We get asked a lot about Matco Tools Franchise. Is it a good business to own, how much does it cost how much can you earn today on Franchise City
Matco is one of those franchises where many buyers make decisions on emotion rather than
data. Its similar to Amazon DSP inexperienced buyers looking at a low cost startup (link above) and driven often by emotions
How great would it be driving around in your own truck, being your own boss, selling tools to
businesses and making a six figure income. Matco tools has some big earnings numbers on their
website with total revenue up to 2 million a year, this looks like a great opportunity. Or is it?
To get started you'll need to invest between $76,819 to $309,133 and you can see the breakdown
of expenses on your screen As far as earnings here are the numbers from Matcos website as of
today January 10, 2023. Matco earnings are divided by top middle and bottom 1/3 of distributors. Top
1/3 median revenue is $644,369, middle 1/3 is $447,053 and bottom 1/3 of Matco distributors
earn $303,025. Looks like their top earner is just under 2 million and their bottom is at zero.
Now I have to give kudos to Matco for their disclosure placed right below the earnings,
not hidden away where you wont find it. They initially state the obvious, or at least it
should be obvious if you are considering buying a business, that these are gross earnings and
your truck lease payments, gas, truck maintenence, labor costs, loan payments, insurance still has to
come out of that number. Matco doesnt list what your net earnings would be after expenses. This
number will vary depedning on your location and situation but it will be a whole lot
less than the gross number and you have to wonder if Matco distributors are making a
liveable income. More on that in a moment but perhaps relevant to that point look at this:
Matco includes this on their page: "During the 2021 calendar year,
189 Distributors closed or ceased operations. Of these, 15 were open for less than 12 months"
That is a huge number of distributors that closed in just one year and that is not a
good sign. I looked at their FDD and their growth numbers showed even with closures they had sold
almost 150 franchises since 2019. So they are closing them fast but selling them even faster.
Online complaints are a dime a dozen, you never know if they can be trusted. There are dozens of
complaints about the Matco franchise all over the net. Complaints of fraud, no freedom for owners,
exaggerated earnings claims, territories being taken away and more. A simple search for Matco
complaints brings up dozens. In fact Unhappy franchisee states they had more complaints on
Matco than on any other franchise. But how can we validate if these are legitimate.
We can probably assume due to the sheer volume that most complaints are valid
One of the benefits of buying a franchise is the companies are legally obligated to list lawsuits
over a certain period of time in their disclosure documents. I looked at their most recently filed
documents and many of these online allegations also show up as legal cases against Matco.
There is currently a class-action lawsuit alleging that due to the level of control
exerted over Matco franchisees one of the primary complaints, that they are not independent,
franchised distributors but should be considered employees of Matco. Other lawsuits include fraud
and civil conspiracy based on fraudulent and deceptive financial projections, Unjust
enrichment, fraud, deceit and negligent misrepresentation, and a few more
pages of people suing Matco and Matco suing its distributors. Now lawsuits arent the end
of the world most larger franchises will have them, but these type are definitely a red flag.
I would want to speak with many existing franchisees to determine their sentiment.
You might wonder if almost 200 distributors lost their franchise last year why dont you
hear more complaints? Why arent franchisees going to the press?
Keep in mind most franchises will have you sign an NDA, a non disclosure agreement,
that subjects you to substantial fines if you discuss any aspect of the business. So you dont
just lose your $100k+ plus, but now you have to pay legal fees and thousands in penalties,
most ex-franchisees just bite the bullet and give up. I covered how this scheme works in The Dark
Side of Franchising. Im not saying Matco is being purposely deceptive, but there are franchises out
there that will misrepresent, lie and cheat newbie investors just to get their money so you have to be extremely cautious.
So is Matco a good business? Im pretty sure the distributor making almost 2 million is happy,
as are many others but there are quite a few red flags including the complaints and
lawsuits. One of the comments I saw when researching this piece really sums up my
sentiment. "I have seen a lot of Snap-on, matco, mac and Cornwell dealers fail and
succeed. I can only speak for Snap-on however. If you do your homework when you get in. Get
the right training and support and get a good route you can make money. Understand
though if worked properly You just bought a 6 day a week JOB working 12 hours a day. At
the end of the year if all went well you made 60 – 70 grand. To me thats a job"
So this was for Snap On - a similar business, and today that figure is probably higher,
but it speaks to the crux of the issue and something we always speak about on
the channel. Do you want a business, or do you want to buy a job. There are many
businesses that are well suited to ultimately step away from the business and allow you to
become a passive owner. Are you comfortable running a business in an executive capacity
or prefer working in the business. If you love the tool industry, love talking to people and
driving Matco could be a good business. If your goals are to build a franchise empire it might
not be the best option. As we always say there is no prefect franchise for everyone, it depends on you, your locality and situation.
Never go direct to a franchise always call an experienced broker like Franchise City to
help you through the process. Thanks for watching.