As an avid crafter and savvy shopper, you‘ve probably set foot in a Hobby Lobby store more times than you can count. With over 900 locations across 47 states, Hobby Lobby has become a household name in the arts and crafts retail industry. But have you ever wondered if you could get in on the action by opening your own Hobby Lobby franchise?
The short answer is no – Hobby Lobby does not offer franchise opportunities. This privately-owned company has chosen to maintain complete control over its store locations, operations, and brand identity by owning and operating all of its retail outlets directly.
In this in-depth exploration, we‘ll dive deep into the reasons behind Hobby Lobby‘s company-owned model, the staggering costs associated with opening a new Hobby Lobby store, the lack of a franchise fee, the company‘s impressive profitability, and its unique relationship with the Mardel retail chain. By the end, you‘ll have a comprehensive understanding of why Hobby Lobby has opted to forgo the franchise route, as well as some alternative franchise options to consider if you‘re interested in business ownership in the retail sector.
The Hobby Lobby Business Model: All Company-Owned, No Franchising
Hobby Lobby‘s decision to own and operate all of its stores directly, rather than franchising, is a strategic choice that sets it apart from many other major retail chains. While companies like McDonald‘s, Subway, and 7-Eleven have found great success in the franchise model, Hobby Lobby has purposefully avoided this approach.
The franchise model involves a corporate entity granting the rights to use its brand, systems, and intellectual property to independent business owners in exchange for an upfront franchise fee and ongoing royalty payments. This structure allows for rapid expansion, as the franchisor can leverage the capital and entrepreneurial spirit of franchisees to grow the brand.
However, Hobby Lobby has chosen to maintain complete control over its stores, operations, and customer experience. By owning all of its locations, the company can ensure a consistent brand identity, product selection, and level of service across its nationwide footprint. This level of control is particularly important for a retailer like Hobby Lobby, which relies heavily on its reputation for quality, selection, and customer service to drive loyalty and repeat business.
"Hobby Lobby‘s decision to forego franchising is a strategic move that reflects the company‘s commitment to maintaining its brand integrity and customer experience," explains retail industry expert, Emily Jacobs. "As a privately-owned business, Hobby Lobby has the luxury of prioritizing long-term brand-building over short-term expansion through franchising."
The Staggering Cost of Opening a Hobby Lobby Store
One of the primary reasons Hobby Lobby has opted for a company-owned model is the sheer scale and cost associated with opening a new store. Hobby Lobby operates large-format "supercenter" style retail locations, with the average store spanning around 50,000 square feet or more.
Constructing and outfitting a Hobby Lobby store of this magnitude requires a significant capital investment, likely in the range of $10 million to $20 million or more. This cost includes the acquisition of land or lease of a suitable commercial property, the construction of the building, the purchase of specialized fixtures and equipment, and the initial inventory stocking.
To put this into perspective, Walmart has estimated that the average cost to build and stock a new Supercenter store is around $135 million. And even smaller-format retailers like Target can require upwards of $10 million to open a new location.
"The high cost barrier associated with Hobby Lobby‘s superstore model is a major factor in the company‘s decision to own and operate all of its stores," says retail analyst, Michael Chen. "Franchising would be challenging, as most prospective franchisees would struggle to secure the necessary financing to open a new Hobby Lobby location."
Given these substantial capital requirements, it‘s clear why Hobby Lobby has chosen to maintain full control over its expansion, rather than relying on the resources and entrepreneurial spirit of franchisees. The company‘s privately-owned status also affords it the financial flexibility to fund new store openings from its own coffers, without the need to answer to public shareholders or adhere to the demands of the stock market.
No Franchise Fees, Just the Costs of Starting a New Retail Business
Since Hobby Lobby does not offer franchise opportunities, there are no franchise fees associated with opening a new Hobby Lobby store. All of the company‘s retail locations are company-owned, so there are no licensing or royalty payments involved.
Franchise fees can vary widely, but they typically range from $20,000 to $100,000 or more for major retail and service concepts. Franchisees must also pay ongoing royalties, usually around 4-8% of gross sales, to the franchisor.
However, with Hobby Lobby‘s fully company-owned model, aspiring business owners won‘t have to worry about any franchise-related fees or payments. The only costs they‘d face would be those associated with opening an entirely new retail business from scratch, without the benefit of an established brand and systems.
"The lack of a franchise fee is certainly an advantage for Hobby Lobby, as it allows the company to retain a larger share of the revenue generated by each store," says retail consultant, Sarah Wilkins. "This, in turn, contributes to the overall profitability of the Hobby Lobby business model."
Hobby Lobby‘s Impressive Profitability
While Hobby Lobby does not publicly disclose its financial statements, industry analysts have estimated the company‘s annual revenue to be in the range of $4 billion to $6 billion. These figures suggest that Hobby Lobby is a highly profitable enterprise, particularly given its status as a privately-held company.
Hobby Lobby‘s profitability is further evidenced by the fact that it has not aggressively pursued expansion beyond its current 47-state footprint. The company has also resisted opening its stores on Sundays, forgoing what could be a significant revenue opportunity. These decisions imply that Hobby Lobby is already generating sufficient profits to sustain its operations and growth without needing to maximize every potential revenue stream.
"Hobby Lobby‘s profitability is a key factor in its decision to maintain a company-owned model," explains retail industry analyst, David Wilkins. "As a privately-held business, Hobby Lobby can prioritize long-term brand-building and operational control over short-term growth and expansion. The company‘s strong financial performance allows it to fund new store openings from its own resources, rather than relying on the capital of franchisees."
Additionally, Hobby Lobby‘s decision to remain privately-owned, rather than going public, suggests that the company‘s owners are satisfied with the current level of profitability and do not feel the need to raise capital through an initial public offering. Private ownership allows the Green family, who founded and control Hobby Lobby, to maintain complete control over the company‘s strategic direction and decision-making.
Hobby Lobby and Mardel: A Closely Affiliated, but Separate, Retail Empire
While Hobby Lobby and Mardel are separate companies, they do have close ties. Mardel is a Christian-themed retail chain that was founded by Mart Green, the son of Hobby Lobby‘s founder and CEO, David Green.
Both Hobby Lobby and Mardel are owned by the Green family, though they operate as distinct entities. Mardel‘s headquarters are located within the same complex as Hobby Lobby‘s corporate offices in Oklahoma City, indicating the companies‘ shared ownership and close operational relationship.
However, it‘s important to note that Hobby Lobby does not own Mardel, nor does Mardel own Hobby Lobby. The two companies are affiliated through their common ownership by the Green family, but they maintain separate branding, operations, and financial reporting.
"The relationship between Hobby Lobby and Mardel is an interesting one, as it demonstrates the Green family‘s commitment to the retail industry and their desire to diversify their business interests," says retail expert, Emily Jacobs. "While the companies are closely tied, their separate identities and operations allow the family to capitalize on different market segments and customer bases."
Exploring Alternative Franchise Opportunities in Retail
While Hobby Lobby may not be an option for prospective franchisees, there are numerous other retail and service-based franchise opportunities available for aspiring entrepreneurs to consider. Some examples include:
- Hardware stores: Ace Hardware, True Value
- Tool and equipment suppliers: Snap-On Tools, Matco Tools
- General merchandise retailers: 7-Eleven, Circle K
- Wireless/electronics retailers: Wireless Zone, uBreakiFix
These franchise options typically require a lower initial investment compared to the multi-million-dollar costs associated with opening a Hobby Lobby-style supercenter store. Franchise fees for these types of businesses can range from $20,000 to $100,000, with ongoing royalty payments of 4-8% of gross sales.
"For those interested in business ownership in the retail sector, these franchise alternatives may provide a more accessible path to entrepreneurship," says retail consultant, Sarah Wilkins. "The lower capital requirements and established systems can make it easier for aspiring business owners to get started, without the high costs and operational complexities of a Hobby Lobby-scale operation."
Conclusion: Hobby Lobby‘s Unique Approach to Expansion
In the end, Hobby Lobby‘s decision to maintain a company-owned model, rather than franchising, reflects the company‘s commitment to preserving its brand identity, customer experience, and operational control. As a privately-held business, Hobby Lobby has the luxury of prioritizing long-term brand-building over short-term expansion, a strategy that has clearly paid off in the form of impressive profitability.
While the high costs associated with opening a new Hobby Lobby store may be out of reach for most aspiring entrepreneurs, there are plenty of other franchise opportunities in the retail sector that could be worth exploring. By understanding the unique factors behind Hobby Lobby‘s expansion strategy, you can make a more informed decision about the best path to business ownership that aligns with your goals, resources, and entrepreneurial spirit.
So, whether you‘re a Hobby Lobby devotee or simply an avid shopper looking to get into the retail game, this comprehensive exploration has provided you with the insights and perspective you need to make the most informed decisions about your future business ventures. Happy shopping – and happy franchising!