Colorado Car Sales Practice Test

What must a dealer do when a salesperson leaves their employ?

1. Notify the local police

2. Return the salesperson's license to the Auto Industry Division

3. Transfer the license to another salesperson

4. Do nothing, the license is permanent

The correct answer is: Return the salesperson's license to the Auto Industry Division

When a salesperson leaves a dealership, the appropriate action that the dealer must take is to return the salesperson’s license to the Auto Industry Division. This is a necessary step to ensure that the licensing records are kept accurate and current, which helps maintain regulatory compliance within the industry. When a salesperson is no longer employed, their license is effectively rendered inactive because licensing is tied to employment at a specific dealership. Returning the license not only fulfills the legal obligation but also prevents potential misuse of that license by someone who is no longer representing the dealership. Proper management of these licenses contributes to the integrity of the dealership operations and helps uphold the standards set by the regulatory authority. This knowledge is critical for any dealer or manager to ensure they are following the law regarding personnel changes in their sales team. The other options do not align with the required procedure. Notifying local police is unnecessary in this context, as it does not pertain to the licensing process. Transferring the license to another salesperson is not allowed; each license must be specifically associated with an active employee at the dealership. Lastly, the idea that the license is permanent and no action is required contradicts the regulations governing the auto industry, which necessitate that all licenses reflect current employment statuses.