Considering a Snap-on Tools Franchise? Don’t Overlook These 20 Important Franchise Fees

Updated on April 21, 2018.

If you are considering a Snap-on Tools franchise, don’t get blindsided by these 20 important franchise fees (from the initial franchise fee, to the royalty fee, to 18 other fees found in Items 5 and 6 of Snap-on Tools’ 2018 FDD).

1.  Initial License Fee:  $8,000 to $16,000

• The initial fees include an initial license fee of $8,000 to $16,000, plus additional fees and payments ranging between $107,770 and $117,770 for goods and services Snap-on Tools provides you before your franchise opens.

• Except as otherwise described, the initial fees are uniform.

• The initial license fee of $16,000 includes your initial training, which Snap-on Tools estimates to have a cost of $3,000, your technology package, which it estimates to have a cost of $3,000, and a turnkey office supply package, which it estimates to have a cost of $400.

• Under the following circumstances the initial license fee and what is included in the initial license fee will vary:

• Additional Franchise. If you are purchasing an Additional Franchise, which includes the purchase of assets by an existing franchisee from an existing franchisee to add an additional franchise, or if you currently operate an additional van under a Franchise Agreement and meet all the requirements to make that a franchise, your initial license fee will be $10,000 and you will receive initial training for your employee, the technology package, and the turnkey office supply package.

• Renewal Franchise. If you are purchasing a Renewal Franchise, you pay an initial license fee of $8,000. This fee does not include initial training, the technology package, or the turnkey office supply package.

• Transfer Franchise. If you are purchasing a Transfer Franchise, other than as an Additional Franchise, you will pay a transfer fee of $10,000, unless a different transfer fee is specified in the selling franchisee’s Franchise Agreement. You will receive training, but you will not receive the technology package or the turnkey office supply package.

2.  Initial Inventory:  $107,000 to $117,000

• You must purchase an initial inventory, which Snap-on Tools pre-selects for you, with a suggested retail price approximately between $158,000 to $172,000 and a cost to you approximately between $107,000 to $117,000.

• Snap-on Tools pre-selects your initial inventory so that you have a balanced inventory to start your franchise. After the initial inventory, you will make all decisions regarding inventory items you desire to purchase.

• Under the following circumstances, you will pay a lesser amount for your initial inventory or receive additional inventory without cost to you:

• Additional Franchise. If you are purchasing an Additional Franchise, you will receive inventory having a franchisee cost of $20,000 at no cost to you (the “Inventory Incentive”). This incentive is designed to assist you in starting your Additional Franchise and providing ongoing continuity in the operation of that franchise.

• For that reason, in order to earn the Inventory Incentive, you must operate the business under the Additional Franchise for a minimum of three years unless you transfer it to a franchisee approved by Snap-on Tools. If, for any reason other than a transfer of business assets of the Additional Franchise to a franchisee through transfer, either (i) the Additional Franchise is terminated or (ii) you cease operating the van under the Additional Franchise during the three-year period after you start, you will be required to pay Snap-on Tools the entire Inventory Incentive you originally received, which will be immediately due and payable.

• Except as so provided, you will have no further obligation to Snap-on Tools for the Inventory Incentive. This incentive is available to an existing franchisee who converts an additional van to an Additional Franchise.

• Veteran’s Discount. If you are a veteran of the United States Armed Forces who has been honorably discharged and you are purchasing your initial Snap-on franchise, you will receive inventory with a franchisee cost of $20,000 at no cost to you (“Veteran’s Discount”).

• Employee Discount. While no program is currently available, from time to time during the effective period of the 2018 disclosure document, Snap-on may make available to certain groups of Snap-on employees the opportunity to purchase an initial Snap-on franchise and provide a discount on the initial inventory. An employee who qualifies for the Veteran’s Discount is not eligible for any employee discount, but will receive the Veteran’s Discount.

• Unassociated Dealer. If you are currently in the business of selling and servicing tools for professional mechanics and other customers in the automotive aftermarket and related businesses, but you are not associated with Snap-on Tools (“Unassociated Dealer”), Snap-on Tools may provide you with a portion of your initial inventory, without cost to you, at the time you become a Franchisee.

• If you are purchasing a Transfer Franchise or Renewal Franchise, you will not be required to purchase additional inventory as long as your initial inventory meets Snap-on Tools’ minimum inventory requirement.

3.  Computer Software License Fee:  $770

• You will need to use the Snap-on software program described in Item 11. You must pay Snap-on Tools the Software License Fee, which is currently $770, plus any applicable tax. This fee is not applicable if you are purchasing a Renewal Franchise.

• The initial license fee and Computer Software License Fee are non-refundable. Inventory is subject to Snap-on Tools’ tool return policy.

4.  Weekly Remittance for Products and Services Purchased From Snap-on Tools:  the minimum amount is 100% of miscellaneous charges less miscellaneous credits, plus any amount necessary to be $1.00 under your credit limit

• Due Date:  Payable weekly upon receipt of the final weekly statement. Receipt means the final weekly statement including each invoice displayed electronically and which you must access.

5.  Monthly License Fee:  $120.00

• Due Date:  Payable monthly upon receipt of an invoice from Snap-on Tools.

6.  Computer Software Maintenance Fee:  $26.00

• Due Date:  Payable monthly upon receipt of an invoice from Snap-on Tools.

7.  Franchise Finance Program Loan Payment:  no payment for the first 90 days (interest accrues from inception of loan); thereafter, the estimated payment is $1,404 to $1,628/month, except for a Transfer Franchise the estimated payment is $1,330 to $2,401/month

• Due Date:  Payable weekly.

8.  RA Loan Payment:  $739 to $848/month, except for a Transfer Franchise the estimated payment is $0 to $848/month

• Due Date:  Payable weekly beginning six months after the time you become a franchisee.

9.  Credit Program Payments:  to be determined

• Due Date:  To be determined.

10.  Open Account Payments:  to be determined

• Due Date:  To be determined.

11.  Transfer Fee:  this fee is currently $10,000

• Due Date:  Upon transfer.

12.  Renewal Fee:  50% of Snap-on Tools’ then-current Initial License Fee. The Renewal Fee is currently $8,000

• Due Date:  Upon renewal.

13.  Insurance and Other Coverage:  $5,674 to $10,503

• Due Date:  Payable annually, quarterly, or monthly.

14.  Indemnification:  to be determined

• Due Date:  To be determined.

15.  Administrative Handling Charge:  to be determined

• Due Date:  To be determined.

16.  Van Lease and Maintenance Fee Payment:  $2,078 to $2,444/month van lease payment, plus $325/month maintenance fee

• Due Date:  Payable weekly in advance (under the Snap-on Credit Van Lease Program) of each month’s lease payment due date.

17.  Van Lease Termination (under Snap-on Credit Van Lease Program):  unless you purchase your van, you must return the van to a location designated by Snap-on Credit (estimated cost to you between $180 to $4,100, depending on your location) and you are responsible for damage in excess of ordinary wear and tear. Up to one month’s lease payment for early termination will be due.

• Due Date:  Upon termination.

18.  Late Charges (under Snap-on Credit Franchise Finance and Credit Programs):  under the Franchise Finance Loan, 4% over the regular rate (subject to the maximum permitted by law). Under the Snap-on Credit Van Lease Program, 5% of the amount due (plus interest at 10%) for a payment delayed more than 10 days, or $10.00, whichever is greater (subject to the maximum permitted by law).

• Due Date:  Upon failing to make timely payment.

19.  Charges for Insufficient Funds or Dishonor of Payment Under Snap-on Credit Franchise Finance and Credit Programs or for Payment to Snap-on Tools:  up to $25.00, which may increase during the term of your Franchise Agreement

• Due Date:  Upon dishonor of payment by check, ACH, or similar instrument.

20.  Training:  $0 to $3,000

• Due Date:  At time of training.