Matco Tools Franchise: Average Sales ($491K) vs. Cost ($77K-$313K)

In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for a Matco Tools franchise, based on Item 7 of the company’s 2023 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Matco Tools franchise, based on Items 5 and 6 of the company’s 2023 FDD

Section III – Number of franchised and company-owned Matco Tools outlets at the start of the year and the end of the year for 2020, 2021, and 2022, based on Item 20 of the company’s 2023 FDD

Section IV – News updates on the Matco Tools franchise opportunity

Section V – Presentation and analysis of Matco Tools’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 FDD, including information on the:

• 2022 average, median, highest, and lowest total completed business for the top 1/3, middle 1/3, and bottom 1/3 of the 1,527 distributorships in the United States that operated pursuant to distributorship agreements with Matco and were in business for all of 2022 (1,291 standard distributorships, 40 225 distributorships, and 196 enhanced territory distributorships)

• 2022 average, median, highest, and lowest weekly sales for the top 1/3, middle 1/3, and bottom 1/3 of the 1,527 distributorships in the United States that operated pursuant to distributorship agreements with Matco and were in business for all of 2022 (1,291 standard distributorships, 40 225 distributorships, and 196 enhanced territory distributorships)

Section VI – Key ratios, comparables, computations, and analyses for the Matco Tools franchise opportunity (exclusive content for Platinum subscribers)

Section I – Matco Tools Franchise Costs

• Matco Tools franchise costs, based on Item 7 of the company’s 2023 FDD:

• Initial Franchise Fee:  $8,000
• Initial Inventory:  $50,000 to $84,000
• Acquisition and Establishment of Time Payment Reserve Accounts:  $22,000; or Time Payment Line of Credit:  $4,700 to $9,325
• Mobile Store (1 1/2 months’ lease payments):  $2,804 to $163,584
• Computer Hardware:  $2,900 to $3,600
• Computer Software and Internet Service (3 months’ lease payments):  $2,050 to $2,825
• Insurance (3 months’ premiums):  $768 to $3,118
• Travel, Lodging, and Meal Expenses:  $179 to $2,767
• Professional Services:  $310 to $5,852
• Fixtures, Supplies, Licenses:  $525 to $4,400
• Additional Funds (3 months):  $5,000 to $13,500
• Total Estimated Matco Tools Franchise Costs:  $77,236 to $313,646

Section II – Matco Tools’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Matco Tools’ initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2023 FDD:

• Initial Franchise Fee:  $8,000
• Minimum Inventory Purchases:  maintain an inventory of Products at least equal to the starter inventory ($50,000 to $84,000); and maintain a ratio of purchase average to total sales of at least 60%

Section III – Number of Franchised and Company-Owned Matco Tools Outlets

Franchised

2020

• Outlets at the Start of the Year:  1,771
• Outlets at the End of the Year:  1,781
• Net Change:  +10

2021

• Outlets at the Start of the Year:  1,781
• Outlets at the End of the Year:  1,854
• Net Change:  +73

2022

• Outlets at the Start of the Year:  1,854
• Outlets at the End of the Year:  1,809
• Net Change:  -45

Company-Owned

2020

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2021

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2022

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  6
• Net Change:  +5

Section IV – News Updates on the Matco Tools Franchise

• A Match Made in Power – Matco Tools and Milwaukee Tool Partner on Cordless

• Nicholas & Tomasevic Secures Nearly $16 Million Settlement for Misclassified “Independent Contractors” Working as Franchisees for Matco Tools

• Matco Tools Ranked a Top Franchise in Entrepreneur’s Highly Competitive Franchise 500

• Matco Tools Ranked No. 31 on Entrepreneur’s 2023 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Matco Tools Franchise (Item 19, 2023 FDD)

• Presented below in Parts 1 and 2 are certain operating and sales results from 1,527 Distributors during the period from January 1, 2022 through December 31, 2022.

• The four different charts in each section display this data for the three different types of Matco Distributorships that a Distributor may operate: (1) the “standard” Distributorship, (2) the 225, and (3) the Enhanced Territory Distributorship (ETD). The other (first) chart in each section displays this data for all Distributors in the system, including standard Distributorships, 225s, and ETDs.

• For the purposes of this Item 19, a standard Distributorship has between 325 and 349 Potential Customers, a 225 has fewer than 325 Potential Customers, and an ETD has 350 or more Potential Customers. In 2022, there were 1,291 standard Distributors, 40 225s, and 196 ETDs.

• This Item 19 only includes operating data for Matco Distributors in the United States that operated pursuant to Distributorship Agreements with Matco and were in business for all of 2022. Matco is not providing, and this Item 19 does not reflect, information regarding Distributors who started during 2022, or those who left the system or stopped selling Products during 2022.

• Part 2 reflects the average weekly sales figures for the Matco Distributors in 2022. Part 2 also includes the median, and the highest and lowest weekly sales figures.

Part 1 – Average, Median, Highest, and Lowest Numbers in the Range of Total Completed Business – 2022

• Part 1 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. Part 1 also includes the median, and the highest and lowest gross revenue figures. The information is segregated into thirds, based on Total Completed Business.

• The term “Total Completed Business” means the total cash or revenue a Distributor received during 2022 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 PSA (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.

A.  All Reporting Distributorships

• Chart A reflects the operating data for 1,527 total Matco Distributors in the United States operating pursuant to Distributorship Agreements with Matco that were in business for all of 2022 and who reported sales for at least 48 weeks during 2022.

• The three groupings of Distributors in Chart A (Top 1/3, Middle 1/3, and Bottom 1/3) included 509 Distributors in the Top 1/3 group, 509 Distributors in the Middle 1/3 group, and 509 Distributors in the Bottom 1/3 group.

Top 1/3

• Average:  $721,821
• Number of Distributors Above Average:  198 (38.9%)
• Median:  $670,738
• Highest:  $1,788,987
• Lowest:  $543,568

Middle 1/3

• Average:  $460,942
• Number of Distributors Above Average:  258 (50.1%)
• Median:  $461,338
• Highest:  $543,312
• Lowest:  $387,386

Bottom 1/3

• Average:  $292,702
• Number of Distributors Above Average:  304 (59.7%)
• Median:  $308,563
• Highest:  $387,296
• Lowest:  $0

All Reporting Distributorships

• Average:  $491,822

B.  Standard Distributorships

• Chart B reflects the operating data for 1,291 standard Matco Distributors in the United States operating pursuant to Distributorship Agreements with Matco that were in business for all of 2022, who had between 325 and 349 Potential Customers, and who reported sales for at least 48 weeks during 2022.

• The three groupings of Distributors (Top 1/3, Middle 1/3, and Bottom 1/3) included 430 Distributors in the Top 1/3 group, 430 Distributors in the Middle 1/3 group, and 431 Distributors in the Bottom 1/3 group.

Top 1/3

• Average:  $686,348
• Number of Distributors Above Average:  165 (38.4%)
• Median:  $647,694
• Highest:  $1,394,047
• Lowest:  $525,095

Middle 1/3

• Average:  $451,890
• Number of Distributors Above Average:  219 (50.9%)
• Median:  $453,737
• Highest:  $524,045
• Lowest:  $380,642

Bottom 1/3

• Average:  $290,357
• Number of Distributors Above Average:  254 (58.9%)
• Median:  $305,792
• Highest:  $380,139
• Lowest:  $36,082

All Standard Distributorships

• Average:  $476,054

C.  225 Distributorships

• Chart C reflects the operating data for 40 total Matco Distributors in the United States operating pursuant to Distributorship Agreements with Matco that were in business for all of 2022, who had fewer than 325 Potential Customers, and who reported sales for at least 48 weeks during 2022.

• The three groupings of Distributors (Top 1/3, Middle 1/3, and Bottom 1/3) included 13 Distributors in the Top 1/3 group, 13 Distributors in the Middle 1/3 group, and 14 Distributors in the Bottom 1/3 group.

Top 1/3

• Average:  $691,832
• Number of Distributors Above Average:  6 (46.2%)
• Median:  $648,997
• Highest:  $1,010,700
• Lowest:  $559,817

Middle 1/3

• Average:  $453,785
• Number of Distributors Above Average:  5 (38.5%)
• Median:  $443,244
• Highest:  $552,020
• Lowest:  $352,964

Bottom 1/3

• Average:  $230,221
• Number of Distributors Above Average:  8 (57.1%)
• Median:  $233,399
• Highest:  $303,967
• Lowest:  $115,847

All 225 Distributorships

• Average:  $452,903

D.  Enhanced Territory Distributorships (ETDs)

• Chart D reflects the operating data for 196 total Matco Distributors in the United States operating pursuant to Distributorship Agreements with Matco that were in business for all of 2022, who had more than 350 Potential Customers, and who reported sales for at least 48 weeks during 2022.

• The three groupings of Distributors (Top 1/3, Middle 1/3, and Bottom 1/3) included 65 Distributors in the Top 1/3 group, 65 Distributors in the Middle 1/3 group, and 66 Distributors in the Bottom 1/3 group.

Top 1/3

• Average:  $921,675
• Number of Distributors Above Average:  26 (40%)
• Median:  $864,563
• Highest:  $1,788,987
• Lowest:  $678,279

Middle 1/3

• Average:  $559,770
• Number of Distributors Above Average:  30 (46.2%)
• Median:  $549,284
• Highest:  $677,043
• Lowest:  $439,276

Bottom 1/3

• Average:  $333,569
• Number of Distributors Above Average:  38 (57.6%)
• Median:  $350,855
• Highest:  $437,301
• Lowest:  $0

All Enhanced Territory Distributorships

• Average:  $603,620

Part 2 – Weekly Distributor Sales Average – 2022

• “National Distributor Sales Average” means the total reported sales of all Products by the reporting Distributors in 2022 in each group, divided by the number of weekly “close-outs” 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.

• One of the differences between the “Total Completed Business” and “Sales” is that “Sales” (Part 2) reflects all sales, even if some of the payments have not been received, and “Total Completed Business” (Part 1) 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 includes sales tax collected, and that the figures for Sales do not include sales tax.

A. All Reporting Distributorships

• National Distributor Sales Average:  $9,258
• Distributors Reporting:  1,527
• Distributors At or Above Average:  658 (43.1%)
• Median:  $8,667
• Highest:  $34,657.75
• Lowest:  $0

B. Standard Distributorships

• National Distributor Sales Average:  $8,985
• Distributors Reporting:  1,291
• Distributors At or Above Average:  564 (43.7%)
• Median:  $8,502
• Highest:  $29,776
• Lowest:  $594

C. 225 Distributorships

• National Distributor Sales Average:  $8,386
• Distributors Reporting:  40
• Distributors At or Above Average:  20 (50%)
• Median:  $8,136
• Highest:  $17,375
• Lowest:  $1,994

D. Enhanced Territory Distributorships (ETD)

• National Distributor Sales Average:  $11,229
• Distributors Reporting:  196
• Distributors At or Above Average:  85 (43.4%)
• Median:  $10,253
• Highest:  $34,658
• Lowest:  $0

• 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.

• During the time period covered by this financial performance representation – the 2022 calendar year – 275 Distributors closed or ceased operations. Of these, 28 were open for less than 12 months, including 17 that closed or ceased operations pursuant to the Test Drive program that is described in Item 5.

• Your sales, revenue, and income will be affected by a variety of factors, including the sales and marketing skills of your Principal Owner; your Principal Owner’s or Operator’s frequency of visits to actual and Potential Customers; efforts to collect on unpaid invoices or installment contracts; retail prices you charge for products; discounts you may offer; prevailing economic or market conditions; demographics; interest rates; your capitalization level; the amount and terms of any financing that you may secure; and your Principal Owner’s business and management skills.

• Some distributors have sold this amount. Your individual results may differ. There is no assurance that you will sell as much.

Section VI – Matco Tools Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️