10 questions to ask yourself before you buy a pawnbroker franchise


Dickensian ideas of a small man hunched over the books, taking pledges in a dingy back-street shop are seriously out of date.

Pawnbroker franchises are increasingly modern, primarily offering loans secured on personal property to customers in short term need. They also act as an alternative high street retailer of pre-owned goods, selling on items to new customers for a profit.

Wth UK personal debt at an all-time high of £1.43 trillion, buying a pawnbroker franchise is a safe bet. But have you considered all the financial, retail and even criminal logistics involved?

1. Can you recognise value?

If you’re always good at guessing the values of items on The Antiques Roadshow or bagging a bargain on eBay then you will be suited to pawn-broking. With practice, you’ll be quickly and correctly assessing the value of items like jewellery and electronics products. 

Valuation can also be trend-lead, so it's important that your finger is on the pulse, what people are prepared to pay to get their hands on certain things, and when this may tail off.

2. How good is your maths?

If you have no head for figures then you may struggle.  Being well-versed in interest rates and regulated fee structures is important. 

If you’re organised and like to know who owes who what (are you the person that calculates the bill at a group dinner?) you’ll be ready to deal with any defaulters or changes loan customers want to make.  

Together with your franchisor you are able to set interest periods and rates for individual customers and use your maths skills to set values for items offered for sale. 

3. Are you a people person?

Pawnbrokers invariably find themselves providing personal finance services as well as being salespersons. 

Customers will look to you for financial advice, so if you’re able to provide this in a friendly manner, you’ll be streets ahead in  establishing and maintaining good client relationships. 

Getting to know your customers could help you determine who pays their loans on time and who doesn’t, and will give you flexibility to be generous with your terms. 

4. Are you happy with the franchise model?

Pawnbrokers in the franchise system remain an independent business that is conducted via premises – you operate your own shop, running what is known as a turnkey business, although the franchisor is there to help you with financing, negotiating leases, staff hiring and marketing.  

You will be taking on existing branding with a strong theme that must be used on your signage inside and out. Ask yourself whether adhering to a strong brand identity appeals to you or whether you might prefer to run an independent pawnbroker shop.

5. Can you run a dual business?

A pawnbroker franchise is all about community support and ensuring that your business is welcoming to people who may have urgent financial problems. But you can’t afford to alienate potential shoppers who aren’t interested in money-lending issues and just want to nose around in your shop and pick up a bargain. 

These two different types of customer are at the heart of the business and are instrumental in driving continued growth. Pawnbroker franchisees are committed and passionate about their shop, so consider whether you have that determination to succeed in a two-pronged business.

6. Can you deal with an uncertainty?

Before becoming a franchisee you will spend time behind the pawnshop counter to see what the business is really like – something that is encouraged by franchisors like Cash Brokers. Existing franchisees will give valuable advice and tips on how to deal with customers who default (i.e. don't pay on time) on their loaned goods.

This uncertainty means that a pawnbroker has to regularly decide when and how to resell goods in order to recoup on investment. And some people may return to redeem their pawned items later than they have agreed - knowing when to sell and when to keep things makes for good pawn-broking.

7. Are you happy to work with the police?

Most customers of a pawnbroker franchise are decent, honest people. However the odd unsavoury character may want to sell stolen items to you. You will learn tricks like checking the serial number of electronics products, and where necessary submitting your goods lists to the police. 

On the rare occasion that this happens, if you haven’t reported suspect goods to the police when you receive them, the pawnbroker can be charged with receiving stolen merchandise. If you’re happy to work closely with local police you’ll have nothing to fear.

8. Do you love paperwork and storage?

Ok, so nobody loves paperwork, but a pawnbroker needs to be well-versed in recording information on everything that they acquire and sell. 

Keeping these lists helps maintain your reputation as an honest and reliable business, and they’ll help you organise testing items to check that they’re in sound condition too.  

You’ll also need to store all of the goods that you secure loans on so many pawnbrokers have a warehouse attached to the back of the shop. If you can handle organised storage and run the lists of what is where to quickly find items for loan completers then you’ll do well in this sector. 

9. Do you want to make dreams come true?

The Cash Converters pawnbroker franchise is going from strength to strength, wanting to give back to the community. Their franchisees have been working with the Dreams Come True charity to help terminally or seriously ill children turn their dreams into a reality. 

If you like the idea of helping others less fortunate, and using your influence to raise both money and the charity’s profile then becoming a Cash Converters franchisee will suit you. 

10. When can you start?

With no experience required, you can decide whether a pawnbroker franchise is right for you. All franchisors will provide extensive training and detailed procedures to ensure that you can run this specific type of recession-proof business.

If you’re looking for a unique business operating both retail and financial services from sharp-looking stores then you don’t need to answer any more questions! With many first time franchisees opening multiple stores you could soon join them.

About The Author

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Sarah Louise Dean Writer
Sarah Louise produces content across all titles in the Dynamis stable.