Snap-On Tools
Date of Incorporation: 2001
Franchising Since: 2001
Headquarters: Kenosha, Wisconsin
Country: U.S.
Description: Snap-On Tools Company LLC offers a license to operate a franchised retail mobile store selling high quality repair and diagnostic tools and equipment. Its parent corporation is Snap-on Incorporated. Snap-on manufactures and/or distributes these tools and equipment to professional mechanics and other tool users in the automotive aftermarket and related businesses throughout the United States.
Franchise Offer: There are two franchises offered.
1) 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 franchise agreement between a franchisee and Snap-On. The franchisor makes available to existing standard franchisees who qualify the opportunity to purchase an additional franchise or add an additional van for an existing franchise.
2) The Gateway franchise offering affords a franchisee a license for two years to operate a Snap-on retail mobile store as a Snap-on franchisee. Gateway franchisees will have the option at the end of the term to become a standard franchisee if he/she meets the requirements for conversion set forth in the gateway franchise agreement.
The license under both agreements grants the right to purchase products at a discount from suggested retail products, and the right to resell the products at prices of the franchisee’s choosing, to customers at business locations identified on an assigned list of calls attached to the franchise agreement.
Financial Assistance: Snap-on Credit may, at its option, offer the franchisee direct financing assistance. If the franchisee meets all the requirements, Snap-on Credit may lend funds to cover certain initial investment costs and expenses of the franchise. Snap-on Credit may also lend the franchisee funds to cover initial investment costs and expenses for an additional franchise or to add an additional van under the expansion program. Snap-on Credit may also lend funds to purchase additional inventory or recapitalize business. Snap-on Credit is an entity in which Snap-on Incorporated has an ownership interest. Snap-on Incorporated and its affiliates received payments from Snap-on Credit for the origination and servicing of loans, van leasing and other credit programs.
Training and Assistance: The franchisor provides a technology package that includes the franchisee’s computer with applicable software, a printer and signature pad. The franchisor provides on loan access to a standard franchise operations manual. The franchisor conducts an initial training program for the franchisee.
Territory: The franchisor grants the right to sell products to locations on a “list of calls”, which consists of a series of business addresses at which the franchisor has determined that there are, or should be, tool users who purchase their own tools. The franchisee will receive the list of calls at least seven calendar days prior to signing the franchise agreement. The franchisee is not granted an exclusive territory, and may face competition from the franchisor or other competitive third parties, or from other channels of distribution or competitive brands controlled by the franchisor.
Term of Agreement and Renewal: The length of the franchise agreement is 10 years. The franchisee can add one term of 5 years, if he/she gives written notice between 9 and 12 months prior to expiration, and meets all the renewal requirements.
Obligations and Restrictions: The franchisee alone must personally make all regular sales and service calls on potential customers on the list of calls. This requirement will not apply to an expansion franchise or additional van under the expansion program. The franchisee must use his/her best efforts to promote aggressively and develop fully the sales of products to these potential customers and maintain an inventory of products in at least the minimum amount specified in the Snap-on program. The franchisee must call on every potential customer at stops on the list of calls at least once a week. The franchisee must refrain in engaging in activities that would conflict with these purposes, and must devote full business attention and efforts to these purposes. The franchisee may offer and sell only products, and only to customers on the list of calls. The franchisee may sell merchandise other than specified products only with the franchisor’s express, prior written consent. The franchisee must honor all warranties on products sold.
Total Number of Units: 4,725 units.
Investment Tables:
Initial Investment:
Standard Franchise Fees:
| Name of Fee | Low | High |
|---|---|---|
| Real estate | $0 | $0 |
| Initial license fee | $5,000 | $15,000 |
| Initial inventory | $72,000 | $76,000 |
| Van | $8,000 | $87,500 |
| Van insurance (3 months) | $250 | $1250 |
| Van delivery charge | $190 | $3,135 |
| License | $100 | $2600 |
| Acquisition/development of revolving accounts | $52,500 | $52,500 |
| Other equipment, fixtures, expenses | $150 | $350 |
| Computer software license fee | $770 | $770 |
| Invoice line of credit repayment | $0 | $30,000 |
| Additional funds- 3 months | $8,953 | $12,854 |
| Estimated totals | $145,913 | $281,959 |
Gateway Franchise Fees:
| Name of Fee | Low | High |
|---|---|---|
| Real estate | $0 | $0 |
| Initial license fe | $5,000 | $5,000 |
| Initial inventory | $0 | $0 |
| Van | $3,360 | $3,684 |
| Van insurance (3 months) | $250 | $1250 |
| Van delivery charge | $190 | $3135 |
| License | $100 | $2600 |
| Acquisition and development of revolving accounts | $0 | $52500 |
| Other equipment, fixtures, expenses | $150 | $500 |
| Additional funds- 3 months | $8,569 | $12,470 |
| Estimated totals | $18,619 | $81,139 |
Ongoing Fees:
Standard Franchise Fees:
| Name of Fee | Amount |
|---|---|
| Standard Franchisee weekly remittance for products and services purchased from Snap-on | 25% of balance from previous week minus payments and assigned accounts plus new invoices; in addition, 100% of net amount of other changes/credits |
| Monthly license fee | $102.00 |
| Computer software maintenance fee | $26 |
| Franchise finance program loan payment | No payment for first 90 days; thereafter, $840/month-$981/month for a new person; $1437/month-$1678/month for Gateway franchisee becoming Standard |
| Franchise finance program loan prepayment fees | 5% (3% if loan is to finance an additional franchise) of outstanding principal balance on date of prepayment unless cease being a franchisee or otherwise employed by Snap-on |
| RA loan payment | $655/month-$756/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 and lease program and open account payments | To be determined |
| Transfer fee | 50% of then-current initial license fee, current $7500 |
| Renewal fee | 50% of then-current initial license fee |
| Insurance/other coverage | $2,140-$10,7000 |
| 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 | $1,397-$1,559/month van lease plus $216/month maintenance fee |
| Van lease prepayment fee | 1-3 months’ lease payments |
| Van lease termination fee | Up to one month’s lease payment |
| Late charges | Under franchise finance loan 4% over regular rate. Under snap-on credit van lease program 5% of amount due (plus interest at 10%) for payment delayed more than 10 days or $10.00, whichever greater |
| Charges for insufficient funds/dishonor of payment | Up to $25.00 |
| Audit | Cost of audit |
| EC paper contract processing fee | $150 for any month in which Snap-on Credit allows to submit an EC contract on paper rather than electronically or remit EC collections manually rather than electronically |
| Manual check processing fee | $50/month of fail to pay Snap-on electronically |
| Training | $0-$1800 |
| Merchandising program | $70-90/month |
Gateway Franchise Fees:
| Name of Fee | Amount |
|---|---|
| Gateway Franchise Equity payment | $335 |
| Gateway franchise weekly remittance | the greater of either (i) 68% of cash sales, RA collections, extended credit sales and open account sales after adjustments or (ii)$300 |
| Credit and lease program and open account payments | To be determined |
| Insurance and other coverage | $2140-$10700 |
| Indemnification | To be determined |
| Administrative handling charge | To be determined |
| Van lease and maintenance fee payment | $13970$1559/month van lease plus $216/month maintenance fee |
| Van lease prepayment fee | 1-3 months lease payments |
| Van lease termination fee | Up to one month’s lease payment |
| Late charges (under Snap-on Credit van lease program) | 5% of amount due (plus interest 10%) for payment delayed more than 10 days of $10.00, whichever greater |
| Charges for insufficient funds/dishonor of payment | Up to $25.00 |
| Audit | Cost of audit |
| EC paper contract processing fee | $150/month which Snap-on Credit allows 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 fail to pay Snap-on electronically |
| Merchandising program | $70-90/month |
Date of FDD: 2009
The above information has been taken from the UFOC/FDD and online sources of Snap-On Tools.
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