Applying for an FFL

[TrickyDick]

So for awhile, I've considered getting a standard FFL to sell firearms on the side. Right now I have a C&R FFL for myself, but would like to try dealing since I know a lot of people who always ask me what they should buy or what I think of a certain firearm.
Right now, I'm work full-time as a machinist and am going to school part time. When I graduate, I'll have to quit my job to go-to law school full-time. At this point, I hope to have had my FFL for awhile and established myself as a dealer.

Question is, should I bother and is it worth it?

 

[General Geoff]

Maintaining an FFL is a labor of passion, not profit

 

[CapnMac]

Probably ought to ask our storied @dogtown tom about this, as he has considerable experience.

 

[MachIVshooter]

Question is, should I bother and is it worth it?

Probably not, but that's a decision you'll have to make. Do you want people pestering you constantly with "has my gun showed up yet?" and then having to coordinate for their background check in your free time? Is there going to be someone around during the day to receive/sign for the packages? If not, are OK with having to reschedule deliveries, and are you comfortable with delivery drivers sometimes just leaving firearms on your porch if nobody is home? Because they will.

On the business side of it, you do have to be engaged in the business. You can be by appointment only, but you need to be selling or doing transfers. ATF may get cranky with you if your books are composed almost entirely of personal acquisitions. FFLs other than 03 are explicitly NOT for enhancing personal collections.

Type 01 isn't very expensive, but you still have the same record keeping requirements as any other, and are still subject to ATF compliance inspections. Make sure you're on top of bookkeeping; clerical errors are what get most FFLs in trouble, some acquisition or disposition that wasn't recorded properly (or at all). "Missing" firearms are a problem. If you're planning to run it from your home, make sure your zoning or HOA doesn't prohibit it. If you're wanting to play the NFA game, that increases the cost, $500 or $1,000 annually for 03 SOT, depending on your revenue (most small shops and "kitchen table" end up being the reduced $500)

 

[TrickyDick]

Well I do plan on doing transfers as the guy I used to use closed up shop because he wanted to focus on his herbalife business, and my wife is an accountant so she can help me there. I don't plan on using it to make my collection bigger, I'd rather use the money for my lack of working while going to school

 

[Captcurt]

It is a hard row to hoe, or at least it is in North Arkansas. What I have found is a home-based dealer does not get access to guns that larger dealers can get. Many of the new offerings are allocated and go to the distributors best/biggest dealers. I had to buy my Glock 42 from my LGS because I couldn't get it from any of my 4 distributors. He sold it to me at wholesale because I sell some of his high-dollar guns online for him. He normally sells 10% over his cost. I'm lucky to make 5% on a new gun. That is why I lean towards online sales. It is someone else's guns and I don't have to run ground checks.

Besides inventory problems there is always the time factor. You are pretty well tied down if you have guns coming in because you are supposed to sign for them. Today I wanted to hunt the last day or our gun deer season, but no-o-o. I had 2 guns shipping out on Fedex and a customer bringing me 7 guns to list online. There is always something.

 

[dogtown tom]

....Question is, should I bother and is it worth it?

Ask yourself if going to law school is worth it.
Seriously, no one can answer that but you. We don't know your work ethic, how much time you plan to spend on yor gun business or anything about your market.

I'm a school teacher and do 2,000 gun transfers a year part time. But I have a million people within a twenty minute drive of my house. That means my business plan will look entirely different than a home based dealer an hour away.

Determining whether its worth it means doing some market research and a business plan.

 

[dogtown tom]

Maintaining an FFL is a labor of passion, not profit

If you aren't earning a profit, you ain't in business, but a hobby.

 

[dogtown tom]

It is a hard row to hoe, or at least it is in North Arkansas. What I have found is a home-based dealer does not get access to guns that larger dealers can get. Many of the new offerings are allocated and go to the distributors best/biggest dealers.

One of the "Top 100" dealers on GunBroker lives a mile away from me. He's a former customer and only does online sales. From home. He can't do transfers because of his HOA.
"Home based" does not always equal low volume.

.... I'm lucky to make 5% on a new gun. That is why I lean towards online sales. It is someone else's guns and I don't have to run ground checks.

Besides inventory problems there is always the time factor. You are pretty well tied down if you have guns coming in because you are supposed to sign for them. Today I wanted to hunt the last day or our gun deer season, but no-o-o. I had 2 guns shipping out on Fedex and a customer bringing me 7 guns to list online. There is always something.

UPS Store account for deliveries from UPS/FedEx/USPS. I pick up that days deliveries after school.

 

[hso]

How to you intend to get inventory in this time?

 

[TrickyDick]

How to you intend to get inventory in this time?

Well, I understand times right now are different, but I figured I could just become established and in time, start doing more business. Law school shouldn't be more than a couple years away.

 

[Captcurt]

One of the "Top 100" dealers on GunBroker lives a mile away from me. He's a former customer and only does online sales. From home. He can't do transfers because of his HOA.
"Home based" does not always equal low volume.

I don't know what you consider low volume. I sell an of average $100,000 worth of guns a year online. If I really sat down and figured my time and expenses I doubt if I make minimum wage. I do get to see some really nice guns though.

 

[243winxb]

Many of the new offerings are allocated and go to the distributors best/biggest dealers.

Just what my gunsmith told me 2 days ago. Many distributors don't sell to the little basement FFL dealer.

Told me to order online & have it shipped to his FFL address. Taurus G3c is on its way.

 

[tark]

"Missing" firearms are a problem.

Amen to this. When I worked for Les we came up short on three serial #s. All Monolith frames. The ATF was all over us like flies on feces. Never did find the missing #s Big fines resulted.

 

[Captcurt]

Many distributors don't sell to the little basement FFL dealers.

This is true. Some require that you have a store front.

 

[dogtown tom]

I don't know what you consider low volume. I sell an of average $100,000 worth of guns a year online. If I really sat down and figured my time and expenses I doubt if I make minimum wage. I do get to see some really nice guns though.

May be your business plan is lacking.
Pretty much all I do are transfers and a couple hundred silencer sales and I sure as heck make more than minimum wage.

 

[rbernie]

Many distributors don't sell to the little basement FFL dealer.

I know more than a few small dealers who belong to buy groups like NBS, as a specific counter to this dynamic. Of course, there are also OEM's who only sell direct, but sadly many of them also have highly unrealistic order minimums (looking at you, Beretta).

 

[dogtown tom]

....Many distributors don't sell to the little basement FFL dealer...

Like who?
I'm home based (no basement because its Texas) and haven't had any distributor refuse to sell to me. RSR refuses to ship to my shipping address and only to my premises. So guess who 90% of my business goes to? Zanders and Lipseys.

BTW, a lot of those distributors that refused to do business with "little" FFL's? They gone. Died. Belly up. Bankrupt. Hows that working out?

 

[herrwalther]

I am in the wait process for my FFL. I applied for a regular 07/manufacturer license (No SOT). I am waiting for my ATF interview with my local agent. My advice is to apply now, as the application can take weeks if not months to approve or deny. The fee you pay ($150 for 07) is for three years. I feel that is worth it. If you can make a decent profit in 3 years keep going, if not, you can close up shop and focus on law school.

As far as getting from distributors, not that I have heard. You may get lower priority compared to big shops but you will still get what you order. Ammo is much harder for stores to come by.

 

[TrickyDick]

I assume that most of my money will be made in transfer fees, but I'm sure that some friends/customers will request me to order certain firearms for them.

 

[rbernie]

I'm home based (no basement because its Texas) and haven't had any distributor refuse to sell to me

In fairness, quite often the issue isn't as much that an OEM or wholesaler won't sell to a small entity but that the small business won't get the same pricing breaks ('order twelve of these and get a free that') as the larger / higher-volume outfits. This is less of an issue for things that are specialty items, but more of an issue if the small FFL is trying to compete with the big boys.

 

[dogtown tom]

....As far as getting from distributors, not that I have heard. You may get lower priority compared to big shops but you will still get what you order.....

Who told you this?
I ask because high demand inventory at distributors is always allocated by the sales teams largest and best accounts.
Being that you aren't yet an FFL you have a rude awakening on what guns you are going to be able to get.

 

[herrwalther]

Who told you this?
I ask because high demand inventory at distributors is always allocated by the sales teams largest and best accounts.
Being that you aren't yet an FFL you have a rude awakening on what guns you are going to be able to get.

Other, newer FFLs that got approved. Most of which are home based that have been approved in the last 6 months. Those FFLs have been saying longer ship times. A week as compared to 2 days, quite minor. And no I am not an FFL, so I defer to your wisdom.

 

[dogtown tom]

I assume that most of my money will be made in transfer fees, but I'm sure that some friends/customers will request me to order certain firearms for them.

And they will be disappointed.
First, they assume you can order a Glock 19, Sig 320, etc and have it next weekend.......and sell for less than Academy/Bass Pro/Cabelas/etc.
Second, you won't find it in stock at any distributor.
Thirdly, online retailers who order millions of dollars of firearms every month (like Bud's, PSA, Kentucky Gun, Academy, etc) will be in line way ahead of you for product. And thats the way it should be.

Lastly, before you spend a nickel on getting your FFL, sketch out a business plan. While demand for guns is extremely high right now, the supply isn't. That's a recipe for disaster for someone looking to invest time and money into a new gun business. Almost like starting a new airline during a pandemic.

 

[herrwalther]

Thirdly, online retailers who order millions of dollars of firearms every month (like Bud's, PSA, Kentucky Gun, Academy, etc) will be in line way ahead of you for product. And thats the way it should be.

This is akin to what I was talking about. If I order a single Glock 19 for my neighbor down the street (as an FFL) I am not expecting to get it before the Academy 5 miles away that ordered 200 of them.