If you‘re an arts and crafts enthusiast or home decor aficionado, you‘ve likely spent hours happily browsing the aisles of your local Hobby Lobby store. With its wide selection, attractive displays, and affordable prices, Hobby Lobby has become a go-to destination for millions of shoppers.
As a savvy consumer and aspiring entrepreneur, you may have wondered: is Hobby Lobby a franchise? Could I open my own store and get in on the action? In this comprehensive article, we‘ll explore Hobby Lobby‘s business model, history, competitive advantages, and franchise potential.
Whether you‘re just curious or actively considering your retail franchise options, this deep dive will give you all the insights you need. Let‘s get started!
Hobby Lobby Company Overview
First, let‘s look at some key facts and figures about Hobby Lobby as a company:
- Founded in 1972 in Oklahoma City, OK
- Privately held and owned by the Green family
- 900+ stores across 47 states
- 43,000+ employees
- $5 billion in annual revenue (estimated)
- 70,000+ items per store
- 50,000-60,000 sq. ft. average store size
Hobby Lobby has experienced tremendous growth over the past few decades. Here‘s a chart showing how the company‘s store count has increased over time:
| Year | Store Count |
|---|---|
| 1980 | 6 |
| 1990 | 50 |
| 2000 | 172 |
| 2010 | 479 |
| 2020 | 900 |
As you can see, Hobby Lobby went from a single store in the 1970s to a national chain with a presence in nearly every state. This growth has been entirely self-funded – the company has never gone public or sold ownership shares to outside investors.
So how has Hobby Lobby achieved this level of success? Let‘s take a look at some of the key elements of its business model and competitive advantages.
Hobby Lobby‘s Business Model
Hobby Lobby operates as a big-box category killer in the arts and crafts retail space. Its massive stores offer an unparalleled selection of over 70,000 items across departments like:
- Arts and hobbies
- Crafts and jewelry making
- Seasonal decor
- Home accents
- Party supplies
- Fabrics and sewing
- Frames and wall art
- Floral and wedding
By offering such a wide assortment, Hobby Lobby aims to be a one-stop-shop for your creative projects. And unlike specialty retailers that just focus on one niche, Hobby Lobby attracts a broader customer base.
One unique aspect of Hobby Lobby‘s business model is its commitment to closing on Sundays. According to the company‘s statement of purpose, this policy is meant to "allow employees time for family and worship." While closing one day a week undoubtedly means leaving some sales on the table, Hobby Lobby believes it‘s the right thing to do.
Another pillar of Hobby Lobby‘s model is selling products at everyday low prices and offering regular sales and coupons. The company uses its buying power to source products directly from a wide range of vendors, from big brands to small artisans. According to a 2018 Forbes article, Hobby Lobby works with around 5,000 suppliers worldwide to keep its shelves stocked.
Competitive Advantages
So what sets Hobby Lobby apart in an increasingly competitive retail landscape? Here are a few key areas where the company has an edge:
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Selection – With 70,000+ items in most stores, Hobby Lobby offers unparalleled variety and choice for shoppers. It‘s a crafter‘s paradise.
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Pricing – By sourcing directly, running an efficient supply chain, and keeping operating costs low, Hobby Lobby is able to undercut competitors on price for many items. Regular sales and coupons drive loyalty and foot traffic.
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Store experience – Hobby Lobby stores are known for their attractive merchandising displays, wide aisles, and helpful employees. The company invests heavily in store design and layout to keep customers coming back.
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Brand and reputation – Many shoppers are drawn to Hobby Lobby‘s faith-based culture and values. The company frequently runs newspaper ads on Christian holidays and supports various ministries and charitable causes.
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Real estate – Over decades of growth, Hobby Lobby has amassed a sprawling real estate portfolio. It owns many of its store locations and has optimized its geographic footprint. Careful site selection in high-traffic centers draws customers.
Retail industry expert and consultant Steven Dennis sums it up well: "Hobby Lobby has done an exceptional job of carving out a defensible niche. By combining broad selection, competitive prices, and a unique shopping experience, they‘ve become a category leader."
Why Hobby Lobby Doesn‘t Franchise
Now back to our original question: is Hobby Lobby a franchise? The short answer is no. Hobby Lobby is a privately held company that owns and operates all of its retail stores. It does not offer franchise opportunities to independent owner-operators.
This may come as a surprise or disappointment to some entrepreneurs who love the Hobby Lobby brand and see its growth potential. After all, franchising is a popular expansion strategy for many chain retailers and restaurants. So why not Hobby Lobby?
There are a few key reasons behind the company‘s decision:
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Control and consistency – By owning all stores itself, Hobby Lobby maintains complete control over the customer experience, merchandise selection, pricing, promotions, and brand image. It doesn‘t have to worry about franchisees deviating from its standards or values.
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Capital and financing – New Hobby Lobby stores cost millions of dollars to build out and stock due to their large size. Funding the real estate, inventory, equipment, and labor is very cash-intensive. As a profitable private company, Hobby Lobby has been able to expand using its own capital, lines of credit, and cashflow without needing franchisee investment.
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Complexity – Executing the Hobby Lobby store model is incredibly complex. The company has built robust systems for everything from site selection to store design to inventory management. Providing the necessary infrastructure, training, and support to franchisees would require massive additional corporate overhead.
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Values and culture – Hobby Lobby‘s faith-based culture and commitments like closing on Sundays are central to its brand. Maintaining this unique identity with a network of independent owners would be much harder than with a fully company-owned model.
For these reasons, Hobby Lobby has strategically chosen to grow and operate without franchising. As founder and CEO David Green explained in his book ‘Giving It All Away‘, "Hobby Lobby is a brand that will never franchise because it‘s a very complex model that we want to control."
Hobby Lobby Franchise Cost
Although it‘s a moot point since Hobby Lobby doesn‘t franchise, you might still be curious what it would cost to theoretically open a store. While the company doesn‘t disclose detailed financials, here‘s a rough estimate based on comparable retailers:
- Franchise fee – $50,000
- Real estate and construction – $1-3 million
- Inventory – $500,000+
- Fixtures and equipment – $300,000+
- Training and pre-opening – $50,000+
- Working capital – $200,000+
All in, a new Hobby Lobby franchise location would likely require a minimum of $2-4 million in startup capital, plus ongoing royalties and marketing fees. That‘s significantly higher than many other franchise opportunities.
For comparison, here are the estimated initial investments for some popular retail franchises according to FranchiseDirect:
| Franchise | Initial Investment |
|---|---|
| Ace Hardware | $286K-$1.1M |
| The UPS Store | $169K-$398K |
| GNC | $192K-$366K |
| Matco Tools | $87K-$280K |
| Wireless Zone | $93K-$225K |
As you can see, Hobby Lobby‘s theoretical franchise cost is on a totally different scale than most due to its size and inventory levels. This high barrier to entry for franchisees is another reason the company has likely chosen to self-fund its growth rather than franchising.
How to Evaluate a Franchise Opportunity
So if Hobby Lobby is off the table, how can you find the right franchise opportunity for you? Here‘s a quick checklist of factors to consider:
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Industry and market – Is the franchise in a growing, stable industry with long-term demand? How competitive is the market?
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Brand strength – Does the franchise have strong brand recognition, differentiation, and customer loyalty?
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Unit economics – How much revenue and profit do typical franchise locations generate? What are the margins and ROI?
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Franchisor support – What training, marketing, technology and operational support does the franchisor provide? Do they have a good track record?
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Territory and scale – Is the franchise a good fit for your target market in terms of demographics, competition, and real estate? Does it have growth potential?
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Alignment – Do the franchise‘s values, culture and offering align with your goals and strengths as an owner-operator?
Carefully scrutinize the franchise disclosure document (FDD), speak with current franchisees, and consult with legal and financial professionals before making a franchise investment. Look for a proven model with strong unit economics and a supportive franchisor.
The Bottom Line
While Hobby Lobby may have some attractive qualities as a potential franchise, the fact is that the company is not and will likely never be a franchise opportunity. Its massive scale, unique culture, and preference for control and consistency make franchising an ill-suited strategy.
However, there are still plenty of great franchise options out there for aspiring retailers. Focus on finding an opportunity that plays to your strengths, aligns with your values, and offers strong economics in your market. With hard work and solid execution, you can build a successful retail business as a franchisee.
