CORNWELL TOOLS Franchise Scam or No Scam?
“Eight former Cornwell tool dealers, including David Bachrach, sued Cornwell Quality Tools Company for compensatory and punitive damages, alleging common law deceptive trade practices, violation of Ohio’s Business Opportunity Law, fraud, fraud in the inducement, consumer fraud, negligent misrepresentation, and breach of fiduciary duty.
“The former franchisees brought class action claims in Summit County Common Pleas Court as representatives of a proposed class of nearly 500…
“The plaintiffs (eight former Cornwell tool dealers) have alleged that:
(1) Cornwell’s trade practice is to draw the plaintiffs and others into Cornwell’s sham enterprise;
(2) in the sale of a business opportunity to plaintiffs and others, Cornwell has not acted in conformity with the Business Opportunity Laws of Ohio;
(3) Cornwell committed fraud and fraud in the inducement in obtaining the franchise agreements from plaintiffs and others through material misrepresentations designed to greatly distort the risk involved in the franchise;
(4) Cornwell committed consumer fraud in connection with the sale of services; (5) Cornwell negligently misrepresented facts regarding the likelihood of success of the franchise to the damage of plaintiffs and others;
(6) Cornwell breached its fiduciary duty to its franchisees; and
(7) Cornwell acted with reckless disregard of its franchisees’ rights and well being. All of these claims stem from the formation of the contract and the contractual relationship whereby plaintiffs became franchisees of Cornwell. “
Source: Bachrach v. Cornwell Quality Tool Co., (Ohio 2011)
The court determined that the matter was to be settled via private arbitration – so the proceedings and outcome may never be made public.
ARE YOU FAMILIAR WITH THE CORNWELL TOOLS DEALER FRANCHISE OPPORTUNITY? IS IT A GREAT FRANCHISE OPPORTUNITY, A FRANCHISE SCAM OR NEITHER? PLEASE SHARE YOUR OPINION BELOW.
Contact the author or site admin at UnhappyFranchisee[at]gmail.com.
have been a dealer for almost 3 years and with the economy as bad as it is i was sent a letter saying cornwell is pulling my franchise because i do not purchas enough tools ……i am below 80% of the national adverage……..
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sandralboy, come over to MATCO, MATCO is #1 again!
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why is it that no one has gone after all of the tool companys togather? they call it a franchise yet they forget the #1 rule in a franchise is that what you do to 1 franchisee you have to do to all not just make up rules as you go along and that it doesn’t matter what state the host is in the laws of the state the franchisee is in trumps ……so check out your state laws you will find out they are not treating you right……
i just got the boot from cornwell tools after almost 3 years because my purchase adverage was bellow 80% of the national adverage….mind you 6 of the 12 dealers in this area were also under the adverage….and 4 dealers went down this last year 3 quit i got the boot …what does that tell you about the management and so called support that the company tells you we are here for you ….well its all lies ….
after the week at tool school most district managers are to spend 2 weeks with you and then ride with you untill you have 75 coustomers …i got 4.5 days spread out over 2 weeks …..yet i signed the paperwork that said he spent 2 weeks training with me ..i was told it was paperwork i was suposed to sign in ohio…so yes i signed it without reading it ……big mistake on my part……read everything….never trust anything they tell you no matter how much you think why would they lie ….just think of that last used car salesman you heard about and you won’t be far from the truth…..
i could go on and on about the things that i went threw in the last 3 years…..and have 3 other dealers to back it up they quit because of what they were told about how much you can make in this buisness …what they dont tell you is what ever area you get onto if there are any other tool dealers you may have 2 to 3 other tool companys all trying to get the same guys to buy from them….and if you have alot of dealerships most of the techs already have most of their tools and don’t buy much and when it is slow and the guys only get paid when they work they don’t buy tools….or if they do you don’t get paid ……
just a few things to think about before you dive head first into the tool buisness…..
I would call marks & Klein in red bank nj. Look them up on the web. They help people that got screwed with tool companies. It is worth the call. Have dealers and old dealers you know call too…
Was a dealer in 2005 was told that all of Cornhell tools are made right here in Ohio. That was 1 of the reasons I bought in to the b.s. and that my brothers high school friend (district manager) said it was easy money. (U can always trust a high school friend.) My sale pitch was, ” made right here in the good ole USA and about 50 miles away keeping the money locally”. Until a potential customer showed a wrench that had CHINA embossed on the back. Most wrenches and sockets are made in Ohio but a majority are out of the country. Despite paying myself $400 a week and not being able to collect a lot debt the DM said ,”YOU’RE MAKING MONEY”.
I lost about $37000 in one year and got out. Customers who were established were reluctant to buy because they never expected you to be around for six months, because that was how long the previous dealer lasted. (Even though that particular territory never had a dealer so I was told).
There are so many things that Cornwell does to cover themselves that just screws the potential dealer. False statements and all.
Did I mention my brother started 6 months before me. He lasted i think a little over 5 years . Because of Cornhell he lost around 350,000 which included a 60000 401k and my parents house that was paid of at one time . Would love to get some of that back .
Call a franchise attorney if you feel the tool company screwed you. I recommend marks & Klein red bank nj. I think they practice in most states.. Call…
Just in case someone thinks Cornwell is ANY better than any other Tool Franchise think again: In 2008 they started with 584 Franchises and added 127 Franchises through the year but by years end they only had 536 Franchises left.
In 2009 they started with 536 added 121 but only had 532 at the end of the year.
In 2010 they started with 532 added 113 but only grew to 538 by the end of the year.
2008=30% Churn
2009=23% Churn
2010=20% Churn
Try and explain how this is unprofitable for Franchisor’s?
well does anyone know anyone othet than Marks and Klein in redbank nj i called them and they are so burried in Mac, Snapon ,and Matco they don.t want to take on anymoretool dealer cases so if anyone has some info on another attorney please let me know….
i just don’t understand why none of the former dealers don’t get togather and stop this madness….we loose our buisness our saveings in some cases our homes and its all ok because we do nothing about it …i think its time to send cornwell a message ……
sandrailboy:
You should get in touch with the Mobile Tool Dealers Association
http://www.mobiletooldealersassociation.com/live/contact-us/
They are organizing dealers from all 4 tool dealer companies, since the complaints are so similar… and there’s strength in numbers.
Cornwell has probably got the highest failure rate of all of them. Why aren’t there more on here complaining?
Had the same DM as Sal and his brother and I actually warrented a lot of the tools they sold, Cornwell ioesn’t tell you you have to buy the freeking tool, give it a customer who broke theirs and then wait 2-4 months to get reimbursed.
I lost about $60000 and before the depression hit, I was collecting $5000 per week and had 30k plus on the street. I lost 175 customers (all who owed me money) in 6 weeks… Cornwell just buried their head in sand and stood there with there hand out lookiing for their money, offering no freeking help whatsoever……. never buy a freeking tool truck
Today on april 19th I am in the middle of purchasing a cornwell route and after reading this and what my lawyer told me,i am really confused because it doesnt seem like a good thing. However I have 2 good friends in the bus and they are making good money….any suggestions???
Run the other way, and get into a business that people actually pay you when you sell them something or perform a service, not over the next 6-8 weeks… especially if you are in Northern Ohio they’ll mess with you
Tim,
Ask the DM for a list of shops he has picked. if more thab 10% are high risk- muffler/tire franchises that hire a lot of 9.00 hour kids, that like to buy tools, but not pay you, then run
you want shops that are busy, with lots of OT, then you get good experienced techs with some money to spend, my best stops were redneck places like truck garage, construction companies, bigger farms, machine shops and equipment rebuilders, heavy equipment dealers, railroad locomotive shops, my worst stops were the hisk risk hight turnover shops and new car dealers. Generally if the techs parking lot is filled with decent looking newer pickups, it will be a good stop, if they all drive 500.00 cars then go someplace else
Stay away from this line of work. You will work your ass off for little return. Go to mobiletooldealersassociation.com.
ooohhh did we ever get screwed…my husband was#2 in his district for 3 years,,..worked his freakin ass off to gain loyal customers, and he did it…problem was we had a dm who was a hotshot and wanted to recruit, recruit, recruit..He had promised the territory my husband developed to a new guy, took him 2 years but finally got what he wanted my husbands route….we ended up with a route that not only had the other 3 bigs to deal with….we had other cornwell dealers and our dm scoping the shops…very bizarre….oh yeah I complained, and loudly….couldnt afford to arbitrate so took a bum settlement and went under after losing over 100k in a year…lost in arbitration because by that time couldnt afford to show up….what a crock of shit..these people should be ashamed how do they sleep at night? they had 6 dealers come and go within a year or two..
be afraid!! be very afraid!!!!Jessy fountain colorado area
All of these tool companies are scams.
Am looking into a Cornwell truck route as a new business and talked with a DM and he seemed like he wanted to help out by sending me a package to see about getting me started, I also let him know I don’t have all the cash to get started and he let me know they would have paperwork I could sign and get back to him and see if I qualify for financing, though I have abouts $25k I could get in cash but I’m am now Leary after hearing about other brands like Snappy doing Dealer direct purchasing account cutting out the truck, wtf is that, will cornwell follow suit down the road, another avenue I have is there is a huge military base I could access as a customer yet is it really feasible, have not seen many tool trucks around my area, does that mean its good or does it mean it’s for a reason? This is very discouraging, I feel I can make it a go, just not sure if I should talk to existing truck owners and see if it’s as good as it could be or worse than they hoped…
Lars
Stay away from the tool business, period. All 4 tool companies have a horrible track record of Franchisee retention and you will literally work you effing azz off for very little reward.
Spend some time reading all the Matco Tools blogs here as well as Jim Lager’s site, there is a lot of information here about the tool biz in general. A tool Franchise is not as good as it appears on the outside.
http://www.unhappyfranchisee.com/matco-tools-franchise-complaints/
Take organized’s advice.
All of these companies are members of the IFA (International Franchise Association.) The International Franchise Association serves and protects franchising at the cost of the franchisee.
The International Franchise Association is the reason that the F.D.D. you sign to become a franchise distributor gives jurisdiction over your claims of fraud and misrepresentation by your franchisor to an unfavorable state for franchisee resolution.
The only way for you to be a distributor is to sign an F.D.D. which takes your right to DUE PROCESS in a court of law away. It’s called an Arbitration Clause. This clause renders the franchisee HELPLESS and gives the franchisor the ability to do WHATEVER THEY WANT to their franchisee and have the support of attorneys to protect their fraudulent TAILS!
What is next? Look up the IFA online and see that in their May Legal Symposium (A Legal Symposium is composed of Franchisor Attorneys and franchisors who decide what things they can do on the F.D.D. in the next year to CONTROL their franchisees.) they are talking about how to STRIP a franchisee of their right to free speech over SOCIAL MEDIAS.
That’s right! Soon, to be a franchisee you will have to sign over your right’s to free speech. No longer will you be able to warn others to stay away from franchisor’s who have no PROVEN record of success and commit fraud and sell fraudulent opportunities. This is what they have done in regards to getting DUE PROCESS when your franchisor commits fraud, lies, steals and creates false documents to falsely terminate your franchise they will point to binding arbitration in a state where justice is not favorable and the judges are PAID OFF!
Why do you think that Matco, Mac and Cornwell list OHIO as their choice for arbitration? It is not because the franchisee will receive a FAIR judgement.
All these tool companys are selling Franchises. What that means is they are only interested in getting you behind the wheel and keeping you hungry. If you last 2-3 years and quit. That is a home run for them because they will find another sucker and do it over again. People can disagree with me on here but it is the truth. These companys ARE NOT interested in keeping people around for the long term. They lose money that way because once you get confortable and made the money they figure you wont work as hard and what you buy from them will go down every year. It’s all about the numbers and too keep you hungry so you keep buying. If Cornwell doesn’t do something now doesn’t mean they won’t do it later. Read the FDD Document closely. Everything is in favor of the Franchisor and not the Franchisee. My advice don’t let the fantasy of owning a cool truck with shiny tools control your thinking. It’s cool owning the tools but not cool working for nothing. If anyone on here disagrees with me and says the business has made them a fortune ask them to prove it. Ask for a 1040 or a schedule c. They may say they dont claim everything which is fine but how much can you hide? If you show $15k as an income did you really hide $40k? I think not… I know people that own a real business and have proudly shown me $100k just on paid divedents. Yes only on there return on investment. You will NEVER make $100k a year selling tools if you are brand new coming in. All the guys that still do well been around a long time and have huge routes. Take it for what its worth and find another thing to do.
Good advice!
hi, i have been a cornwell dealer for over two years, im # 2 in my district and 80th in the country, i buy 2 k above the nat.franchise every week. and i am happy in my bussiness, but i will tell you this, DONT OWE THEM MONEY!!!! never… for any reason, i payed off my bussiness as fast as i can, reason why is that they never what to help you see the real money from the money you think your making, take your yearly sales, subract 16-19% thats about what you can make in this franchise,thats it, i sell 8 k a week on avg, per a year just over 400k, 70k a year is mine, not bad… but i also work 60 hours a week, always lossing money, proffit margin is lower then 40.. thats just a complete lie. try 25-33 1/3 %, maybe. then take 1 % a year and throw that away.. ppl do run away. then sell a bunch of tech credits 0% recorse.. yea if they feel like they cant find a way to blame you. tust me they will find some way to charge this to you. i had one that ran away. not 5… not 2… 1! in 2 years. they tried everything. didnt work though. i also pay my tool bill one week ahead every week in full! only way to work with them. you dont owe them money, no problems. work like a dog, the buss will never be worth a penny. truck is worth more than the tools and the money on the steet together. also, back to that 70 k a year, remeber that if you get hurt, truck blows up, get sick… hell just break a foot and your done, if i take one day off i have lost that weeks paycheck. take a week, forget it for a month. its a thankless, hard working low profit job. i love my buss and i hope to never give it up. but this is a dieing buss, even at 8 k a week. almost 4 k above nat avg… not alot of money for the stress.. by the way if you sold 5 k a week, avg tool guy YOU WOULD MAKE ABOUT 30k if your lucky and bills are low! real low,just an fyi
Thank You for your truthful comments! This is the reality of franchising in the tool industry. I find your story to be very similar to mine but my franchisor stole from me, threatened to take my franchise, lied (non-stop) and falsely terminated me. It’s one thing to understand you are in the top 50 of 1500 franchisees and made very little money and another to realize that there are 1450 other franchisees below you and wonder how the hell are they staying in business? How are you able to out perform so many others who have been in so much longer than you have.
wow John you hit it on the head. Please checkout a web site http://www.mobiletooldealersassociation.com.. Please leave the same comment.. Keep up the hard work and congrats for figuring out the real truth..
There is an attorney handling a Cornwell lawsuit, contact Tim Shimko & Associates
Clevland, Ohio
I am also a Cornwell dealer now for two years and love it! I was with snap on for 7 years and also did very well with them also.but they are the mafia!! I love Cornwell I pay them and they dont screw with me.i sell all tech credit toolboxes on ach with the customer ,I get paid,I do not collect the money, and customer does not get behind,I dont get harra ssing phone calls like I did with snappy,life is good! All tool trucks are a lot of work and not for lazy people.in ten years I have seen a lot of people come and go. No company is gonna look out for u,you must do that, after all it is your business not theirs u must take ownership of it .in order to be successful u must talk to a successful dealer and do what he tells you not what the company tells you too!! It can be done, I have and am still successful!! The other guys numbers are off. He said he buys 8k per week he did not say how much he collects!purchases do not necessarily equate profit!! I collected &320,000 last year and kept $90,000 thats 28percent net profit that’s with me buying only $4400 per week versus his buying $8000 per week so I spent half of him on tools but made $20,000 more salary than him!! So u see it’s not about how much u buy but how much u keep! Cornwell top 50 are their top 50 purchasers! Not top 50 most profitable!! I will never be in the top 50 and don’t really care to be! I must say I also have my Cornwell loan and truck paid for. We live on &50,000 a year and save the other $40,000 per year !what other job are u gonna do that at??? I pay for everything and my wife works part time and we save her &15k per year also, we are also raising 2 kids so go for it!! And get a partner who is experienced
By the way, I forgot to mention that I only collect between six and seven thousand per week.
CORNWELL-
I was a Cornwell Dealer in Joliet Illinois for a short time. I’m here just to offer my personal experience regarding the tool business, but Cornwell specifically. I knew nothing about the tool business going into it.
All of Cornwell’s hard line tools are made in Ohio. Bit sockets are from Taiwan. They sell all the major manufacturers (Lisle, OTC, ADT etc.)
I found that a lot of techs preferred Snap On or Matco because of the big name. Eventually I realized providing better service and selling other things, instead of hard line tools, was the way to go. Guys started trusting me and got used to seeing me every week and business was growing. My tool bill was paid in full every week.
It will take long hours, just like others said. And if you take vacation, get hurt, whatever…..you miss out.
I began losing control of my tool business because I decided to get involved in a 2nd business and started dividing my time between the two. The bottom fell out of both.
I said to myself that the only thing that will keep me from being successful in the tool business would be me. And it was.
But let me tell you how Cornwell responded.
They accepted all of my tools back and credited me appropriately. I had a $4,000 OTC scanner that was opened and demoed. Cornwell gave me full credit for it. I paid off Cornwell in 3 weeks of giving up the business; that shows I was profitable. My DM was named Dwayne C. He called me and asked me what I was going to do with my truck. He called me. I didn’t call him. He found a buyer for it who gave me my asking price no questions asked because my DM vouched for it being a great truck.
I appreciated the time with Cornwell and how they treated me.
I’ve had really good luck with cornwell. If u fail it is ur own fault. before I started I researched my area and possible competition, but also I have a mechanical back ground. and I don’t mind telling a customer no.
I have been Cornwell franchise for 2 years now. If you can manage your money you can manage a business then being a tool distributer is no problem. I wish I had done it 20 years ago. Cornwell in my mind is the best fit for me. Remember just because you own your own business does not mean you don’t have to work. Success comes with working and working smarter. As well as managing your money and Business.
Mr. Pritchett,
You are 100% correct. But what happens when you build your business and then your franchisor tells you you violated your contract with them? All they want is what makes your franchise business successful! The hard work you put in to GROW it and EXPAND it! Did you know in every franchisee contract with ALL the tool selling franchises there is an “Arbitration Clause”. Why is that! Because attorney’s and judges have been conditioned by our leaders through FUNDING (see IFA and FRANPAC) to protect franchising at all costs. The costs being successful franchisees like myself who had CRIMINAL ACTS imposed on there franchise by their franchisor. Threats from a Regional Manager to surrender shops or lose your franchise. False reports from District Managers to make it look like I had more customers to service than I had. Being terminated for a PURCHASE AVERAGE that your franchisor created because your District Manager promised to reevaluate your route and never did so in 1 1/2 years. Then when you get your separation letter stating if you don’t cure in 90 days you will be terminated and call headquarters to ask “How can you terminate me for my purchase average when my District Manager promised me to re-evaluate my route for the last year and a half and never did? That’s is when they create a false survey which states you have enough customers but you suck as a salesman. Then when you receive that false survey and threaten to lawyer up they hand you a NEW route with a lot more customers three days later which enables you to sell tools in an amount above the required purchase average for the next 1/2 year. Then when you fall below that purchase average again, 215 days later, they terminate you based upon the separation letter you received 8 months ago but according to your own states laws your franchisor CAN NOT terminate without giving 10 days to cure. You tell me how the Attorney Generals office, Federal Trade Commission, Federal Bureau of Investigation, State Senators, State Representatives, State law enforcement, County law enforcement, Local law enforcement, Prosecuting Attorney and 4 attorneys you paid to represent you against your franchisor can not get you justice? I believe you are successful in your franchise at this current time but go back and read your contract. If it has an ARBITRATION CLAUSE in it you are SCREWED buddy! If and when your franchisor wants to pursue your franchisor you better have thrown the first punch. My problem is that I waited till I was victimized by Matco to complain about the violations committed against my franchise. Now I am just a disgruntled employee who did not like getting fired. Even though I was supposed to be a business owner that has SO MANY constituents (Governor Mike Bebe, Senator Boozman, Senator Mark Pryor, Rep. Steve Womack, Rep. Les Carnes) and consumer departments: Federal Trade Commission, Federal Bureau of Investigation, Attorney Generals office, State law office, County law office, Local law office and County Prosecutor none of them will give a RATS &$% if your franchisor committed felonies against your franchise. Attorneys your hire SCREW you over to settle other constituents or leave their partners after you give them money and charge you to talk to Matco when they promised their services to sit down at the mediation table. Of course, your franchisor will ask your attorney for the same information your last attorney gave them so your new attorney can run your bill up after your franchisor mediates 30+ franchisees he never told you he was representing you as a group. Then put pressure on you to mediate for FAR LESS than what your damages are because the deal is for all his clients or none. Your attorney will tell you that these other victims have suffered enough and that while this deal isn’t that good for you it will help the other clients you help bring him some closure. Then when you say no he terminates his representation of you and others to resolve 30+ franchisees so he can put $250,000 in his pocket. Keep telling yourself right now that you are doing well but if you don’t already have an attorney and are paying him for future services you are making a grave mistake.
I am a former Cornwell Tool Dealer, I have a YouTube Channel that I am putting former Tool Dealers stories on. Please visit my website at http://www.mycornwelltoolstory.com for more information.
Toby,
I am sorry for you and your family. I have been there and experienced what you are going though. It put my wife and I in a pretty deep depression, ruined our perfect credit, and took all of our money. Please know you are not alone and there are thousands of guys out there just like us. I highly recommend you speak with a bankruptcy lawyer and you do it soon. They normally will give you a free consultation to go over your options and will give you good advice. The BK will cost between $1k-$1500. You could talk to a lawyer about suing and they will most likely make tons of promises to you. They usually require $5k retainer + billable hours with no guarantee or timeline. In the end I think most guys end up with a settlement that pays the lawyer and forgives the debt. Nothing ends up in your pocket and your credit is still ruined and you still may owe legal fees. Before you pay anyone or file make sure you cover your back sales tax if you have any and then start your life over. You will find that you will most likely be able to keep your house and personal possessions with BK. It may be perceived as a bad word but for most x-tool guys and business owners it is the best way to protect yourself and start over. It is a fresh start. I can’t tell you how good it feels to have my life back again! You can rebuild! Good luck and keep warning the suckers like us!
I am at my 1 year as. Cornwell tool franchise i like it there are up and downs . I watch my purchases and my bank account very close i dont spend money crazy i ask questions and get answers i go to work every day talk to customers sell tools and mostly collect money. This is a business so fail some rise but the one thing is if you are below the purchase mark they require you are failing you are not selling and your not collecting .
Why is everyone losing houses and going bankrupt? Did you not run your truck as an alcohol?
I was the only successful Cornwell dealer in the RI market, lasting over 14 and getting (according to my DM) no calls from disgruntled tool buyers about me. i.e they were satisfied. My purchase average was subpar but it was not discussed at any length because there was no one else to service them if they moved and the customers knew that. Many wouldn’t buy CW because of that important factor.
Then I went to a Medco show. they found out and terminated me. I only went because:
their prices were better, they flew me there for free with complimentary room and food and drink, and gave me a year to pay my tool bill. I told CW I would be happy to show the valid reasons why I went for their benefit, but they refused. They want the franchisees to know that outside buying is frowned on. For sure it is but the outside buying kept me viable as a franchise. The fact that I was relatively solid ( although like so many I paid myself last) really didn’t matter to the bosses at Cornwell.