How to Get a Dealer License in Tennessee: Cost & Requirements

Last updated: August 18, 2026

Tennessee licenses dealers through the Motor Vehicle Commission, and its bar is physical. The $600 application is the easy part — the state wants a building of at least 288 square feet with a working restroom, a display lot that holds 15 vehicles and is gravel, not grass, three customer parking spots, and a sign with eight-inch letters. The bond is $50,000 and garage liability runs $300,000 per occurrence.

The Facility Is the Real Test

Most states describe a dealership loosely. Tennessee measures it. The Commission expects a permanent facility primarily used for selling and servicing motor vehicles, and its checklist is specific enough to plan a lease around:

• Building of at least 288 square feet, with a functioning restroom.
• Display lot for 15 vehicles, surfaced with compacted gravel or similar material — not grass.
• Three customer parking spots.
• A permanently installed sign with letters at least eight inches high, visible from the road.
• Posted hours and days of operation, which must be photographed for the application.

That gravel rule catches people who plan to open on a grassy lot, and the restroom requirement rules out a bare office trailer.

What It Costs

Item	Cost	Notes
Initial application	$600	Franchise dealers add $600 per line make
Corporate surety bond	$50,000 penal sum	Covers two consecutive years
Garage liability insurance	$300,000 per occurrence minimum	Certificate required
Tennessee LLC	$300	Minimum; scales with membership

Two costs people forget: Tennessee requires workers’ compensation insurance at five or more employees, and the $300,000 garage liability minimum is the highest of any state in this guide series — budget the premium accordingly.

How to Get Licensed, In Order

1. Form the entity with the Tennessee Secretary of State so the bond, insurance, and signage all name the same business.
2. Secure a facility that clears every measurement — 288 sq ft, restroom, gravel lot for 15 vehicles, three customer spaces.
3. Install the sign with eight-inch letters, permanently mounted and visible from the road.
4. Bind the $50,000 two-year bond and garage liability at $300,000 per occurrence.
5. Photograph everything, including your posted hours, and file with the $600 fee.

Frequently Asked Questions

How many cars can I sell in Tennessee without a dealer license?

Five. Anyone who sells, or offers to sell, more than five motor vehicles in one year in Tennessee must be licensed by the Motor Vehicle Commission as a motor vehicle dealer.

How much does a Tennessee dealer license cost?

$600 for the initial application, and franchise dealers pay an additional $600 per line make. Behind that sit a $50,000 corporate surety bond covering two consecutive years and garage liability insurance with a minimum limit of $300,000 per occurrence.

What facility does Tennessee require for a dealership?

A permanent building of at least 288 square feet with a functioning restroom, a display lot able to hold 15 vehicles built of compacted gravel or similar material rather than grass, three customer parking spots, and a permanently installed sign with letters at least eight inches high that is visible from the road. Your posted hours and days of operation must be photographed.

How much garage liability insurance does Tennessee require?

A certificate of garage liability insurance with a limit of at least $300,000 per occurrence — the highest minimum among the states we have covered. Separately, Tennessee requires workers’ compensation insurance for any business with five or more employees.

Taxes, franchise and excise tax, licensing, and hiring are covered in our full guide to starting a business in Tennessee.

Sources

Source	What It Covers
Tennessee Motor Vehicle Commission — Dealer License	$600 fee, $50,000 two-year bond, $300,000 garage liability, facility measurements, sign, five-vehicle threshold