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Snap-on Tools Franchise Cost & Fees

Date of Incorporation: 1920

Franchising Since:  1990

Headquarters: Kenosha, Wisconsin


Business Description: The franchisor is Snap-on Tools Company LLC. Snap-on Incorporated is a global innovator, manufacture, and marketer of tools, diagnostics, and equipment solutions for professional users. Product lines include hand and power tools, and are sold through its franchisees, company-direct sales, and distributor channels, as well as over the internet.



Franchise Offer: The standard franchise offering is for a 10-year license (in the case of a renewal franchise, a five-year license) to operate a Snap-on retail mobile store through a Snap-on Tools Standard Franchise Agreement between a franchisee and Snap-on. Existing standard franchisees who qualify also have the opportunity to purchase an additional franchise or add an additional van for an existing franchise.



Financial Assistance: Snap-on Credit is owned by Snap-on Incorporated. Snap-on Credit offers certain financing programs described in the FDD. If you meet all the requirements, Snap-on Credit, may lend franchisees funds to cover certain initial investment costs and expenses of their franchise. Snap-on Credit may also lend franchisees funds to cover initial investment costs and expenses for an additional franchise or to add an additional van under the Expansion Program, to purchase additional inventory, finance their RAs or recapitalize their business. If franchisees are current Snap-on franchisees relocating their franchise and are already participating in one or more of these programs, Snap-on Credit may allow them to continue to participate in the program under the terms, conditions and documents which they already have in place. In addition, Snap-on also offers Special Veteran Incentives: honorable discharged military veterans can receive a $20,000 discount on the initial start-up inventory (approximately a 25% discount on the start-up inventory).



Training and Assistance:
Before franchisees begin operation of the franchise, the franchisor provides New Franchisee Training. All Standard Franchisees and employees of a Standard Franchisee who operate an Expansion Franchise must satisfactorily complete New Franchisee Training. New Franchisee Training is not provided to you if you are purchasing a Renewal Franchise. New franchisee training currently consists of between an estimated 47.25 to 60.25 hours of classroom training and 135 hours of on-the-job training. About five to six months after the franchisee begins operating the business, franchisees are required to attend New Franchisee Training 2. This consists of approximately 12 hours of training and is intended to reinforce previous training after they have had actual experience operating their franchise. Once franchisees begin operation of their franchise, it is important that they participate in ongoing training, including Franchise Performance Team meetings generally held once per month, but the franchisor may hold them more or less frequently as determined appropriate.



Territory: Snap-on grants franchisees the right, subject to terms, to use the Snap-on Program, and to purchase Products from the franchisor for resale only at the locations identified on their List of Calls.
“Products” are the tools and equipment manufactured and/or distributed by Snap-on and made available by it for resale by its franchisees. The List of Calls consists of a series of business addresses or “stops” at which the franchisor has 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 the franchisor’s intent that each List of Calls contains at least 200 potential Core Customers at the time a Franchise Agreement is signed. In addition to Core Customers, the List of Calls identifies potential additional tool purchasers either at the same or additional business addresses who are not considered potential Core Customers according to Snap-on's criteria, but to whom franchisees are allowed to sell Products and are identified as potential “Exception Customers”.



Term of Agreement and Renewal: The length of the franchise agreement (license) is 10 years. Franchisees can add one term of five years, if they meet requirements.



Obligations and Restrictions:
Franchisees’ personal participation in the operation of the franchise business is required. Franchisees must use their best efforts to promote aggressively and develop fully the sales of Products to their potential customers, and maintain an inventory of Products in at least the minimum amount specified in the Snap-on Program so that they can maximize their sale of Products. Unless the franchisor otherwise agrees in writing, franchisees must directly or through an employee call on every potential customer at stops on their List of Calls at least once a week, again so that they can maximize their sale of Products and provide the service expected by Snap-on customers. Franchisees must refrain from engaging in activities that would conflict with these purposes and must devote full business attention and efforts to these purposes. Franchisees may offer and sell only Products (tools and equipment manufactured and/or distributed by the franchisor and made available by Snap-on for resale by its franchisees and Independents). Franchisees must also assist in honoring all warranties on Products.



Total Number of Units:
4,780

 

Investment Tables:


Initial Investment:

Name of Fee Low High
Real Estate
$0 $0
Initial License Fee $7,500 $15,000
Initial Inventory $76,000 $86,000
Technology Package $0 $2,400
Supplies $0 $400
Uniforms $0 $400
Van $55,000 $103,000
Van Insurance (3 months) $250 $1,250
Van Delivery Charge $180 $4,100
License $200 $2,400
Acquisition/Development of Revolving Accounts $0 $52,500
Other Equipment, Fixtures, Expenses $150 $750
Computer Software License Fee $770 $770
Invoice Line of Credit Repayment $0 $20,000
Van Merchandise Displays and Safety Equipment $0 $4,000
Additional Funds - 3 months $3,633
$14,730
Estimated Total $143,683 $307,700

 

Other Fees:

Name of Fee Amount
Weekly Remittance for Products and Services Purchased from Snap-on
100% of miscellaneous charges less miscellaneous credits, plus any amount necessary to be $1 under the franchisee’s credit limit.
Monthly License Fee $107
Computer Software Maintenance Fee $26
Franchise Finance Program Loan Payment For a new person entering the system, no payment for the first 90 days (interest accrues from inception of loan); thereafter, the estimated payment is $1,022/month–$1,152/month. For a Gateway Franchisee becoming a Standard Franchisee, payments begin immediately, and the estimated payment is $1,527/month–$1,711/month.
RA Loan Payment $636 - $711 per month.
RA Loan Prepayment Fees 5% (3% if loan is for an additional franchise) of outstanding principal balance on date of prepayment unless cease being a franchisee or are otherwise employed by Snap-on.
Credit Program and Open Account Payments To be determined.
Transfer Fee 50% of then-current initial license fee, currently $7,500
Renewal Fee 50% of then-current initial license fee, currently $7,500
Insurance/Other Coverage $2,140 - $10,700
Indemnification To be determined.
Pre-existing Obligations Under Gateway Franchise Documents To be determined.
Administrative Handling Charge To be determined.
Van Lease and Maintenance Fee Payment $1,608 - $1,777/month van lease plus $325/month maintenance fee.
Van Lease Termination (under Snap-on Credit Van Lease Program) Unless franchisees purchase their van, franchisees must return the van to a location designated by Snap-on Credit (estimated cost to the franchisee is between $180-$3,135, depending on the franchisee’s location) and franchisees are responsible for damage in excess of ordinary wear and tear. Up to one month’s lease payment for early termination will be due.
Late Charges (under Snap-on Credit Franchise Finance and Credit Programs) Under franchise finance loan: 4% over regular rate (subject to maximum permitted by law). Under Snap-On credit van lease program 5% of amount due (plus interest at 10%) for payment delayed more than 10 days or $10, whichever is greater (subject to maximum permitted by law).
Charges for Insufficient Funds/ Dishonor of Payment under Snap-on Credit Franchise Finance and Credit Programs or for Payment to Snap-on Up to $25, which may increase during the term of the franchise agreement.
Audit Cost of audit.
EC Paper Contract Processing Fee $150 for any month in which Snap-on Credit allows the franchisee to submit an EC contract on paper rather than electronically or remit EC collections manually rather than electronically.
Manual Check Processing Fee $50/month if the franchisee fails to pay Snap-on electronically.
Training $0 - $1,800
Merchandising Program $70 - $100/month.
New Product Purchases Up to $800 per month.

 

  Date of FDD: 2013

The above information has been taken from the UFOC/FDD and online sources of Snap-on Tools.
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