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Left behind

Pawn shop franchise has right economy


Is there such a thing as an upscale pawn shop?

The pawn shop industry often is viewed as the financial institution of last hope for poor people, but owners are working hard to reverse that perception.

Money Mizer Pawn & Jewelry operates corporate locations in its Columbus, Georgia, home, Dothan and Phenix City, Alabama, and is building a store in Macon, Georgia. Franchise locations are under construction in Auburn and Enterprise, Alabama.

CEO Robbie Whitten notes the dearth of pawn shop franchises in the industry and believes the time is ripe for such a concept. The rise of the Internet allows employees to quickly determine what an item being pawned is worth - a skill that once took years to develop.

He describes his stores as "a cross between a high-end jewelry store and a Bass Pro Shop." The stores purposely locate in traditional retail areas as stand-alone stores so doctors' and lawyers' wives will feel comfortable coming into shop. Stores have 16-camera surveillance and are run like casinos with a high level of security, Whitten says.


The mainstay of any pawn shop is jewelry, which can usually fetch a good price.

Of the more than 14,000 pawn shops in the country, 85 percent are mom-and-pop operations, says Patrick Kane, founder and CEO of PeoplePawn, based in Seattle. Kane has been in the pawn industry for decades and helped Pawn X-Change grow from two to 27 locations over a five-year period.

Cash America International Inc. has more than 500 pawn outlets, but only a handful are franchised, and that is not a growth model for the company.

Kane is looking for qualified franchisees to operate an expected 10 stores in the Seattle area, and he's also helping individual pawn shop owners with business plans, site selection, training tools and financial presentations.

"This industry is very recession proof," Kane says. "It's getting more spotlight than I've seen in a decade and a lot of positive PR based on how the public has seen the banking industry behave."

The mainstay of any pawn business is jewelry, which is easy to store and can fetch a good price should the person not pay back the pawn.

Money Mizer has seen its sales rise 25 percent in 2008, mainly because of jewelry that sells for 15 percent above the pawn amount.

The origins of pawnbroking go back 3,000 years to ancient Chinese, Greek and Roman civilizations. Queen Isabella is said to have hocked her crown jewels to finance Christopher Columbus' voyage to the New World.

And what works for a queen certainly is good enough for people of increasing incomes who use pawn services.

"The average median household income of people who pawn in our stores is $40,000 to $60,000," Whitten says. "It used to be $30,000 a year, but it's steadily moving upward.


What can you hock? Nearly anything

Most pawn shops will loan money on anything of value, but everyone has their limits. Longtime pawnbroker Patrick Kane draws the line at guns, knives and porn. He also had to turn down a private plane because Washington law requires a pawned asset to be held for a period of time.

But high-end sports cars are fine with Kane and Robbie Whitten, CEO at Money Mizer. "If it eats or uses the bathroom, we don't take it," Whitten says. "We've even had people pull out their gold teeth and lay them on the counter."

Pawn shops have typically been destinations for just about anything, but that's especially true these days. And the jewelry in particular seems to be getting more expensive - like the men's Rolex we found listed at the Northwestern Loan Company in Baltimore, Maryland that was going for the bargain basement price of $14,999.

Other items are simply unusual. Jerry's Pawn Shop in Atlanta lists, for $350, a signed and framed T-shirt and ticket stubs from the 80s heavy metal band The Scorpions.

Whitten and Kane have seen numerous oddities in their days, including a sterling silver burial urn, a Super Bowl ring and Civil War swords and memorabilia.

"I had a guy once try to pawn the wheelchair he was sitting in," Kane says. "We didn't make that loan because I thought it was ethically inappropriate."


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