Risk Score
Pending analysis
Investment Range
$350,000 - $620,000
Franchise Fee
$30,000
Total US Locations
94
Business Summary
HobbyTown operates retail stores that sell hobby, toy, entertainment, educational, collectible, and gift merchandise. HobbyTown offers a diverse range of products, including model railroading, radio-controlled items, tools and paints, models, games, model rockets, science kits, seasonal activity kits, art supplies, educational toys, and other recreational toys. The brand aims to meet the current and future recreational needs of hobbyists, primarily targeting individuals between 12 and 55 years old.
Corporate History
HobbyTown Unlimited, Inc. was formed as a Nebraska corporation in 1985 by Merlin P. Hayes and Thomas A. Walla. Before this, the founders operated the first HobbyTown USA store in Lincoln, Nebraska, which opened in 1980, followed by a second in 1981. These stores were later merged into the Company's corporate structure. HobbyTown began offering franchises in September 1985. The company owned and operated retail stores in Lincoln, Nebraska until January 2009, eventually transitioning to a fully franchised model. In February 1998, the founders sold approximately 45% of the company to employees, with additional employees later purchasing stock. In October 2023, HobbyTown Unlimited, Inc. merged with a wholly-owned subsidiary of AMain.com, Inc. (AMain), becoming a subsidiary itself.
Financial Overview
Investment Range
$350,000 - $620,000
Franchise Fee (Low)
$30,000
Franchise Fee (High)
$49,500
Royalty %
4.75%
Marketing %
2%
Equipment Costs (Low)
$55,000
Equipment Costs (High)
$114,000
Working Capital
$31,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
HobbyTown's financial statements for the 2024 fiscal year received an unqualified opinion from its independent auditors, indicating that the financials are presented fairly in all material respects. Notably, the company experienced a significant positive shift in its financial position in 2024. Cash and cash equivalents increased substantially from $198,486 in 2023 to $1,331,950 in 2024. This improvement was largely driven by a $1,412,678 gain from the sale of property, plant, and equipment in 2024. The company also significantly reduced its long-term debt, with notes payable decreasing from $3,766,920 in 2023 to $1,029,239 in 2024, including one note paid in full in February 2025. Total liabilities also saw a substantial reduction. However, it is noted that HobbyTown underwent a restatement of its 2023 financial statements to correct an understatement of income taxes payable and provision for income taxes. Additionally, the company's inventory sales revenue stream dramatically decreased in 2024 (from over $10 million in 2023 to $1.5 million in 2024) because its parent company, AMain, began directly providing inventory to franchisees in April 2024, changing HobbyTown's business model for this revenue stream.
Financing Details
HobbyTown does not provide any direct or indirect financing to its franchisees. HobbyTown also does not guarantee any franchisee's bank loans, leases, or other financial obligations.
Performance Metrics
Total US Locations
94
Franchised Units
94
Corporate Units
0
Avg Square Footage
4,500
Franchising Since
1985
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
HobbyTown has no litigation required to be disclosed in Item 3 of its Franchise Disclosure Document. This indicates that HobbyTown and its executive officers have not been involved in any material litigation in the last three fiscal years.
Bankruptcy History
HobbyTown has no bankruptcy information to disclose in Item 4 of its Franchise Disclosure Document. This means HobbyTown and its executive officers have not been involved in any bankruptcy proceedings.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their HobbyTown franchise agreement, franchisees must provide at least six months of advance written notice before the current term expires. They must be in full compliance with all terms and conditions of their existing Franchise Agreement and Software License Agreement. Additionally, franchisees will be required to sign a new Franchise Agreement, which may contain terms and conditions that are materially different from their original agreement. Franchisees are also responsible for making any necessary expenditures to renovate and modernize their store's layout, premises, signs, and equipment to meet HobbyTown's then-current standards of appearance, operations, and image.
Training & Support Program
Franchisor Assistance
Before a HobbyTown franchise opens, HobbyTown assists with site selection by providing a referral to ESR Commercial, a real estate firm, or by approving the franchisee's proposed site. HobbyTown also provides a mandatory 10-day training program for the franchisee or their designated manager. This training includes up to 5 days of on-the-job experience at an existing franchised store in Lincoln, Nebraska, and the remainder at HobbyTown's corporate office or through digital/virtual platforms. During the setup and grand opening, HobbyTown provides a field manager for approximately 10 to 20 days, which includes 10-15 days dedicated to training the franchisee and their employees. After opening, HobbyTown provides ongoing assistance by developing new business methods and sharing information on these developments. Franchisees receive access to a confidential Operations Manual, which HobbyTown may modify. HobbyTown may also hold annual national conventions that franchisees and/or their store managers are required to attend (though franchisees are responsible for travel expenses). HobbyTown offers telephone and email support from its headquarters for operational issues, conducts regular reviews of operations and finances, and sends field representatives for periodic performance appraisals. HobbyTown advises on advertising and campaign establishment, requiring franchisees to use its Media Placement Service for local advertising and obtain prior approval for other advertising methods. Franchisees must also participate in HobbyTown's gift card program and utilize designated POS and accounting software, for which HobbyTown generally provides reasonable updates.
Initial Training Hours
163
Training Location
Lincoln, NE (corporate office and franchised retail store), or other designated venue including digital or virtual platforms.
Ongoing Support
After opening, HobbyTown provides ongoing support by developing new business methods, techniques, and improvements, and sharing this information with franchisees. Franchisees have access to HobbyTown's Confidential Operations Manual, which can be modified by HobbyTown. HobbyTown may hold annual national conventions (required attendance for franchisees/managers, with franchisees responsible for travel expenses). HobbyTown offers telephone and email support from its headquarters for operating issues, conducts regular reviews of franchisee operations and finances, and sends field representatives for periodic performance appraisals. HobbyTown advises on advertising campaigns, requires franchisees to use its Media Placement Service for local advertising, and mandates prior approval for other advertising. Franchisees must participate in HobbyTown's gift card program and all required programs/promotions. They must also use designated POS and accounting software, for which HobbyTown generally provides reasonable software updates.
Franchise Requirements
Ideal Candidate Profile
HobbyTown seeks franchisees who will be involved personally and actively in the on-premises supervision and management of their store. While not strictly requiring full-time, on-premises supervision by the franchisee, the company strongly recommends it. If a manager is hired for on-premises supervision, HobbyTown does not currently require the manager to complete the company's training program, but reserves the right to require it if necessary. The manager is not required to have an ownership interest in the franchise. HobbyTown's franchisees are expected to dedicate their full time and best efforts to operating the franchise and are prohibited from participating in any other similar business without prior written consent. If the franchisee is an entity, all owners must personally guarantee the obligations and maintain a controlling ownership interest, with the individual formerly acting as franchisee retaining legal control of ordinary business affairs and at least 51% of the voting interest. The company ensures that those operating HobbyTown stores are ethically and financially responsible and knowledgeable in business operations.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Supervisory
Territory Type
Exclusive
Territory Size Requirements
Each HobbyTown franchise is granted an exclusive protected territory, defined as a minimum of a five-mile radius around the franchisee's approved HobbyTown store location. The precise boundaries of this territory are further described in a separate addendum to the Franchise Agreement, signed by both parties after the store's location is determined and approved, and the lease is executed. To maintain this protected territory, HobbyTown franchisees must continuously maintain a minimum inventory of $150,000.
Staffing Notes
HobbyTown provides field managers to assist new franchisees with store setup and grand opening for approximately 10-20 days. This includes about 10-15 days devoted to training the franchisee and their employees on-site. The franchisor also makes representatives available by telephone, e-mail, or other communication means at the HobbyTown headquarters in Lincoln, Nebraska, to address any operating issues encountered by franchisees. A representative of HobbyTown conducts regular reviews of franchisee operations and finances, and a field representative visits stores periodically to conduct performance appraisals. While HobbyTown does not require full-time, on-premises supervision by the franchisee, it strongly recommends personal and active involvement in the on-premises supervision and management of the store. Most HobbyTown franchisees are significantly involved in the day-to-day operations. If a manager is hired as an on-premises supervisor, HobbyTown does not currently require them to complete the company's training program but reserves the right to mandate training if necessary. HobbyTown does not impose ownership requirements on on-premises managers, but they must maintain confidential information of the HobbyTown franchise system.