Pub. 58 2017-2018 Issue 3

28 LICENSE REQUIREMENT The agency’s licensing categories follow the defined classifications as to the agency’s jurisdiction. The general licensing requirement in Subchapter F, Texas Occupations Code, states: § 2301.251. License Required: Generally (a)Unless a person holds a license issued under this chapter authoriz- ing the activity, the person may not: (1)engage in business as, serve in the capacity of, or act as a dealer, manufacturer, distributor, converter, representative, vehicle lessor, or vehicle leases facilitator in this state; or (2)perform or offer to perform repair services on a motor vehicle under a franchise 71 and a motor vehicle manufacturer’s warranty, regardless of whether the person sells or offers to sell motor ve- hicles at the same location. (b)A franchised dealer must have both a franchised motor vehicle dea ler’s genera l distinguishing number issued under Chapter 503, Transportation Code, and a license issued under this chapter. (c)A manufacturer or distributor that directly or indirectly reim- burses another person to perform war rant y repa ir ser v ices on a vehicle is engaged in business in this state regardless of whether the manufacturer sells or offers for sale new motor vehicles in this state. 72 (Emphasis added.) This general license provision re- quires that if a person is in Texas and engaging in the business of manufacturing, distributing, con- verting, representing, leasing, lease facilitating, or acting as a dealer, 73 that person must have the appropriate license required by Chapter 2301 and issued by the agency. Section 2301(a)(2) requires that re- pair services may not be performed or offered on a motor vehicle under warranty at a location without the required license. This license provi- sion allows for a standalone repair facility by a franchised dealer. As the definition of “dealership” allows: “ ... The term includes premises or facilities at which a person engages only in the repair of a motor vehicle if the repair is performed under a franchise and a motor vehicle manufacturer’s warranty.” 74 The agency’s “Service-Only Facility” rule also addresses the franchised dealer’s stand-alone service dealer- ship. This rule states: § 215.103. Service-Only Facility (a)A service-only facility is a loca- tion occupied and operated by a franchised dealer that is a com- pletely separate, non-contiguous site, from the franchised dealer’s new vehicle sales and service or sa les only location, where the franchised dealer will only per- form warranty and non-warranty repair services. Except as allowed in subsection (d) of this section, warranty repair services may only be performed at either a licensed dealership or a licensed service-only facility. (b)A franchised dealer must obtain a license to operate a service-only facility. The dealer may not obtain a service-only facility license to service a particular line of new motor ve- hicles, unless the dealer is franchised and licensed to sell that line. (c)A service-only facility is consid- ered a dealership under Occupations Code, § 2301.002(8), and is therefore subject to protest under Occupations Code § 2301.652. (d)Upon the manufacturer’s or distributor’s prior written approval, which cannot be unreasonably with- held, only a franchised dealer of the manufacturer or distributor may contract with another person as a sub-contractor to perform warranty repair services the dealer is authorized to perform under a franchise agreement with a manu- facturer or distributor. Payment shall be made by the franchised dealer to the sub-contractor and not by the manufacturer or distributor to the sub-contractor. (e)A person with whom a franchised dealer contracts, as described in subsection (d) of this section, to perform warranty repair services is not eligible to obtain a service-only facility license and may not advertise to the public the performance of war- ranty repair services in any manner. 75 (Emphasis added.) The agency’s Service-Only Facility Rule highlights that only a franchised dealer may have a serviceonly facil- ity at which warranty repairs and service is performed. This rule again reinforces the statutory requirement that warranty repairs are conducted at an appropriately licensed franchised dealer’s facility, whether sales are made at the facility or whether it is a service-only location. With respect to subsection (c) of § 2301.251, a manufacturer or distribu- tor is engaged in business in Texas if reimbursing another person for warranty repair services and must obtain a manufacturer’s or distribu- tor’s license under Chapter 2301, Occupations Code. For example, subsection (c) requires that if a Texan owns aGermanApolloAuto- mobile or a Mazzanti Evantra Milleca- vallli 76 and themanufacturer reimburses "X" in Texas to performwarranty repair services, then Apollo or Mazzanti is re- quired to have a manufacturer’s license from the agency because they are doing business in Texas. This provision does not allow that Apollo or Mazzanti may perform warranty repairs-only that if Apollo or Mazzanti pay another person to repair the owner's vehicle, thenApol- lo or Mazzanti must have the requisite manufacturer's or distributor's license. The rationale for this requirement is, at minimum, so that the State as well as an