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-   -   How to start a class III FFL? (http://forum.e46fanatics.com/showthread.php?t=959610)

david05111 12-06-2012 11:18 PM

How to start a class III FFL?
 
I've known I could get a demo letter for a while, but I didn't know that I could open an FFL and use the letter from an agency in a different state to acquire weapons for testing...I just found this out today.

So, I'm looking to get the paperwork done quickly and get started on this. The demo letter I'll have is only valid for one year, so that gives me one year to acquire as many cool toys as I can for the FFL. I know this gets me access to post-samples...I'm not sure if it grants me access to order any weapon I want from any manufacturer (for instance, a brand new M4A1 direct from colt).

Anyone know how to start the process? I'm aware that there is an interview, etc. after the paperwork is filed...

Adam@Euro-Spec 12-07-2012 07:56 AM

No idea but that would be awesome if you got it done...I saw a pair of post ban mp5 samples sell for about $6k :drool:

How is fl with setting up a FFL? Md a big problem is zoning and you now basically need a location...they are cracking down on giving out home FFLs.

jott5555 12-07-2012 08:37 AM

You cannot just get an FFL license to collect unless its for relics, you need to have a legitimate business and be selling firearms otherwise you cannot qualify for one. Also be prepared to shell out some cash for the Class III, And even if you did get the license once you had the firearms as soon as you close your business you have to either transfer them to another FFL dealer or destroy the fire arms.

Also it is not a quick process it takes up to 60 days.

tailo 12-07-2012 11:19 AM

Yup, not for collecting.

The ATF will put a stop to that REAL quick. The post sample thing is not as easy as it sounds. IIRC each demo letter is good for 1 firearm and good luck finding somebody who will give you one right off the street. You cant have multiples and you are restricted to 1 of each type.

david05111 12-07-2012 11:21 AM

Quote:

Originally Posted by Adam@Euro-Spec (Post 14958969)
No idea but that would be awesome if you got it done...I saw a pair of post ban mp5 samples sell for about $6k :drool:

How is fl with setting up a FFL? Md a big problem is zoning and you now basically need a location...they are cracking down on giving out home FFLs.

I have access to a few commercial locations, any one of which I could tack it on to. I'd do it out of the house, but you're right. I don't want the liability or people coming into my place and zoning is tricky.

Quote:

Originally Posted by jott5555 (Post 14959003)
You cannot just get an FFL license to collect unless its for relics, you need to have a legitimate business and be selling firearms otherwise you cannot qualify for one. Also be prepared to shell out some cash for the Class III, And even if you did get the license once you had the firearms as soon as you close your business you have to either transfer them to another FFL dealer or destroy the fire arms.

Also it is not a quick process it takes up to 60 days.

It's not just to collect. I'll do transfers and sell a few things hopefully. Transfers will be cheap, like 5-10 bucks for anything. Just enough to cover my cost of doing them; I couldn't care less about making a ton of money with it. It's purpose will be to cut some of the fat off the fees other FFL's charge for stuff that shouldn't be that expensive. $50 transfers are a joke and are just sticking it to people. Access to bottom dollar prices on all sorts of stuff will be beneficial to friends, family, and other acquaintances and customers as well. If I recall, I read somewhere that the fee is like $500/year for a class III. That's not too bad and I'll hopefully offset that with some sales. I plan on keeping it open.

Also, pre-ban dealer samples you CAN KEEP if you close up; they just can't be held personally or be transferred to family in the event of your death. They must be sold to another dealer at that point.

david05111 12-07-2012 11:24 AM

Quote:

Originally Posted by tailo (Post 14959401)
Yup, not for collecting.

The ATF will put a stop to that REAL quick. The post sample thing is not as easy as it sounds. IIRC each demo letter is good for 1 firearm and good luck finding somebody who will give you one right off the street. You cant have multiples and you are restricted to 1 of each type.

The Sherriff in question is a family friend; I have no doubt he'll give me as many as I want. See above post for collecting response.

So each letter is valid for only one weapon? So I'd have to make a list, get letters drafted for each weapon, and then proceed from there?

tailo 12-08-2012 07:41 AM

Yeah but your getting ahead of yourself a bit. I have no first hand experiance with the process myself because I'm not a sot. I do however have plenty of experiance with them.

I believe you need to hold a valid FFL for something like 3 months before you can apply to be a class III dealer or manifatuer. I would actually become a manifactuer myself because IIRC its the same cost only difference is you could build them if you wanted.

The problem is ATF wants you to have a store front for your standard FFL, I dont believe they will allow a home operation. When you start doing class III you can do it out of your home then. Mine does it in a small shed in his back yard.

You will open yourself up to inspections any time of the day or night and your security and bound books better be 100%

The way to make it a valid business is stock a few cans and undercut all your local dealers on transfer fees. Around here they transfer for $75- $200 per transfer.... do $50 or so and you will have all the business.

david05111 12-08-2012 11:25 AM

Quote:

Originally Posted by tailo (Post 14961613)
Yeah but your getting ahead of yourself a bit. I have no first hand experiance with the process myself because I'm not a sot. I do however have plenty of experiance with them.

I believe you need to hold a valid FFL for something like 3 months before you can apply to be a class III dealer or manifatuer. I would actually become a manifactuer myself because IIRC its the same cost only difference is you could build them if you wanted.

The problem is ATF wants you to have a store front for your standard FFL, I dont believe they will allow a home operation. When you start doing class III you can do it out of your home then. Mine does it in a small shed in his back yard.

You will open yourself up to inspections any time of the day or night and your security and bound books better be 100%

The way to make it a valid business is stock a few cans and undercut all your local dealers on transfer fees. Around here they transfer for $75- $200 per transfer.... do $50 or so and you will have all the business.

That's exactly my business model. I've been getting some serious flak over on Arfcom for all this.

I already have a commercial building that's part of another business. Part of the building is un-used, so I'd establish the storefront there. It already has a security system and is insured; I'd increase the coverage obviously.

I seem to remember that there might be a book out there on all this; I need to look into that. Also, manufacturing would be really cool, but I dint have the tools or skillset to even remotely begin and even if I did, anything full-auto I'd want to make would be at the request of an agency anyway. Just seems like a little bit of a headache.

tailo 12-08-2012 06:22 PM

IIRC no insurance will cover the stock of a gunstore.

You may not have the tools or skill but you never know when you may hire somebody who does.

Cheap silencers are your bread and butter there. A local sot is cranking out cheap cheap .22 cans made from a AR flash hider, 1 inch OD tube, 1 inch ID tube, and fender washers. He's sold a metric ton of them for something like $100 each....probably has $20 in each, takes 10 minutes to assemble. Very crude flat baffle can but it gets the job done even though its essentially a throw away can. He's even sold some to the local leo to dispatch animals like deer that has been hit by a car.

JTLaz 12-08-2012 07:56 PM

Quote:

Originally Posted by tailo (Post 14961613)
The way to make it a valid business is stock a few cans and undercut all your local dealers on transfer fees. Around here they transfer for $75- $200 per transfer.... do $50 or so and you will have all the business.

They transfer for how much?!? :yikes: I just had my firearm transferred for $20 at my local FFL

tailo 12-08-2012 09:15 PM

Class III transfers, total different ball game.....most of the $$$ comes from explaning the process to noobs TIME after TIME after TIME....

Basically, your item transfers in, you pick up the paperwork in a folder, he tells you to do this, that, and this.... and you mail it off.....tick tock....he holds said item for months on end taking up vault space and finally you can pick it up once your stamp arrives.

It's a 100% total PITA to deal with noobs and since insurance is dang impossible to get you run the risk of being wiped out if anything happins to the safe.... Back yourself up with a LLC.

david05111 12-08-2012 09:52 PM

Quote:

Originally Posted by tailo (Post 14963331)
Class III transfers, total different ball game.....most of the $$$ comes from explaning the process to noobs TIME after TIME after TIME....

Basically, your item transfers in, you pick up the paperwork in a folder, he tells you to do this, that, and this.... and you mail it off.....tick tock....he holds said item for months on end taking up vault space and finally you can pick it up once your stamp arrives.

It's a 100% total PITA to deal with noobs and since insurance is dang impossible to get you run the risk of being wiped out if anything happins to the safe.... Back yourself up with a LLC.

How can you not get insurance? I can get insurance for my personal collection...

tailo 12-09-2012 01:23 PM

Your personal collection is not avertised with a store front and empty at night. Dealers are more likely to loose firearms via theft then anyone else.

You will need a slip and fall liability insurance but most companies wont insure (or will at a HUGE cost) the stock. Theres only a hand full of insurance companies that will insure the stock of a gun shop but it costs.... You could try the NRA, They will insure plain jane FFL's...not sure about class III's (i dont believe so but you can ask) and I know they wont insure manufacturers.

http://www.locktonrisk.com/nrains/alliance.htm

Adam@Euro-Spec 12-09-2012 01:35 PM

Might want to start with www.guninsurance.com

It shouldn't be hard to get insurance just not cheap. Manufacturers aren't producing millions in inventory and product without being insured.

david05111 12-09-2012 02:06 PM

Point conceded. But still...it's really just inventory. I don't see places like best buy or Kay jewelers having issues getting insurance :dunno:

And the gun stores are probably better secured than most businesses

tailo 12-09-2012 06:32 PM

I'm going by what the two FFL's that I deal with tell me. I asked when I put rifles under consignment. There not getting the better rifles now...;)

Adam@Euro-Spec 12-09-2012 06:36 PM

Quote:

Originally Posted by tailo (Post 14965091)
I'm going by what the two FFL's that I deal with tell me. I asked when I put rifles under consignment. There not getting the better rifles now...;)

They might not want to shell out the multiple thousands a year it will cost but I'm sure it's available. Business insurance isn't cheap and they might not want the extra $5,10,20k overhead extra it might cost to properly insure everything(no idea what the numbers actually are). You are correct that NRA doesn't insure class 3 dealers.


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