A class action lawsuit against Matco Tools and TD Bank alleges that the tool company franchisor and the bank engaged in a loan fraud scheme to encourage unsophisticated borrowers to enter into risky business loans to buy Matco Tools franchises.
Here is a copy of the complaint brought by Marks & Klein, LLP, of Red Bank, New Jersey:
The lawsuit alleges that Matco and TD Bank conspired to make loans using secret three-year income projections, in violation of FTC franchise disclosure regulations. Specifically, it claims Matco would deliver the secret three-year income projections to TD Bank with a letter, instructing bank officials not to disclose the projections to loan applicants.
The bank would then use the income projections to qualify the loans for SBA financing. But Matco kept the projections secret because it knew of the high rate of failure among its franchisees and feared the lackluster projections would be used by failed franchisees filing suit.
UnhappyFranchisee.com has received a copy of the alleged secret three-year income projections Matco is said to have provided to TD Bank but did not furnish to prospective Matco Distributors. Click here for the alleged three year projections.
The lawsuit further states that Matco, TD Bank and other unscrupulous SBA lenders preyed upon unsophisticated borrowers because of their perception that the lender would not make the loan unless it believed the Matco franchise was an acceptable business opportunity.
According to the lawsuit, TD Bank profited through its collection of loan origination fees as well as interest on the loan principal, which it collected from borrowers while these improper loans were current. When the loans would ultimately fail, TD bank and other lenders would pass along the loss to the American taxpayer, as SBA loans are 90 percent guaranteed by taxpayers, according to the FDIC.
Matco, as the franchisor, would likewise profit from the sale of a new franchise and having its franchised distributors sell tool products for two to three years in a designated route, before ultimately failing and being replaced by a new franchisee.
“Matco and TD had the ability to perpetuate this scheme because of a self-serving lending culture that was more than happy to originate and collect fees and pass along the risk of loss to its customers and taxpayers, even if the law was being violated,” said Louis Tambaro, Esq., another member of Marks & Klein. “By bringing this lawsuit as a national class action, we look forward to exposing the dark underbelly of a destructive lending culture.”
Representatives of Matco Tools, TD Bank or others are invited to submit clarification, opposing opinions or rebuttals for publication. Contact the site ADMIN at UnhappyFranchisee[at]gmail.com.
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Contact the author or site admin at UnhappyFranchisee[at]gmail.com.
Also read: MATCO TOOLS Franchise Complaints.
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Support systems non existant had 20 managers and countless other franchise owners come and go over a 24 year period as a franchise owner with Matco, their so called "Route Surveying" is completely false these guys go into these shops ask a few questions right down a number and walk ( NOT AT ALL WITH YOUR BEST BUSINESS INTERST IN MIND), and hopefully to be done by noon to have a few cold ones I've seen it with my own eyes on several ocassions over my 24 years. Heck if your servicing a shop and you have one directly next door and it's not on your route list your can't service it, that will make a customer real happy and limits you to expand you business, If you loose a shop or several or they are a dead beat shop they don't give ya replacement shop or they tell ya your route needs to be resurveyed well I been waiting since 07. When I signed up we had territories with room for expansion for your franchise and that's history today. When you can purchase the exact same products for a 1/3 of the price somewhere else what service are you really providing a customer. When I signed up we where supposed to be exclusive and American made well that all went flying out the window over time.I finally gave up faith and hope in Matco and moved on 5/14.
This is just what I’ve been looking for as far as information goes.