HobbyTown USA

[Harry P.]

All Hobbytown USA stores are independently owned and operated, and unlike, say, McDonald's, individual store owners pretty much have carte blanche with regard to their stores' inventories.

I guess I'll never understand that business model.

To me, the whole point of a franchise system is uniformity. Go to a Subway in LA or one in Chicago or one in New York and you'll see the same items on the menu. I would think that the "mother ship" would want all of their locations, whether owned by the corporation or by an individual franchisee, to uniformly and consistently uphold the "brand" so that whichever of that franchise's locations a customer happens to go to, they know what they can expect.

I understand how the HT system works, but I don't understand why it works that way. Doesn't make good business sense to me. One "bad" franchise location (that has lousy inventory, for example) reflects badly on the entire brand.

[Skydime]

Ok we were both talking about two totally different things. I thought you were talking about a return policy, not the ball machine. I do agree that the ball machine sounds like a bit of a rip off but can probably be resolved if politely taken up with the store manager. Maybe something along the lines of "Excuse me Mr (INSERT NAME HERE) I noticed that the ball machine's product varies from the display model, would you mind changing out the display model to give people a better idea of the product"

As for offending me you did not, the HobbyTown I work at even has flaws, I have yet to find a perfect hobby shop.

Cool, glad we got that one cleared up. I agree, we truely will never have a perfect hobby shop. Everyone has different needs.

[Erik Smith]

I guess I'll never understand that business model.

To me, the whole point of a franchise system is uniformity. Go to a Subway in LA or one in Chicago or one in New York and you'll see the same items on the menu. I would think that the "mother ship" would want all of their locations, whether owned by the corporation or by an individual franchisee, to uniformly and consistently uphold the "brand" so that whichever of that franchise's locations a customer happens to go to, they know what they can expect.

I understand how the HT system works, but I don't understand why it works that way. Doesn't make good business sense to me. One "bad" franchise location (that has lousy inventory, for example) reflects badly on the entire brand.

Seems quirky to me as well. It's not like HTUSA advertises a lot or, obviously, has enough pull with wholesales to get a price break (based on MSRP selling points), to make the franchise thing worthwhile.

I also wouldn't say the models are a "courtesy". Yes, they may make more money on RC products, but a retail store will never fill valuable shelf space with products that either don't sell or don't generate profit. There is no room for goodwill in a for profit enterprise, really.

The HT in Spokane has a very good paint selection - the only place in a metro area of 600,000 people that sells Tamiya paints - decent tools, and okay model selection. They are constantly busy with role and card playing tourneys as well as Kendama displays/shows/or whatever you call it. In fact, it's usually so busy with annoying card type games it's hard to hear yourself think, or talk to yourself.

[Harry P.]

But here are the major differences between HTUSA and McDonald's or Subway, as well the reasons why McDonald's or Subway's business models wouldn't work for HTUSA. McDonald's and Subway provide one basic product _ food _ and they cater to people who have one basic interest _ filling the bellies. HTUSA stores, on the other hand, cater to people who have a wide range of interests _ model-building, R/C cars, R/C planes, jigsaw puzzles, paintball, etc. Therefore, individual store owners need to have freedom to tailor their inventories to suit the needs of the communities in which they operate. For example, a store located in a community with an R/C car racetrack is probably going to sell more R/C cars, parts and accessories than one located in a community that doesn't have one. On the other hand, a Hobbytown in a city that has one or more active model clubs is probably going to be better stocked on model kits and supplies than one located in a city that doesn't have those. Therefore, HTUSA Corporate mandating that all of its stores carry the exact same inventory would likely be a death sentence for many of them.

Ok then, a more direct comparison: Michael's and Hobby Lobby. All their locations carry the same inventory, more or less.

I'm not saying you're wrong, just saying that to me, a franchise business that allows its franchisees to stock whatever they feel like (or don't feel like) doesn't make sense to me. Like I said, to me the whole point of a franchise is that it provides uniformity of product availability from one location to the next. And a place that calls itself Hobby Town should, in my opinion, at least keep common everyday hobby items like small drill bits in stock and not act as if I just dropped in from Mars looking for something they've never heard of!

I suppose that HTUSA does what it does because it works for them, otherwise they wouldn't do it. But from a consumer standpoint (me)... I don't like the idea that if I go to a particular HT looking for something that I know I have bought before at a different HT, they might not even carry that same item. It's not the end of the world, just a little frustrating... especially after going to the same HT on three different occasions looking for three different but very common items, and each time being told they have never had anyone ask for those items. Yeah... right.

[carrucha]

The kit prices in Hobbytown are high but the kits you buy online are just as expensive or more when you take into account shipping costs. The only time I buy kits online is if the kit has been discontinued and is no longer available in hobby shops. In the area that I live there have been five Hobbytowns and the only one still open has been in business since October 2012. I hope they survive for years to come. The staff if very friendly and they have good selection of kits and supplies.

[Harry P.]

The kit prices in Hobbytown are high but the kits you buy online are just as expensive or more when you take into account shipping costs.

You must not be a very good online shopper. I find that in almost every case I can find a kit cheaper online than in a store, even with the S&H added, especially if they will ship several kits for very little extra S&H... sometimes none at all.

In store = kit + sales tax + gas you burned to get there and back.

Online = kit + S&H.

Works for me in just about every case.

[Harry P.]

Neither Michael's nor Hobby Lobby stores are franchises; they are all corporately owned. Sooo, not a valid comparison.

Ah.. ok, I see. Never mind...

[sjordan2]

HobbyTown may have more lenient franchise requirements (or enforcement). And, unlike corporations such as McDonald's, whose franchisees are heavy with well-heeled investment and family groups, with multiple locations and a larger stake in maintaining store uniformity and McD assistance, a survey of franchising companies shows that only 5% of HobbyTown store owners have more than one location. What you might call a Mom & Pop franchise situation. Look at the differences in size and inventory of Ace Hardware stores -- around here, they range from hole-in-the-wall strip centers to big box stores.

As far as corporate chains go, I spent many years doing advertising for several supermarket chains, which individually had different sizes of inventory, different sales, different prices -- we had to do weekly price/item advertising in multiple versions for different markets based on prices and inventory, and each store manager's decisions.

But McDonald's may be a better comparison than assumed. For example, they offer lobster rolls in Massachusetts, but not here in Tennessee, and more Hispanic items where appropriate. Their menus vary around the country and around the world to reflect local and national tastes.

Edited September 21, 2013 by sjordan2

[2000-cvpi]

The kit prices in Hobbytown are high but the kits you buy online are just as expensive or more when you take into account shipping costs. The only time I buy kits online is if the kit has been discontinued and is no longer available in hobby shops. In the area that I live there have been five Hobbytowns and the only one still open has been in business since October 2012. I hope they survive for years to come. The staff if friendly and they have good selection of kits and supplies.

Not true, moody of the time I could found a identical kit online that's cheaper even with shipping. HTU here had the Moebius hornet kit for 33.99 for the regular version. Online with shipping I bought two for 45.00. It wasn't that hard to find either. Another example is the Moebius 55 Chrysler Nascar kit was 44.99 at Hth, that was ridiculous. I get the support local hobby shops, but to me there is a line to be drawn. HTU crosses it for me with kit prices , staff that cares about rc stuff only. My other area hobby shops see me and my money a lot.

[ToyLvr]

I was a pretty regular customer at the HT in the Cincinnati area when I worked in that vicinity, and I learned a few things about them.

I can't say that this will work for you folks in other areas of the USA, but if there's a kit you want and you think their price is outrageous, just complain to the manager.

I did that on more than one occasion, and pointed out that I could buy the kit online from Tower Hobby (or take your pick of internet store) for a lot less (having done my homework ahead of time, of course). The manager would meet - or beat - the online price, and I saved $$$ on shipping charges by not ordering online. Win-Win for me. Since these stores are a franchise unit, the manager has the final say on the sale price. Give it a try; whaddya got to lose? This manager seemed truly interested in keeping my business.

I haven't been there in a while, but I'll mention for you folks in the Cincy area that the HT up in Mason is pretty well "car model friendly" with a fair selection of kits and supplies. I would say that their mainstay, though, is RC.

BTW, I almost fell off my chair when I read that Harry actually shopped at a brick-n-motar store!!! ;-)

[Harry P.]

BTW, I almost fell off my chair when I read that Harry actually shopped at a brick-n-motar store!!! ;-)

Yep, once in a while I still like to go "old school"...

[Tom Geiger]

Ok then, a more direct comparison: Michael's and Hobby Lobby. All their locations carry the same inventory, more or less.

Even Walmart stocks different inventories in different stores. May it be from store size, local preferences or even their rather sophisticated inventory system telling them what sells best in each store. Some guys have reported models for sale at their store, I haven't seen models in any Wallys near me. Once I was out in Evansville, Indiana and the Walmart there had a huge double sided aisle of Ertl farm toys right up front near the registers. No doubt catering to the local clientele since I hadn't seen those products in any store in suburban NJ.

Since I've been looking for my next career adventure, I have looked into a Hobbytown USA franchise and have gone over their prospectus. They talk about the product categories and your ability to select from those. The local store in Westchester, PA fits that toy store description. There are aisles of kids toys and games. They also have a long aisle of RC parts, and no doubt make their money on that, noted that there are two kids behind the counter working on RC cars and planes.

Of course if I bought the franchise, I would listen to everything their folks say (that's why you buy a franchise instead of going it alone, their experience) and modify their inventory to limit the toys and games and expand the models and supplies. I would no doubt embrace the bread and butter of the RC trade, as well as the gamers. I'm sure that once the store opened and people knew it was mine, I'd have a decent clientele of car modelers.

As others have said, the smaller shops buy their kits from distributors. I don't think Hobbytown USA does any national purchasing for their franchises, they probably buy from distributors. Those who buy kits directly from Revell and Round Two save some money, but must buy in larger quantities than the average hobby shop can handle. Tower Hobbies IS a distributor (as well as the owner of Revell) so they get the largest quantity discounts and can pass on that savings due to the volume of business they generate.

All said, I don't think I'll be opening a Hobbytown USA. It's a nice dream, but I'd be very worried about it's ability to sustain itself and provide me with a living.

[sjordan2]

Not cheap, but not overly expensive for an investor to open a HobbyTown USA store. This is from Entrepreneur.

Startup Costs, Ongoing Fees and Financing

Total Investment: $137,000 - $332,000

Franchise Fee: $20,000 - $25,000

Ongoing Royalty Fee: 3%

Term of Franchise Agreement: 10 years, renewable

FINANCIAL REQUIREMENTS NET WORTH: $100,000 - $250,000

LIQUID CASH AVAILABLE: $75,000 - $125,000

OPERATIONS

5% of all franchisees own more than one unit. Number of employees needed to run franchised unit: 4. Absentee ownership of franchise is allowed. (95% of current franchisees are owner/operators).

How This Franchise Supports Franchisees

Training: Available at headquarters: 1 week. At franchisee's location: 3 weeks.

Ongoing Support: Newsletter, Meetings, Toll-free phone line, Grand opening, Internet, Security/safety procedures, Field operations/evaluations, Purchasing cooperatives, Lease Negotiation

Marketing Support: Co-op advertising, Ad slicks, National media,

Edited September 21, 2013 by sjordan2

[Harry P.]

I don't think I'd ever want to own a retail store of any kind. Way too many headaches... all the local/state/federal government paperwork, red tape and all the goofy rules and regs, dealing with employees and all the government red tape and paperwork that goes with that... insurance... health care... dealing with distributors and suppliers... that is all WAY more work than I would ever even consider doing just to make a living.

[crazyjim]

I used to visit the Hobby Town store in Gainesville after I went to the VA hospital. They shut down the giant store and moved to the other side of town to a much smaller store. While the prices at the original store were high, they went through the ceiling in the new place. The old place had a fantastic selection of Model Master paint and while priced high, it was the only place to get it. Now their paint selection is poor and I don't even bother going back. Hello online stores.

[sjordan2]

I don't think I'd ever want to own a retail store of any kind. Way too many headaches... all the local/state/federal government paperwork, red tape and all the goofy rules and regs, dealing with employees and all the government red tape and paperwork that goes with that... insurance... health care... dealing with distributors and suppliers... that is all WAY more work than I would ever even consider doing just to make a living.

That's part of the advantage of a franchise, depending on the company -- a lot of that is handled by the franchisor. Single store accounting and management, of course, is up to the owner. But that's what it takes to be an entrepreneur. Essentially, as a franchisee, you're renting a national brand and don't have to do it yourself.

[afxmustang]

We don't have any Hobby Towns here in the Detroit area. I was in one when I was in Wisconsin last year and wasn't impressed. It was the first Hobby Town that I had been in. I was in Hobby Lobby today and was shocked to see several AMT kits at $24.95. I am used to seeing them there for $19.95.

[Maindrian Pace]

I worked at the local Hobbytown when it first opened, around '90-'92. It was always primarily an R/C car/plane/boat store with model kits as a secondary line. But because I worked there, we had the best car selection anywhere in the state. We got customers in our store for car and truck models from a couple of hundred miles away, no joke. We would also order items for them, and any special order item was 10% off of list. If we liked the customer, we hit the 15% button and told them to keep it under their hat, which they did.

I forget the name of the model distributor we used, but they were doing well enough that they had a rep come over to the two Hobbytowns that were owned by the same owner and do the model order. At the time, the average car model was around $9, and the markup to list was 100%. So a ten dollar kit cost us five bucks. That left a lot of room to move around, so most kits were discounted 10%, and the bigger, more expensive, or imported kits were discounted 15%. Sometimes we could go deeper on a special order high buck kit, and we usually did. We had tons of aftermarket goods, including some resin parts made by local customers, who got a big kick out of seeing their items for sale in a store. Sales were great for a long time. I quit in '92, and the selection went down hill because nobody else that worked there in the next 20 years really cared.

Now they are like any other Hobbytown, small selection, almost no aftermarket, decent paint selection, and list prices. But it wasn't always that way. I don't know what the markup is now, but I imagine that the margins are tighter. They could discount the kits, but I don't think that they really care, R/C is still the main profit generator.

-MJS

[Tom Geiger]

_{Skip, they also provide the computer system and accounting software to run the store. That's actually huge since everything you do is computerized and as easy as printing reports. That includes bar codes on merchandise etc.}

_{Sooo... do you guys think this is a viable business opportunity. I qualify, but am skeptical.}

[Joe Handley]

Not that I know of Carl, those distributers do give a better price to HTU's than other shops, but not much, the stores can buy non exclusive products like Traxxas', but stuff like Revell can only be bought via Great Planes. Outside of slightly better pricing, GP doesn't do much for HTU or independant shops, not only are they a supplier, but via Tower Hobbies and Plastic-Models, they are a competitor tjat sells for a discount. If WalMart did that, people would be making noise over it.

[Harry P.]

Sooo... do you guys think this is a viable business opportunity. I qualify, but am skeptical.

Hard to say. Impossible to say, really. What you would need is demographic data showing you the buying habits and interests of people in the area... that might help you determine whether opening a HT would be a viable business. For example, how does the population break down, agewise, in a 25 mile radius of the proposed location? Mostly older people? Mostly younger people with kids? Near a major college campus? In any case, these are tough times to be opening up a brick-and-mortar hobby store.

If it was me, and I wanted to get into the franchise game, I would look elsewhere... probably fast food. No matter what the economy, people will always need to eat, but they don't need to buy model cars.

[Harry P.]

What's that old saying?

How do you make a small fortune in the hobby shop business? Start with a large fortune...

[Thatswhatshesaid]

The Hobbytown by me is a joke. The owner/franchisee is a jerk and the prices are through the roof. If you aren't there for the R/C stuff they act you are a huge inconvenience to them. The last time I was in there was about a year and a half ago. There was an article in the other magazine I wanted to read so I stopped after work. What did I find when I went to the magazine rack? Even the mags were marked up!! $7 for a magazine. I shook my head and walked out. I'll never go there again.

Does anyone else get tired of the 'support your LHS' speech? I don't know about you but I work hard for my money and like to make every dollar count. Why should I spend $30 on a kit when I can get it for $17-$18 online? Just so some jerk can make a couple more bucks on already inflated prices? The whole 'once you add in shipping' argument doesn't hold a lot of water either. If you do a little research and shopping around, you can save a lot of money. Unless you buy your kits one piece at a time from PJ Toys.

Kits are expensive these days no doubt. But like everything else the days of $8-$10 kits are over. Just shop around and stretch your hobby dollars. Some day online hobby shops will be all that is left. If I can buy 3 kits online for the price of one kit at HTUSA, guess where my money is going?

Oh and about the self cutting mat in the original post. Get one at Michaels or HL with the coupon.

[Harry P.]

Does anyone else get tired of the 'support your LHS' speech? I don't know about you but I work hard for my money and like to make every dollar count. Why should I spend $30 on a kit when I can get it for $17-$18 online? Just so some jerk can make a couple more bucks on already inflated prices? The whole 'once you add in shipping' argument doesn't hold a lot of water either. If you do a little research and shopping around, you can save a lot of money.

Amen, brother! You nailed it.

[Tom Geiger]

The Hobbytown by me is a joke. The owner/franchisee is a jerk and the prices are through the roof. If you aren't there for the R/C stuff they act you are a huge inconvenience to them.

I have found that at a good number of hobby shops. If you aren't in the hobby of the person at the counter, you are suddenly not welcome there. And there are a good number of jerks in business. I have been stalking my local Hobbytown just to get an idea of the franchise and the business. As predicted, the two young RC dorks fixing stuff behind the counter saw I had about $75 worth of Evergreen and basswood and asked me what I was building. When I said 'cars and light commercial trucks' their faces fell and they treated me like I had ordered a dollar burger at McDonalds. Then I went back on a weekday and I can say that the owner was friendly and treated me like a customer. It's been said, 'you can't get good help anymore!'