Franchise owners of mobile tool franchises (such as Snap-on Tools, Matco Tools, MAC Tools, & Cornwell Tools) complain that their franchises have little-to-no resale value.
[This post is a work in progress. If you have input on the resaleability of mobile tool franchises, please share a comment below.]
An analysis of the the Matco Tools Franchise Disclosure Document by law firm Marks & Klein* (MATCO TOOLS Franchise Report Alleges Distributor Churning) reported:
“During the three year period from 1/1/08 to 12/31/10, seven hundred fifteen (715) Distributors, forty nine percent (49%) of the total number of MATCO Tools Distributorships open at any time during the period, left the MATCO system.
“Of that 715, only fifty (50) transferred their MATCO Tools business to third party franchisees…
“If a MATCO Tools distributor desired to exit the system during this three year period, and hoped to sell its business through a MATCO approved transfer, that franchisee had less than a seven percent (7%) chance of success. Statistically speaking, such a low success rate indicates that the MATCO Tools businesses run by distributors who were leaving the MATCO system were so unprofitable as to be unmarketable.”
On our post SNAP-ON TOOLS Franchise Complaints, Snap-on Tools franchise owner Jim Lager alleges his franchisor intentionally interferes with its franchisees’ efforts to sell their franchises:
i am trying to sell off franchises and there is no value what so ever in my business. Snap-on does everything they can to inhibit the sale diminish the value…
I am at least a little pissed off at Snap-on because i am trying to sell one of my franchises to one of my dealers. Believe me there is NO BLUE SKY in your business/job. Let me tell you why. snap-on has something called a schedule 1. This lists everything you as a selling dealer has to sale, Inventory, accounts recievable, truck, used tool, discontinued tools, computer, and other things you might sell a dealer. The schedule is bullshit because Snap-on credit will only finance 2 things on that schedule. Inventory and accounts recievables.
The kicker is the maximum accounts recievable or R/A they finance is $55,000.00. So if we do a good job and put a bunch of money on the street, turn it well, Snap-on rewards us by saying they wont finance it when we go to sell it. by the way you can’t go to a bank for financing because if you do, Snap-on tools, not Snap-on credit puts an all encompassing 1st lien against your business. NO BANK WILL TOUCH THIS AND TAKE A 2ND POSITION. Snap-on does this to keep routes cheap and bring in young naive guys with little education to run volume. Snap-on protects themselves. Everything Snap-on does is contrary to us gaining wealth. their training and even volume discount is designed for us to sell high volume at low profit margins.
Understand all my routes do between $10,000 and $14,000 a week. I am very succesful and always have been. snap-on only looks out for us when we force them to. I was a field manager in the 90′s. I will tell you you will never hear a discussion in Snap-on asking themselves what Snap-on did wrong when a dealer is failing. Here is how the discussion always goes. “What can we do to get rid of this guy and put another one in his place.”
…Snap-on loves fresh meat.
* Marks & Klein is a law firm with current litigation pending against Matco Tools & MAC Tools, and past litigation against Snap-on Tools on behalf of franchisees.
ARE YOU FAMILIAR WITH THE MOBILE TOOL FRANCHISES? WHAT DO YOU THINK? SHARE A COMMENT BELOW.
To contact the author or site admin, email UnhappyFranchisee[at]gmail.com.
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Jim lager, funny how you mention owning routes that aren’t worth anything. I talked to a very smart snap on dealer. He said ” you can’t expect more then $30 to $50k blue sky for a route.” his reason was your prospects to take over this kind of job is higher low class or middle class ( if that still exsist) candidates.
These kind of prospects have some money tuct away and have been convinced owning there own business will make them rich. Let’s face it if we sold our routes for a real number like $250k, who would buy it? Anyone that has that kind of money in the bank certainly don’t wanna be a sales person chasing dollars and a company hammering you every week to buy more tools. Or like you said put yourself into a 12 hour a day job 6 days a week to make 60k a year.
I know a friend that sold a boars head route. He sold it for $300k. I asked him how he got that kind of money. He said ” he has a route just like us tool guys have. The overhead is low, you generally restock once a week and all you do is see what your customers are low in and restock them. So he said it’s not really a sales job. He just services his stops and drops them an invoice before he leaves.”
My point is it’s easier to sell something that only requires service, less overhead and not being a sales person. Our routes don’t garauntee anything to a new prospect because this is a relationship business for one and in order to be at that $10k a week you have to be a good seller. Most people don’t like sales jobs.