Bottom line
- Total investment $350K – $620K including a $50K franchise fee, 4.8% ongoing royalty.
- Average unit revenue of $1.5M/year (median $1.3M). Estimated payback in 5.8 years.
- Rated STRONG with a risk score of 52/100. SBA loan default rate of 0.0% across 177 loans (below the industry average).
- System contracting at -11.3% CAGR over 3 years. Investigate whether closures are franchisor-driven (consolidation) or franchisee-driven (economics).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one HobbyTown unit return on the cash you put in?
Unlevered ROIC · per unit
23%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 HobbyTown units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$365K
on $1.8M purchase
Total debt
$1.5M
SBA $0.9M + senior + seller note
Overview
About
HobbyTown franchisees operate specialty retail stores selling hobby products (model trains, RC vehicles, drones, gaming miniatures, craft supplies, etc.). Day-to-day operations include inventory management, customer service, product demonstrations, community event hosting, and staff scheduling in a typically 2,000–3,500 sq ft storefront.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 35 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
HobbyTown presents cautionary-to-high risk due to contracting unit base, negligible franchisee profitability, lack of earnings disclosure, and headwinds in hobby retail—suitable only for operators with deep category expertise and strong local market positioning.
Score breakdown · what drove the 52 / 100 rating
- 01MINORUnit count declining 6.0% YoY (94 units) indicates system contraction and potential market saturation or performance issues
- 02MINORNet income of only $84,160 on $1.46M average revenue (5.8% net margin) is extremely thin after accounting for 4.75% royalties, rent, labor, and inventory
- 03MEDNo Item 19 (financial performance representations) disclosed — franchisor provides no validated earnings data, making ROI projections unreliable
- 04MINORHigh initial investment range ($350K–$620K) paired with thin margins creates extended breakeven period and elevated risk of underperformance
- 05MINORHobby retail sector faces structural headwinds from e-commerce competition and shifting consumer spending toward experiences
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
99 numbers
One-time purchase · CSV download · Validation questions included
FDD download
HobbyTown · FDD (2025) PDF