Does a Type 07 include the right to pawn?

PADoubleX · Feb 27, 2021

Hello All,

I recently applied for my Type 07 FFL, I have a store front in which I’ll conduct my activities. Why a 07 instead of 01? Why not.

I’m curious, not that I necessarily intend to engage in pawn business, But once I have my type 07 does it include the same rights included in a type 02? I’ve researched it and I cannot seem to find anything. If it does not can someone hold multiple FFLs?

My FFL will be held by an LLC, the sole member being a Trust. Why? Liability. I may be involved in firearm and ammunition manufacturing and product liability is difficult to obtain.

Please don’t lecture me about liability, I’ve owned multiple business over the last 30 years, I certainly understand risk. I will obtain product liability insurance as well as GL perhaps not at the limits I desire. LLC and Trust, belt and suspenders. Yes Trust is irrevocable.

Thank you for your comments.

Frank Ettin · Feb 27, 2021

PADoubleX said:
... once I have my type 07 does it include the same rights included in a type 02? ...

You would probably be best off asking the ATF.

Also, if you plan to engage in the business of a pawn broker, you will want to look into state law as well. Pawn brokering is generally heavily regulated under state law and usually (or always) requires a state license.

PADoubleX · Feb 27, 2021

Frank Ettin said:
You would probably be best off asking the ATF.

Also, if you plan to engage in the business of a pawn broker, you will want to look into state law as well. Pawn brokering is generally heavily regulated under state law and usually (or always) requires a state license.

I

Frank Ettin said:
You would probably be best off asking the ATF.

Also, if you plan to engage in the business of a pawn broker, you will want to look into state law as well. Pawn brokering is generally heavily regulated under state law and usually (or always) requires a state license.

It’s not really that difficult to obtain a pawn license:

1. $10,000 capital requirement
2. Pass a criminal background check
3. Have no outstanding tax liabilities to the state unless they are under agreement for installment.
4. Public hearing
5. $2000 bond

Then Normal licensing things like photographs and fingerprints

dogtown tom · Feb 28, 2021

PADoubleX said:
Hello All,

I recently applied for my Type 07 FFL, I have a store front in which I’ll conduct my activities. Why a 07 instead of 01? Why not.

Why not? Oversight. 07FFL have additional recordkeeping requirements and a greater likelihood of a compliance inspection.

I’m curious, not that I necessarily intend to engage in pawn business, But once I have my type 07 does it include the same rights included in a type 02? I’ve researched it and I cannot seem to find anything.

The recordkeeping requirements and procedures for a 02 Pawnbroker are different from that of an 01 Dealer and 07 Manufacturer. Yes, you can hold multiple FFL's but its kinda dumb as each license requires separate records. You want ATF to spend a few weeks for a compliance inspection? Thats whats gonna happen if you have multiple licenses, multiple bound books and multiple sets of 4473's, Multiple Sale forms, etc.
Start reading here:https://www.atf.gov/file/11241/download Use the "Find" feature in your browser for "pawn".

If it does not can someone hold multiple FFLs?

Sure, read the first page of instructions on the Form 7:https://www.atf.gov/file/61506/download

"NOTE: Multiple Licenses - You can apply for more than one license if the business is to be conducted at the same location, by checking more than one type of license in Part A, item #10. If business is to be conducted at multiple locations, a separate application and license fee is required for each business location."

My FFL will be held by an LLC, the sole member being a Trust. Why? Liability. I may be involved in firearm and ammunition manufacturing and product liability is difficult to obtain.

Huh? Obtaining liability insurance is no different whether the licensee is a sole proprietor, partnership, LLC or corporation. If you think sole member "being a Trust" keeps you as an individual from being associated with the license.....you have some reading to do. Every FFL has at least one Responsible Person, that's the name and information you would have entered on pg3 Part B of the Form 7.
For FFL's: "Responsible Person - In addition to a Sole Proprietor, a Responsible Person is, in the case of a Corporation, Partnership, or Association, any individual possessing, directly or indirectly, the power to direct or cause the direction of the management, policies, and practices of the Corporation, Partnership, or Association, insofar as they pertain to firearms."

Please don’t lecture me about liability, I’ve owned multiple business over the last 30 years, I certainly understand risk. I will obtain product liability insurance as well as GL perhaps not at the limits I desire. LLC and Trust, belt and suspenders. Yes Trust is irrevocable.

I don't think anyone will lecture you about liability or the need for insurance, but don't think for one minute that LLC after your business name insulates you from lawsuits.

AlexanderA · Feb 28, 2021

dogtown tom said:
Obtaining liability insurance is no different whether the licensee is a sole proprietor, partnership, LLC or corporation.

The problem is what happens after the liability insurance has paid up to its limit. In the case of a sole proprietorship, the plaintiff can go after the proprietor's personal assets. If the business is a corporation, the potential liability is limited to what is invested in the company.

dogtown tom said:
...but don't think for one minute that LLC after your business name insulates you from lawsuits.

Doesn't protect from lawsuits, but puts a cap on what can be collected.

dogtown tom · Feb 28, 2021

AlexanderA said:
The problem is what happens after the liability insurance has paid up to its limit. In the case of a sole proprietorship, the plaintiff can go after the proprietor's personal assets. If the business is a corporation, the potential liability is limited to what is invested in the company.

Doesn't protect from lawsuits, but puts a cap on what can be collected.

Google "piercing the corporate veil". In a small business its pretty easy to show the only RP or employee was personally liable.
https://www.nolo.com/legal-encyclopedia/personal-liability-piercing-corporate-veil-33006.html

PADoubleX · Mar 1, 2021

dogtown tom said:
Why not? Oversight. 07FFL have additional recordkeeping requirements and a greater likelihood of a compliance inspection.

07FFL allows manufacturing, to me that outweighs compliance inspections. I've been in the food business, USDA has plenty of compliance. As long as you plan to do it right, compliance isn't an issue. Actually compliance can be your ally as they see many many operations and can offer good advice.

The recordkeeping requirements and procedures for a 02 Pawnbroker are different from that of an 01 Dealer and 07 Manufacturer. Yes, you can hold multiple FFL's but its kinda dumb as each license requires separate records. You want ATF to spend a few weeks for a compliance inspection? Thats whats gonna happen if you have multiple licenses, multiple bound books and multiple sets of 4473's, Multiple Sale forms, etc.
Start reading here:https://www.atf.gov/file/11241/download Use the "Find" feature in your browser for "pawn".

I wasn't really interested in the pawn business, I was just curious.

Sure, read the first page of instructions on the Form 7:https://www.atf.gov/file/61506/download

"NOTE: Multiple Licenses - You can apply for more than one license if the business is to be conducted at the same location, by checking more than one type of license in Part A, item #10. If business is to be conducted at multiple locations, a separate application and license fee is required for each business location."

Huh? Obtaining liability insurance is no different whether the licensee is a sole proprietor, partnership, LLC or corporation. If you think sole member "being a Trust" keeps you as an individual from being associated with the license.....you have some reading to do. Every FFL has at least one Responsible Person, that's the name and information you would have entered on pg3 Part B of the Form 7.
For FFL's: "Responsible Person - In addition to a Sole Proprietor, a Responsible Person is, in the case of a Corporation, Partnership, or Association, any individual possessing, directly or indirectly, the power to direct or cause the direction of the management, policies, and practices of the Corporation, Partnership, or Association, insofar as they pertain to firearms."

I don't think anyone will lecture you about liability or the need for insurance, but don't think for one minute that LLC after your business name insulates you from lawsuits.

Product liability insurance is difficult (read expensive to obtain), general liability is easy to obtain. I did not say that a LLC or a Trust Member keeps me from being associated with the license. Part B "Responsible Person Questionnaire" makes that rather clear.

The LLC, as well as other types of structures (Corps) ads a layer of liability protection between me and the lawsuit. The suit would have to "pierce the corporate veil", not impossible but limited to areas of gross negligence and bad faith. Next the "owner" of the LLC is a Trust, the judgement creditor would need to find a way through the Trust to get to me.

Yes, the LLC could be sued, a judgement potentially obtained. A judgement that can't be collected is worthless. The LLC will hold no assets except inventory and raw materials. The equipment is leased. My assets are already in a separate trust.

Thanks for your insight.

Frank Ettin · Mar 1, 2021

Wandering off-topic.

Does a Type 07 include the right to pawn?

PADoubleX

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