Applying for an FFL

[TrickyDick]

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.

I think you may be missing my intent. I know supply is low, and I know that I'm not going to make a killing selling guns from my home. I have a good full time job, benefits and all. I figure it'll be awhile before I become well established, also this is a side thing to help out while in school when I finally have to quit my FT job. My wife makes more money than I do, so I'll really just be helping out during that time. I'm not looking for a get rich quick scheme. if the FFL thing doesn't prove to be profitable, then I'll just get a PT job as well.

 

[rbernie]

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.

It's actually harder than that - you can't order something that shows zero stock with your distributors. You can call the distributor's sale rep and ask to put you on a list, but you will be serviced behind the more lucrative /higher volume dealers (if they even offer to put you on a list at all). That's the point that Tom is trying to make - there is literally zero way for you to guarantee yourself a spot in line for any high-demand items, and certainly no way for you to be price-competitive with the big shops. How long is your neighbor gonna wait for you to get it, when Academy has it in stock and is selling it for the same / less than you can?

If you want to be a stocking dealer, you'll quickly find yourself ordering anything that comes available (meaning that you'll wind up with Caniks and such, because you're not getting Sigs and Glocks) and spending a lot of your free time trolling the distribution inventory, hoping to get a nugget here and there.

This is why most folk's business plans start out with transfers; it's easier to compete with the bigger stores (since they commonly overprice transfers, as a form of nuisance tax) and the customer is responsible for finding the product - not you. It does require that you be very focused on the paperwork / legal side of things, but if you're gonna be an FFL then you better be ready for that in advance anyway. The downside to focusing on transfers is that there are a ZILLION people just like you (look through the GB FFL listing for a given zip code), and you'll need to figure out how to compete in that market.

 

[MAKster]

In the current environment a new FFL operating from home is not going to be able to get any product from distributors. Even FFLs who have long term business relationships with distributors are only getting a dribble of product. They won't even respond to you. So your only way to aquire guns to resell will be buying used guns from individuals.

You might want to watch this video from MarksmanTV. He runs a gun store and since the Covid buying panic he has done a series of videos on how the gun business has changed and how he has adjusted.

 

[Captcurt]

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.

I got my license just before I retired so this is a part-time home-based business that also gets me guns at wholesale price. For several years I would have 100-150 guns listed on GunBroker at all times. Now I keep it down below 50 and charge enough on consignments to weed out the junk that sells for $100. Most now sell for $500+ and I have a Krieghoff listed now for $8000. Like I've said in other post, I get to see some neat stuff.

 

[herrwalther]

It's actually harder than that - you can't order something that shows zero stock with your distributors. You can call the distributor's sale rep and ask to put you on a list, but you will be serviced behind the more lucrative /higher volume dealers (if they even offer to put you on a list at all). That's the point that Tom is trying to make - there is literally zero way for you to guarantee yourself a spot in line for any high-demand items, and certainly no way for you to be price-competitive with the big shops. How long is your neighbor gonna wait for you to get it, when Academy has it in stock and is selling it for the same / less than you can?

I understand the point Tom and you are trying to make. I was just using my own example of it.

 

[MachIVshooter]

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.

If you're planning to just do retail, why did you go 07? Type 01 is $200 first time, but only $90 for renewals, and doesn't come with the same zoning/code/HOA reg headaches. If you're trying to do it from your home and are in any kind of a PUD/HOA, you may have problems with that and have to start over with an 01 application. Even a lot of commercial properties are not zoned for manufacturing/light industrial. Unincorporated rural areas often don't have any prohibitions, but you still want to check that stuff. I run on my own property in a dedicated facility, and I'm zoned residential ag 1 so good to go with light industrial stuff as long as manufacturing operations don't produce excessive noise, smoke, odors, etc, but 1/4 mile away on the other side of the country road is a PUD, and even though the properties have some acreage, they are far more restricted and cannot run this type of business.

If you're not going to do gunsmithing or actual manufacturing, usually best to just do FFL01.

 

[herrwalther]

If you're not going to do gunsmithing or actual manufacturing, usually best to just do FFL01.

That is why I am going for the 07. Repairing firearms can sometimes involve making or ordering serial numbered parts. As an 07, I won't have the same limitations as a 01 dealer that plays too close to the ATF definition of manufacturing. My FFL business is going to be majorly focused on gunsmithing with not as much emphasis on retail.

 

[TrickyDick]

So I recall looking into this awhile back and just never did it, and now that I'm looking back into it, I am starting to remember why I didn't do it then.

I wanted to form an LLC for the FFL as a means of liability protection. The cost of that looks to be about $250, which would bring it up to just under $500.

At this point, is it worth the investment for me, and of course, that decision lies solely with me.

 

[MachIVshooter]

That is why I am going for the 07. Repairing firearms can sometimes involve making or ordering serial numbered parts. As an 07, I won't have the same limitations as a 01 dealer that plays too close to the ATF definition of manufacturing. My FFL business is going to be majorly focused on gunsmithing with not as much emphasis on retail.

You don't need an 07 for direct parts replacement, and replacing a seriazed frame or receiver you didn't originally manufacture will require a normal 4473 transfer. Only the OEM can replace without a transfer being necessary.

Yes, if you plan to manufacture receivers or build firearms on bare receivers, that's 07 or 10 territory. So is barrel threading or rechambering/rebarreling to a different cartridge.

Be sure to keep your books straight. Thats always important, and all of us with dealer, manufacturer or importer FFL have to report acquisition and disposition aggregates upon renewal, but with an 07 or 10, you also have to file a 5300.11 every year, and you are responsible for the FET on any firearms you build, including putting together firearms on receivers/frames you purchased.

 

[herrwalther]

You don't need an 07 for direct parts replacement, and replacing a seriazed frame or receiver you didn't originally manufacture will require a normal 4473 transfer. Only the OEM can replace without a transfer being necessary.

Yes, if you plan to manufacture receivers or build firearms on bare receivers, that's 07 or 10 territory. So is barrel threading or rechambering/rebarreling to a different cartridge.

Be sure to keep your books straight. Thats always important, and all of us with dealer, manufacturer or importer FFL have to report acquisition and disposition aggregates upon renewal, but with an 07 or 10, you also have to file a 5300.11 every year, and you are responsible for the FET on any firearms you build, including putting together firearms on receivers/frames you purchased.

Thanks for the tip. I was on the fence between 01 and 07 for a few months before applying. I talked to an ATF agent and laid out a plan for what I wanted to do. I think what caught his interest, and recommendation for an 07 was I wanted to build ARs for customers. Among some other things.

 

[dogtown tom]

So I recall looking into this awhile back and just never did it, and now that I'm looking back into it, I am starting to remember why I didn't do it then.

I wanted to form an LLC for the FFL as a means of liability protection...

Simply having your business as an LLC or corporation doesn't guarantee that a plaintiff wont come after you personally.
https://www.nolo.com/legal-encyclopedia/personal-liability-piercing-corporate-veil-33006.html