Mac Tools calls its distributorship business opportunity a “Journey Worth Your Lifetime.” The spouse of a former Mac Tools distributor has another term for it: “Illegal franchise.”
Elba Maria Ceballo claims that Mac Tools knowingly misclassifies its distributorship program as a “business opportunity,” and, in doing so, fails to comply with federal franchising laws.
According to the Mac Tools website:
“Being a Mac Tools Distributor is a life-changing opportunity and commitment.
“We believe it is a Journey Worth Your Lifetime. It gives you the freedom and responsibility to go as far and as high as your abilities and hard work take you.
“You are on the road and master of your own fate.
“Yet you are part of a company and community with an esteemed heritage, innovative strategies for growth and one that is completely dedicated to your own personal success.”
A recent press release by the plaintiff’s law firm Marks & Klein, LLP provides an overview of the complaint:
“Wife of Mac Tools Franchisee Permitted to Proceed With Fraud Claims in N.J. State Court
“NEWARK, N.J., Oct. 12, 2011 /PRNewswire via COMTEX/ — A federal judge has cleared the way for the spouse of a former Mac Tools distributor to proceed with fraud claims against the division of Stanley Black & Decker, Inc. /quotes/zigman/590745/quotes/nls/swk SWK +0.69% in a New Jersey state court.
“The Hon. Mary Cooper of the United States District Court for the District of New Jersey issued an Order and written opinion on Oct. 5 granting the motion of Elba Maria Ceballo, the wife of a former Mac Tools distributor, to remand her lawsuit back to New Jersey Superior Court, Middlesex County (Ceballo v. Mac Tools, Inc. et al, 3:11-cv-04634-MLC-DEA). Ms. Ceballo’s lawsuit charged that Mac Tools violated FTC (Federal Trade Commission) regulations by selling her and her husband a tool sales route as a “distributorship” when, in fact, it was an undisclosed “franchise.”
“’FTC regulations provide important protections to individuals and families who invest in small route sales and other franchised businesses,’ said Ms. Ceballo’s attorney, Gerald Marks of Red Bank, NJ-based Marks & Klein, LLP. ‘One of the major protections is the requirement that the seller of a franchise provide a buyer with a Franchise Disclosure Document (FDD) that contains over 22 items of information, including the names of all current and former franchisees so that the prospective purchaser can contact them to determine if they feel they believe the business investment is worthwhile.’
“Ms. Ceballo, a resident of Perth Amboy, NJ, contends that although she was entitled to receive an FDD, one was not provided because Mac Tools fraudulently mislabeled its business as an ‘independent distributorship.’
“After the lawsuit’s original filing in State Court, Mac Tools removed the case to federal court, arguing that Ms. Ceballo only named a district manager of Mac as a defendant to keep the case in state court and avoid federal jurisdiction. Marks & Klein immediately moved to remand the case back to state court, arguing that Ms. Ceballo had independent, factually specific fraud claims against the district manager and that the federal court did not have jurisdiction.
“’Despite Mac’s protestations that our client named the district manager solely to manipulate jurisdiction, the Court rejected Mac’s arguments and agreed that Ms. Ceballo had asserted valid claims against all of the named parties,’ said lead counsel Marks, who has represented tool dealers in various franchise and distributorship systems for the past 20 years. ‘We are extremely pleased with the Court’s decision to properly remand this case to State Court, where it belongs. Mac’s suggestion that its district manager employee was named solely to defeat federal court jurisdiction was a red herring and a futile attempt to avoid what may become a class action.’
“Louis D. Tambaro, another member of Marks & Klein, added: ‘We are excited for the opportunity to try our claims on the merits before a New Jersey state jury of Ms. Ceballo’s peers. Unfortunately, we have had to contend with Mac Tool’s efforts to throw up procedural roadblocks; however, those delay tactics were handily defeated and will similarly not be tolerated in the future. “’
“’We expect Mac to make additional efforts to stall the case,’ Mr. Tambaro continued, ‘but are confident that the case will be rightly and favorably decided by a Middlesex County jury.’
SOURCE Marks & Klein, LLP
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View Comments
I just read Mac tools failure rate on sba loans is 35%. that was only out of 50 people. Pretty bad.
Mac tools has always had a failed system. Now by signing it is gonna cost you. Don't be fooled. Don't sign.
Tool Dealers Association is distributing a flyer that urges Mac Tools distributors NOT to convert to the franchise program. I’ve posted the flyer and their objections to the franchise agreement here:
MAC TOOLS Dealers Warn Against Franchise Conversion
I’ve also updated the full list of links showing all Unhappy Franchisee posts on mobile tool franchises, complaints and discussions. Check it out here:
Mobile Tool Franchise Guide & Index
Mac Dealers - If you convert this is what you have to look forward to. Lets look at Snap-on tools FDD. The only way these companies make more money is by shrinking us and putting more dealers o the street.
From pg 65 of snap-on FDD-see below:
We grant you the right, subject to the terms provided below, to use the Snap-on Program, and to
purchase Products from us for resale only at the locations identified on your List of Calls.
“Products” are the tools and equipment manufactured and/or distributed by us and made
available by us for resale by our franchisees.
The List of Calls consists of a series of business addresses or “stops” at which we have
determined that there are, or should be, tool users who purchase their own tools. While the
number of potential customers on a List of Calls will vary to some extent from franchisee to
franchisee, it is our intent that each List of Calls contains at least 200 potential Core Customers at
the time a Franchise Agreement is signed. Potential “Core Customers” are full-time professional
mechanics and other customers in the automotive after-market and related markets who are
required to furnish their own tools in the normal course of their business. Remember, these are
potential Core Customers, which does not mean that they all will purchase Products from you or
that they all are creditworthy. It simply means that it is up to you to sell Products on terms you
deem appropriate to the potential Core Customers at locations on your List of Calls. The
business located at a stop and/or the number of potential Core Customers located at a stop will
change from time to time during the term of your Franchise Agreement. It is not possible for us to
assure you that you will have the same number of potential Core Customers, or even 200
potential Core Customers, during the entire term of your Franchise Agreement, particularly in
markets which have negative economic changes.
Mac Dealers, us snap-on dealers pay over $100.00 per month to own a franchise that loans us 200 potential customers. In fact read from FDD. It says, "it is not possible for us(Snap-on) to assure you that you will have the same number of potential core customers, or even 200 potential core customers, during the entire term of your franchise agreement.
Do not franchise Mac dealers!!!!!!!
Lets analysis 200 potential customers. The average mechanic makes $400.00 - $500.00 per week. Lets say you as a dealer get all of those potential customers. Remember there are 4 tool companies with dealers trying to get their money. But you are good so you get it all. Lets assume this mechanic can spend $50.00 per week on tools. Best case scenario you get $10,000.00 per week in paid sales. More real is a scenario where you get half the customers. 100 customer and half of their money of $25.00 per week. paid sales of $2500.00
I will tell you that no dealer in any brand can survive with 200 potential customers. Any succesfull dealer in Snap-on has bigger routes that were cheated and Snap-on will never let you sell that route whole. Never!
If Mac delaers convert you will be going down the same path as Snap-on. Take your pick, Cancer or heart disease if you franchise.
Mac dealers think about this. Snap-on who franchised about 15 years ago extracts profits in everyway possible from Snap-on dealers.
Snap-on gets a piece of our credit card fees. While Snap-on does not require us to use Chase Paymentech, there is only one credit card provider that can be used in Snap-on's operating system. In Snap-on's FDD they admit they derive income from the fees we are charged to run credit card fees. while this is not illiegal it certianly is unethical.
what this means when we are collecting credit card payments on Snap-on credit accounts that Snap-on makes 18% interest on and in addition as us dealers collect payment we are charged a fee that Snap-on gets a part of.
These tool companies should be trying to increase our profits as dealers, not extract every last drop of blood from us.
I was a Mac Tools distributor and joined a class action lawsuit back in 2005. Can anybody tell me the disposition of this lawsuit?
Mac dealers, let your voice be heard. Join http://www.mobiletooldealersassociation.com.. Be loud and clear what's on your mind.
Hey Robert M. check out my story at stanleymactoolslawsuit.blogspot.com. I think we were part of the same group. Email me if you have any questions.