Pawn stores offer opportunities for biz owners and customers alike.
Robbie Whitten is the CEO of Money Mizer Pawn & Jewelry, a growing chain of franchised pawn stores in the Southeast. His brand logo includes the traditional pawnbroker’s symbol of three gold spheres hanging from a bar.
But to his many customers and increasing numbers of Americans, Whitten’s stores represent a convenient, comfortable, one-stop shop where they can not only obtain small loans and cash checks, but also buy and sell fine jewelry, sporting goods, electronics, computers, cameras and tools, as well a variety of unique and hard-to-find items.
“In the last two years, we have had a record number of new customers who have never used our services before,” said the 48-year-old Whitten, who got his start in the industry with his father, Robert, when he was just out of high school. “The pawn business is one of the oldest practices in the world. It is a business that is not a fad and considered somewhat recession-proof.”
Launched in 1980 in Columbus, Georgia, Money Mizer has four locations in Georgia and Alabama, including its only franchised store in Auburn, Alabama. But Whitten is eyeing dramatic growth for Money Mizer, which he says is the first chain in the pawnshop industry to offer a true franchise opportunity. Money Mizer expects to sell 10 to 15 franchises in 2011 and grow to 150 locations across the country by the end of 2015.
When Whitten says the pawn business is somewhat recession-proof, he’s not making an idle boast, especially considering the performance of his stores during the turbulent economy that has hounded the nation for the last several years. Money Mizer’s Phoenix City and Dothan, Alabama, locations have averaged at least 25 percent annual growth rates in recent years, while the original Columbus, Georgia, Money Mizer has still seen 15 percent annual growth – despite being a firmly established 30-year-old store.
With multiple revenue streams from retail sales and loan interest, the flexibility to generate both in-store and online sales, as well as an ever-expanding customer base, Whitten says Money Mizer has developed a unique, high-end store that offers quality new and used products at bargain prices.
Technology has helped to eliminate the biggest hurdle to entering the industry – the years and years of experience that was previously necessary to understand the value of the wide variety of items that come into a pawnshop.
“We offer a very comprehensive training program to educate our franchisees, but they also can get assurance from knowing that with a few keystrokes they can go online to value and appraise most any item in real time. Additionally, we also use online auction sites as a tool to sell merchandise. Our retail market used to be a local population of 150,000. Now it’s worldwide and growing at a tremendous pace.”
Many people today depend on pawnbrokers to help them meet financial needs not offered through traditional means. Many are working families who use pawn loans to simply keep the electricity on, the rent paid and their gas tanks filled. The fast-growing, competitive pawn industry is governed by all of the major federal laws that apply to other financial institutions and is represented by the National Pawnbrokers Association.
A pawn is another term for a collateral loan, primarily 30-day renewable loans. Pawnbrokers lend money on items of value ranging from gold and jewelry to electronics, musical instruments and almost anything imaginable. Loans are based on the value of the collateral. When a customer pays back the loan, their merchandise is returned or they may choose to surrender the collateral as payment in full. The average pawn loan is $125.
“We also cash checks for a fee of two or three percent,” Whitten said. “With almost 30 percent of Americans now unbanked, with no checking accounts or credit resources, we are their primary source of small loans. It is not feasible today for banks to make loans of less than $10,000. It’s not worth their time.”
The average median household income of people who pawn in Whitten’s stores ranges between $40,000 and $60,000.
“Our customer base as well as the image that people have of pawnshops has changed dramatically due to our strong national association (NPA) and individual storeowners working hard to overcome the stereotypical Hollywood image of pawnbrokers. Our clientele is consistently shifting toward more white-collar workers. Being a pawnbroker might not be a mainstream franchise concept, but it offers tremendous benefits and advantages.”
Like any pawnshop owner, Whitten has seen his share of unusual items and they have included a 1921 Thompson original gangster-era “Tommy Gun,” elephant tusks, a Roman-era antique coin collection, both Super Bowl and college football national championship rings and a 50-carat diamond bracelet.
HOW TO OPEN YOUR OWN PAWN SHOP
Growth Projections: Money Mizer currently has three corporate-owned locations in Columbus, Georgia, and Phoenix City and Dothan, Alabama, as well as one franchised location in Auburn, Alabama. The chain expects to sell 10 to 15 franchises in 2011, with 150 locations open by the end of 2015. Prime territories include cities with populations of at least 50,000, as well as college towns and military bases.
Franchise Facts: The estimated initial investment for a Money Mizer franchise location ranges between $500,000 and $600,000, including a $40,000 franchise fee. Franchisees are required to pay royalties of five percent of gross sales of retail items and two percent on interest income from pawn loans. Franchisees also contribute two percent of gross revenues to a system-wide marketing fund. Stand-alone stores average 4,000 to 6,000 square feet and are located in traditional retail areas with franchisees typically leasing space in an existing retail space or shopping center.
Training and Ongoing Support: Money Mizer provides up to four weeks of classroom training plus three weeks of in-store training at its corporate headquarters in Columbus, Georgia, for the franchisee and one additional person. Onsite assistance is provided prior to the store’s grand opening for a minimum of 14 days, with several additional onsite visits provided during the first year.
Money Mizer Pawn & Jewelry / Franchise Division, Inc.
#3 Bradley Court, Suite D, Columbus, GA 31904.