What must the director do if they refuse to issue a license?

The correct choice emphasizes that if the director refuses to issue a license, it is required to notify the applicant and clearly state the grounds for that refusal. This process ensures transparency and fairness in the licensing procedure. By informing the applicant of the reasons behind the denial, the applicant is given the opportunity to understand the issues that need to be addressed, whether they pertain to qualifications, compliance with regulations, or other relevant factors.

This approach also aligns with principles of due process, enabling applicants to either correct the deficiencies or contest the refusal. It promotes accountability within the regulatory process and provides clear communication, which is vital for maintaining trust in the licensing system.

The other options do not fulfill the necessary requirement of transparency and fair treatment expected in these situations. For instance, simply notifying the applicant without stating the grounds for refusal lacks the clarity and rationale needed for the applicant to take informed steps moving forward. Waiting for an applicant to request an explanation places the burden of pursuit on them, which is not in line with proactive administrative practices. Finally, providing an automatic appeal process is not a standard requirement; rather, applicants should be informed of their rights and the procedures to contest the decision rather than assuming an automatic right to appeal without prior notification of the reasons for denial.