In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Matco Tools franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Matco Tools franchise, based on Item 7 of the company’s 2021 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Matco Tools franchise, based on Items 5 and 6 of the company’s 2021 FDD
- Section IV – Number of franchised and company-owned Matco Tools outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD
- Section V – Presentation and analysis of Matco Tools’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:
- 2020 Average Total Completed Business for the top third, middle third, and bottom third of the 1,508 Matco Distributors in the United States that were in business for all of 2020, and that reported sales for at least 48 weeks during 2020
- 2020 Weekly National Distributor Sales Average for the 1,508 Matco Distributors in the United States who (i) were in business at the beginning of 2020, (ii) were operating at the end of 2020, and (iii) reported sales close-outs at least 48 weeks during 2020
Section I – Background Information
18 Things You Need to Know About the Matco Tools Franchise
Ranked a Top Franchise in Entrepreneur’s 42nd Annual Franchise 500
1. At the end of January 2021, Matco Tools ranked in Entrepreneur magazine’s Franchise 500, the world’s first, best, and most comprehensive franchise ranking. Placement in the Franchise 500 is a highly sought-after honor in the franchise industry making it one of the company’s most competitive rankings ever.
2. Recognized as an invaluable resource for potential franchisees, the Franchise 500 ranks Matco Tools 50th for its outstanding performance in areas including unit growth, financial strength and stability, and brand power. Factors that go into the evaluation include: costs and fees, size and growth, support, brand strength, and financial strength and stability. Each franchise is given a cumulative score based on an analysis of more than 150 data points.
3. Tim Gilmore, president of Matco Tools, said, “Our mission is to provide people with the opportunity to realize their dream of successful business ownership. This year has been challenging for people in many ways, seeing how stable our performance has been during this time is a reflection of the Matco business system as well as the dedication of our Franchisees.”
4. Over its 42 years in existence, the Franchise 500 has become both a dominant competitive measure for franchisors and a primary research tool for potential franchisees. This will be Matco’s 21st consecutive Top 50 ranking and is a testament to Matco’s strength as a franchise opportunity.
Partners with Volta Power Systems and Summit Bodyworks on Anti-Idling Solution for Mobile Tool Trucks
5. In late February 2020, Volta Power Systems and Summit Bodyworks announced a new partnership with Matco Tools to offer an idle-free, lithium ion power system to Matco franchisees. Matco Tools released a new line of trucks featuring the energy-saving systems at its National Tool Expo Conference in San Diego, CA. The Volta systems will enable Matco Tool franchisees to save on maintenance costs and provide shoppers a quiet retail environment by eliminating the need to continually idle the truck.
6. Tim Gilmore, president of Matco Tools, said, “We’re excited to be able to offer our franchisees and customers a better, quieter, more environmentally-conscious shopping and selling experience. The Volta system will also help our Franchisees cut maintenance costs by cutting the strain of continuous engine idling.”
7. As of August 2019, over half of all U.S. states have idling-reduction or restrictive emissions laws. In addition to environmental impact, fuel and oil changes can cost more than $8,300 per year for mobile retail trucks just from idling alone, according to some estimates. “Our team is ecstatic to be able to partner with Matco and help them move their fleet into the future of energy, making sure they have all the idle-free power they’ll need to keep their business running smoothly wherever they are,” said Jack Johnson, CEO of Volta Power Systems.
8. The all-day power system includes an automotive grade, NMC lithium ion storage pack that will provide Matco trucks with 18,000 Whs of storage and 3.6 kW of 120 AC (30A). The system provides all the energy operators need to power air conditioning, lighting, computer systems, and more. Franchisees can recharge their systems overnight and take the power with them during the day.
9. Chris Munson, general manager at Summit Bodyworks, said, “We’re always looking for ways to empower our clients through innovative technologies. Partnering with Volta to give Matco Tools a cost-effective, green fleet solution is in alignment with our mission.”
Releases New Ball Joint Connected Adapter Kit
10. In mid-July 2020, Matco Tools released the new Matco BJPXR9 Ball Joint Connected Adapter Kit, which covers 29 percent more vehicle models than competitive kits, with fewer adapters. The patent-pending secure-click C-frame holds adapters, cups, and ball joints securely, making it easier to setup, remove, and install ball joints.
11. Made by OTC, the Matco BJPXR9 is maintenance-free, with no O-rings or split rings to lose or replace, while holding cups and adapters throughout ball joint service. An additional 18 adapters are available, covering 43 percent more vehicle models than competitors. Matco’s BJPXR9 Ball Joint Connected Adapter Starter Kit and 18 additional adapters are available now through Matco dealers and matcotools.com only.
12. Exclusive to Matco, the BJPXR9 ball joint connected adapter kit is fully compatible with ball joint cups and adapters from most Matco and OTC ball joint kits, including MST6529, MBJA20, LUBJP, BJP7025C, and MST6539 kits. The C-frame can also be used on U-joints, wheel studs, and heavy-duty wheel studs, and is compatible with applicable Matco and OTC kits.
13. The BJPXR9 starter kit includes 9 cups and adapters for use on 235+ vehicle models. The additional 18 adapters, available individually, cover 375+ vehicle models. A 17-page application manual includes vehicle application by year, make, model, and adapters needed for both removal and installation.
14. The Matco BJPXR9 boasts an extra-large 9” x 2-3/4” C-frame for use on cars, trucks, and SUVs from a Honda Civic up to an F-550. At only 10.4 lbs., the C-frame is easier to handle and setup for less fatigue. Its forcing screw is impact-rated with an integrated striking cap for hammer blows, to help shock a ball joint during removal or installation.
15. Matco Tools was founded in 1946 as the box manufacturing division of Mac Tools, which was started in 1938 in Sabina, Ohio. After a few decades, in 1979, Matco Tools and Mac Tools parted ways and Matco became its own company.
16. That same year, Matco began selling tools directly to professional mechanics and everyday consumers through a network of independent franchised mobile distributors. Additionally, when Matco became independent, the company debuted its now iconic hex and eagle logo. This logo has not changed much in over 40 years.
17. Today, Matco Tools has franchise dealers in all 50 states as well as Canada and Puerto Rico.
Entrepreneur’s Franchise 500
18. Matco Tools ranked No. 50 on Entrepreneur’s 2021 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Matco Tools franchise costs, based on Item 7 of the company’s 2021 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Matco Tools’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 1,721
- Outlets at the End of the Year: 1,711
- Net Change: -10
- Outlets at the Start of the Year: 1,711
- Outlets at the End of the Year: 1,771
- Net Change: +60
- Outlets at the Start of the Year: 1,771
- Outlets at the End of the Year: 1,781
- Net Change: +10
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 1
- Net Change: -1
- Outlets at the Start of the Year: 1
- Outlets at the End of the Year: 1
- Net Change: 0
- Outlets at the Start of the Year: 1
- Outlets at the End of the Year: 1
- Net Change: 0
Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis
- Presented below in Charts A and B are certain operating and sales results from 1,508 Distributors during the period from January 1, 2020 through December 31, 2020.
- Chart A reflects the average gross revenue figures, referred to as “Average Total Completed Business,” for the Matco Distributors, which includes the revenue from the sales of Products and any other items that were sold by the Mobile Store. Chart A also includes the median, and the highest and lowest gross revenue figures.
- The information is segregated into thirds, based on Total Completed Business.
- Chart B reflects the average weekly sales figures for the Matco Distributors for 2020. Chart B also includes the median, and the highest and lowest weekly sales figures.
- The data in the charts are obtained from the Distributors through the MDBS system. As Distributors purchase Products from Matco, they also report on sales made and revenue received. A weekly sales report is generated if the Distributor places an order to purchase Products in a given week.
- Therefore, the information in the charts is based solely on data received from the Distributors through MDBS. These figures have not been reviewed or audited by Matco.
- Other than the revenue figures below, the charts do not include any estimate of, or specific or historic data regarding, costs, expenses, or debts that a Distributor has incurred, or may in the future incur.
Chart A – Average, Median, Highest, and Lowest Numbers in the Range of Total Completed Business – 2020
- The chart reflects the operating data for 1,508 Matco Distributors in the United States that were in business for all of 2020, and that reported sales for at least 48 weeks during 2020.
- Matco is not providing, and this chart does not reflect, information regarding Distributors who started during 2020, or those who left the system or stopped selling Products during 2020.
- The 3 groupings of Distributors (Top 1/3, Middle 1/3, and Bottom 1/3) included 503 Distributors in the Top 1/3 group, 503 Distributors in the Middle 1/3 group, and 502 Distributors in the Bottom 1/3 group.
- The term “Total Completed Business” means the total cash or revenue a Distributor received during 2020, including sales tax collected, from the sale of all products and services. This includes revenue from the sale of Products and any other items that were sold by the Mobile Store.
- The revenue received by the Distributors is comprised of cash sales, Time Payment collections from previous sales, credits received by the Distributor from the sale of Purchase Security Agreements (which are installment contracts), and cash received based on monthly invoices and customers (usually products sold to a shop or business and not an individual). This does not include any Volume Payment to Terms bonus, or rebate payments.
- One of the differences between “Total Completed Business” and “Sales” is that “Sales” reflects all sales, even if some payments have not been received, and “Total Completed Business” reflects sales only based on cash collected and PSA credits collected. Therefore, there is a difference due to timing and collections.
- Another difference between “Total Completed Business” and “Sales” is that the figures reported by Distributors for Total Completed Business include sales tax collected, and that the figures for Sales do not include sales tax.
- The “average” is calculated by adding the total business for all Distributors in the group, and dividing that number by the number of Distributors in the group.
- The term “median” means the data point that is in the center of all data points used.
- Average: $619,445
- Number of Distributors Above Average: 187 (37%)
- Median: $573,469
- Highest: $1,689,819
- Lowest: $476,081
- Average: $401,646
- Number of Distributors Above Average: 247 (49%)
- Median: $399,888
- Highest: $475,820
- Lowest: $335,734
- Average: $249,950
- Number of Distributors Above Average: 271 (44%)
- Median: $262,022
- Highest: $335,002
- Lowest: $24,200
Chart B – Weekly National Distributor Sales Average – 2020
- The terminology “National Distributor Sales Average” means the total reported sales of all Products by the 1,508 reporting Distributors in 2020, divided by the number of weekly “closeouts” of those same Distributors.
- Each week the Distributors are required to report their sales of Products which are the gross selling price of all Products, whether or not the sale is for cash, for credit, or partial cash and partial credit, or trade-in. When a Distributor closes out its sales for the week, it triggers a report.
- The total sales for a year may not be reported for each of 52 weeks, as Distributors may not close out sales each week. Therefore, the annual National Sales Average may not represent 52 weeks of sales.
- The number of Distributors reporting sales in 2020 was 1,508. The 1,508 Distributors were Matco Distributors in the United States who (i) were in business at the beginning of 2020, (ii) were operating at the end of 2020, and (iii) reported sales close-outs at least 48 weeks during 2020.
- National Distributor Sales Average: $7,806
- Distributors Reporting: 1,508
- Distributors At or Above Average: 670 (44%)
- Median: $7,368
- Highest: $30,574
- Lowest: $205