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Secretary of state offers guidance for closing, switching to used-only

November 15, 2010

For dealers with cancelled franchise agreements, there are many issues to consider if they intend to convert to used-car stores, and even more if they intend to close. The Illinois secretary of state’s office offers the following guide.

Dealership Status Change

Dealers who had their franchise agreement cancelled and need to change their dealership status or business name must contact the the Dealer Licensing Division at (217) 782-7817 for an application and instructions. Dealers must pay a $2 fee and file an application that reflects any necessary changes within 30 days of their franchise agreement cancellation.

If the cancellation requires a dealership name change, it also may be necessary to submit a corrected Certificate of Insurance and Illinois Vehicle Dealer Bond (if one currently is on file). Dealerships also would be required to adjust any business signs to reflect a name change.

If a dealer is registered as a corporation or a LLC, he must notify the Department of Business Services, (217) 782-6961. Corporation or LLC changes can be filed by mail with the application to correct a Dealer’s License, to

Illinois Secretary of State
Dealer Licensing Division, Room 069
501 S. 2nd St.
Springfield, IL 62701-1730 

Dealership Closing

Dealers who are closing must notify their Vehicle Services Field Representative or the Illinois Secretary of State Department of Police. Closing dealers must surrender their Certificate of Authority, identification card, dealer plates and temporary registration permits. 

Closing dealers must submit all transactions for title, title and registration or transfer for vehicles that were sold prior to closing. If a dealer participated in the ERT program, he must notify his ERT vendor and surrender license plates, stickers and any other material that the vendor requests. 

Dealers can call the Dealer Licensing Division, (217) 782-7817, if the don’t know how to contact their Vehicle Services Field Representative or the Illinois Secretary of State Department of Police. 

Revenue Department

Dealerships affected by cancelled franchise agreements also may have to notify the Illinois Revenue Department, (217) 785-3707, for instructions on how to change their tax forms. 

Inventory Options

Remaining new-vehicle inventory of dealers losing their franchise due to a manufacturer bankruptcy have a couple options to liquidate their inventory.

New to Other Franchise Dealer

Dealers with a cancelled franchise agreement can transfer remaining new- vehicle inventory to another dealership with the appropriate active and valid franchise agreement. The procedures for these transfers are unchanged.

Used to the Public, Auto Auctions

Dealers with a cancelled franchise agreements who want to sell remaining new-vehicle inventory to the public and/or to other non-franchised dealers (through auctions, direct or other) must consider them to be used cars. The used-car box on the application, therefore, must be checked.

To help dealers in these cases, the Vehicle Services Department will allow them to make application using the MCO without first obtaining a title in the dealer’s name. Dealers who want to process these vehicles as used with an MCO should write or stamp the word "used" across the face of the MCO document and mark the used box on the application.

It is important that these procedures be followed or the transaction will be returned un-processed. Further questions can be directed to Kelly at (217) 558-6148.

Franczek Radelet, the CATA’s labor relations counsel, advises that dealers might be subject to the Worker Adjustment and Retraining Notification (WARN) Act. Illinois dealers with 75 or more employees generally must give workers 60 calendar days’ notice before closing or if 50 or more employees are impacted. Notices of less than 60 days can be given under very limited conditions, such as business circumstances not foreseeable when notice would have been required.

Details of WARN are posted on the CATA Web site: http://www.magnetmail.net/images/clients/NADA/attach/DEALER_WARN_ACT_Q_AND_A.doc

 

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