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Motorcycle Auction- Dealer License?
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Author:  Guest [ Tue Dec 28, 2010 3:32 pm ]
Post subject:  Motorcycle Auction- Dealer License?

Maybe someone has an easy answer to this. I posted it on the NAA Forum and it was suggested I post it here as well.

In order to conduct a Motorcycle Auction in Texas ( With the Motorcycles on consignment from individuals) I am making the assumption ( dangerous I know) that a Licensed Dealer needs to be involved in an official capacity. Since this would probably be a one time only event I was thinking the smartest way to proceed would be to find a Licensed dealer who would cooperate and form a separate L.L.C. or Corporation for the sole purpose of conducting the sale. Auction Company + Dealer = Corporation. This spreads any liability equally and protects both entities. I would appreciate any thoughts or advice.


Author:  James Ford [ Wed Dec 29, 2010 2:47 am ]
Post subject:  Re: Motorcycle Auction- Dealer License?

Nope. No easy answers! My advice would be to read the laws on Texas auto dealer licensing.

First, you will certainly need to be licensed as a dealer to sell cars on consignment or whether you buy and resale autos.
Second, if you form another company, then it would have to be separately licensed. So, just pairing up with a licensed dealer is not going to do much good, if you are claiming a separate business entity, such as a corporation or LLC. The actual premises has to be noted in the licensing, as well. It has to hold a minimum number of cars and state the hours of operation, etc.

These are just a couple of the specifics relating to auto dealer licensing requirements. Go to the Texas DMV website and you can find all the information you need.

There was going to be something like this done a couple of years back, at a motorcycle rally in Somerville. It fell through for some reason... not sure why, but it may have had something to do with the laws or maybe they couldn't get enough consignors to make it worthwhile. You could check with Gary Worstell for the particulars. He was the one that was going to be doing the auction.

Jim Ford
Professional Auctioneer & Auction Marketing for the 21st Century

Author:  Guest [ Wed Dec 29, 2010 8:41 pm ]
Post subject:  Re: Motorcycle Auction- Dealer License?

I found the answer! ( Well kind of)

Apparently the Dealers License in the State of Texas is tied to a LOCATION not an individual like an Auctioneers License is. So forming an L.L.C. or Corporation for this would be futile since State Law makes no allowance for an off-site Motorcycle Auction. ( Unless we were going to lease a location and tie the License to it which makes little sense for a one-time event.)

In order to make this work we would have to find a current Dealer who would allow the Auction to take place on his/her established premises and collect and process all the money for it ( including Taxes) and pay the consignors. This is an interesting situation as the Auctioneer is also responsible for making sure the Taxes and Consignors get paid so how will we structure an Auction where the Auctioneer can be "held harmless" if you will since he/she would have no authority to write checks or collect money. If a consignor was cheated or shorted they could theoretically apply to the State Auctioneer recovery fund for relief.

I am going to continue to look into this and I'll post more of what I find later. :)

Author:  James Ford [ Wed Dec 29, 2010 11:43 pm ]
Post subject:  Re: Motorcycle Auction- Dealer License?

I see that you found the statutory information I referred to in my previous post, regarding auto licensing. I spent quite a bit of time looking into the laws and requirements of operating an auto auction. I ended up deciding against the idea.

There is no way an auctioneer may be held harmless, in any sense of the imagination. Even if you form a corporation, under the auction laws of Texas, the auctioneer is still bearing the responsibility for the company and acting as the licensed authority, since you hold the auctioneer license.

So, my question is why you would not have the authority to collect money and write the checks? You would be the one that would be contracting the consignors, not the auto dealer, as they do not have the authority to take consignments for auction... well, unless you had a partnership (or similar business agreement) and they were authorized to sign the auction consignment contract on your behalf. However, you still retain the authority to insure that everything is done within the law and will be held accountable for the actions of those with such authority.

If you want to give me a call, I'll be glad to discuss some of these issues with you. It might be a little easier, than trying to type out all the details that relate to both types of businesses and the entities involved... it could probably take up a few pages on here.

Jim Ford
Professional Auctioneer & Auction Marketing for the 21st Century

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