.
- Application forms, entitled “Application for Temporary Branch Location, ” OL 73, can be downloaded here, or obtained through your local DMV Inspector.
- A copy of the lease/rental agreement or a copy of the event promoter’s contract must be submitted with the application.
- The dealer must display a sign with the name and address of the dealership at the temporary location, and include the dealer’s name and address on the Contract Cancellation Agreement.
- The dealer must display the complete 8 X 10 inch Car Buyer’s Bill of Rights “THERE IS NO COOLING-OFF PERIOD UNLESS YOU OBTAIN A CONTRACT CANCELLATION OPTION” notice: at the location.
- The dealer must also offer the minimum requirements set forth in the Car Buyer’s Bill of Rights.
- The dealer must maintain the sales location until the latest possible date and time a buyer may return a vehicle if they purchased a two day Cancellation Agreement. The dealer must continue to display signs and have staff available during that time to receive a vehicle if it is returned.
