you've probably seen the Snap-on Tools trucks driving around your own City but did you know
most of these routes are franchises and owned by independent franchise owners but is Snap-on
Tools a good franchise opportunity how much is a franchise to buy and do franchise owners
actually make $3 million a year we'll take a look at that today on franchise city
Not a single week goes by that we don't get a call asking about Snap-on tools and we've had many
Ex owners call us to complain and vent over the years now there's a lot more that we can advise
people over the phone than we can say publicly but let's address what we can say publicly today so
you might have seen other sources here on YouTube and throughout the web saying that Snap-on Tools
franchise owners are making over $3 million a year you might also have heard Snap-on Tools has almost
zero failed franchises so are these things true? Yes. Is it misleading as heck? Absolutely
so the total investment to begin a Snap-On Tools franchise is going to range from about
217,000 to 480,000 a Snap-On Tools franchise is not really a low cost business to start up
and there are many other options that can be less work more scalable and demonstrate higher average
revenues in this particular investment range. The startup cost breakdown I'll put them up on
the screen with the major outlays being initial inventory 135k to $145,000. Your van will run about
65K to $195,000. 3 months of working capital between 5k and $27,000 and please don't make the mistake
that many inexperienced buyers make thinking that 3 months of money of your working capital is all
that you're going to need you'll be seeing profit after that you might need a lot more depending on
how your business actually goes. Franchise companies they put in 3 months they all do
it that doesn't mean that's when your business is going to break even. License fee is between $8k to
$16,000 plus you've got various other expenses up here Insurance software Etc. now you can see
here they've put zero down for Real Estate but your local laws might actually prohibit you from
parking a work truck a Snap-On Tools van in the driveway of your residence so always check
the restrictions beforehand as this might be an additional expense and a potential
headache if you have to park far away from your house. So $3 million a year where does
this originate from? well it's actually from their own latest franchise disclosure and it's
true if we look here the highest total sales of a franchisee is over $3 million but this
is one owner in a system of over 3,000 owners and I can guarantee you this owner has been
building that business for many years perhaps decades and probably owns multiple routes now
you're not going to make anywhere near that amount particularly in your first few years. Also remember
that's gross sales don't forget you also have to buy the tools that's subtracted from that
you're only getting around 10 to 40% discounted over suggested sales as we can see in their FDD
then you've got to make your van payment pay for gas pay for insurance pay for taxes
how much is actually left over. Now you can see the average sales are closer to about $800,000 and if
you've got say a 10 to 15% margin you're actually taking home between 80K to $120,000 but as many
owners attest on the internet you are working 60 hours a week not only driving your route
you're working evenings and weekends you're also doing paperwork you're doing warranties you're
handling inventory and this franchisee suggests he is not happy. $100,000 a year if you're working
60 hours a week that works out to around $33 an hour is it worth it to take on the risk of a
business and all the other things that you have to worry about that's your decision. Even Forbes
included Snap-on as a top 20 franchise opportunity for the buck as they stated and lauded their zero
failure rate well we've called out Forbes before 4 and the franchise 500 as complete garbage I'll
post a link above and even Forbes finally issued a sort of apology that their coverage was misleading
absolutely it was now I'm sure the franchisees that lost 200,000 or more on a franchise forgive
you. So here is the real problem and why this is so misleading. A franchise legally only has to
report a closed store if the franchise actually closes it's abandoned it's gone. If the franchise
buys back a failed franchise even for pennies on the dollar even if they pay a hundred bucks
that technically is not a failed franchise now let's take a look at the hundreds of franchises
Acquired and resold by Snap-on Tools just in the most recent 2024 disclosure alone take a
look here in Florida it closed a location in 2022 acquired by Snap-on and resold, closed again and transferred again
all in one year! (scrolls list) Its a long list of franchises ceased operations and re-sold
that territory to another victim I mean franchisee. And guess who makes money every single time a
franchise is acquired and resold to another buyer well Snap-on Tools in their disclosure states they
made almost $20 million a year from franchise fees and related Revenue sources Snap-on tools
also no stranger to lawsuits we've covered things like this before in the channel I won't dig too
deeply but if you look at the Snap-on Tools Disclosure document you're only going to see
a few lawsuits pending and resolved not many at all this actually looks pretty good but remember
franchises are not obligated to list all the lawsuits only ones that fit certain criteria
over certain time spans a very handy website to see all of the lawsuits is casetext.com and you
can search through hundreds of lawsuits by key term involving Snap-on tools for cases ranging
from things like slander and defamation to fraud Breach of breach of contract and negligence many
many many pages and hundreds of lawsuits to look at. Just a quick overview if somebody is looking
at this franchise some of the common complaints that we hear from franchises that we can state
publicly. territory is being shrunk to such a small size they can't make money Snap-on Tools treating
franchises badly forcing them out of profitable territories. having to extend credit this is one
of the things that you're most likely going to have to do as a vendor of Snap-on Tools is
extend credit and at this point in time there's a lot of garages that are going out of business
that's an additional risk for you that you should be aware of and you may potentially lose money in
that regard. Other franchisees state they were actually misled by the sellers or the representatives
regarding profits and time required to operate the business and what we suggest what we do with
our clients as we take them through the process give a call to some of the people who actually
closed not just the numbers that they give you and say hey this is somebody who's making $2 million
a year they're doing great let's call some of the people who closed find out why they closed you'll
get a very accurate picture from those individuals. So at the end of the day if
you're a social person you love Automotive you look forward to visiting every single one of
your customers at least once a week and that's actually contractually recommended by the way in
the Snap-on Tools agreement Snap-on could be a fit if there is good territory remaining in
your city. but depending on your city's demand your own skills your operational preferences
there's quite a few options in that price range that show higher average revenues. it's all about
finding the franchise that you're going to be best at operating and has the highest demand
in your city demographics want to find the best franchises always call Franchise City Brokers I'll
place that link above in our franchise education playlist I will post below thanks for watching