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FDD Talk 2016: The Snap-on Tools Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on October 28, 2016

in FDD Talk 2017: Miscellaneous Franchises, Franchise Earnings, Mobile Tool Franchise

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Snap On Tools Photo by Alex Grabau

In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the Snap-on Tools franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Snap-on Tools franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Snap-on Tools’ financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • number and percentage of Snap-on Tools franchisees for each of the given ranges of “Paid Sales” during the 2015 reporting period, presented in $25,000 increments between $175,000 and $1,200,000+ per year (the sample includes only those franchisees who operated for all 12 months of the 2015 reporting period and for which the franchisor has received Paid Sales information for the full period)
  • average discount to franchisees from suggested retail prices, based on all franchisee purchases of Products from Snap-on Tools in 2015

Section I – Background Information

It was in 1920 when Joseph Johnson and William Seidemann came together to turn a brilliant idea into a business reality. Back then, a wrench was a wrench, and you had to have lots of different wrenches to do lots of different jobs. Their idea was to fashion a wrench with interchangeable sockets that could snap onto the handle for different jobs. Thus, one tool could do lots of different jobs simply by changing out the socket. This was a complete revolution in the tool industry of that time.

Their other innovative idea was to sell the tools by taking them to customers and showing them how they work, a task taken on in the early days by Stanton Palmer and Newton Tarble.

The company has grown over the decades to include a product line of well over 22,000 different tools for all kinds of purposes, but the company still sells them directly to customers, now by trucks that visit customer locations each week.

Franchising began in 1991. The overall number of locations has either held steady or inched up slightly over the last decade and currently stands at 3,318 domestic units, 1,261 international units in 130 countries, and another 225 that are company-owned for a grand total of more than 4,800.

It is now a $3.3 billion S&P 500 company headquartered in Kenosha, WI. Here’s how Snap-on Tools keeps its customers’ toolboxes well supplied in snappy fashion:

A Broadening Focus

Not surprisingly, for many decades the primary customers for Snap-on have been mostly vehicle repair shops and service departments at car dealerships. But nowadays the company sells to all kinds of repair technicians, including any business that has a need for tools, which is a wide-open market.

The Value Proposition

Overall it’s a pretty simple concept – people who need tools can get them each week from a vendor who shows up on their doorstep with a fully stocked truck full of tools, equipment, and repair information and systems solutions.

A Strong Company and Brand

Franchisees enjoy the benefits of being backed by a $3.3 billion company that always has its eye on innovation and quality. It’s the #1 professional tool brand in the world, and the brand demanded most by professional repair technicians because it’s a brand that has been trustworthy since 1920.

Commitment to Product Quality

Snap-on has a stellar reputation that it tirelessly works to maintain. As noted on the company’s website: “Product development and innovation remain a top priority for Snap-on. So does loyalty to our customers. In fact, many of our products are a direct result of technician input. Our customers have learned to look to us to provide them with the exact solutions they need—more so than any other tool provider out there.”

That means breadth of product line, and tools that get the job done quickly and efficiently. An indicator of Snap-on’s success in this regard – more than 2,000 active and pending patents around the world.

Section II – Estimated Costs

  • Please click here for detailed estimates of Snap-on Tools franchise costs, based on Item 7 of the company’s 2016 FDD.

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis

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