The Dark Side of Matco Tools Franchise

Is Matco Tools a Good Franchise? Cost, Earnings and Lawsuits! We get asked a lot about Matco Tools Franchise. Is it a good business to own?

Matco is one of those franchises where many buyers make decisions on emotion rather than data. How great would it be driving around in your own truck, being your own boss, selling tools to businesses and making a six figure income. Matco tools has some big earnings numbers on their website with total revenue up to 2 million a year, this looks like a great opportunity. Or is it?

To get started you'll need to invest between $76,819 to $309,133 . As far as earnings here are the numbers from Matco's website as of today January 10, 2023. Matco earnings are divided by top middle and bottom 1/3 of distributors. Top 1/3 median revenue is $644,369, middle 1/3 is $447,053 and bottom 1/3 of Matco distributors earn $303,025. Looks like their top earner is just under 2 million and their bottom is at zero.

Matco doesnt list what your net earnings would be after expenses. This number will vary depending on your location and situation but it will be a whole lot less than the gross number and you have to wonder if Matco distributors are making a livable income. More on that in a moment but perhaps relevant to that point look at this:

Matco includes this on their page: "During the 2021 calendar year, 189 Distributors closed or ceased operations. Of these, 15 were open for less than 12 months" I looked at their FDD and their growth numbers showed even with closures they had sold almost 150 franchises since 2019.

Online complaints are a dime a dozen, you never know if they can be trusted. There are dozens of complaints about the Matco franchise all over the net. Complaints of fraud, no freedom for owners, exaggerated earnings claims, territories being taken away and more. A simple search for Matco complaints brings up dozens. In fact Unhappy Franchisee website states they had more complaints on Matco than on any other franchise. But how can we validate if these are legitimate?

One of the benefits of buying a franchise is the companies are legally obligated to list lawsuits over a certain period of time in their disclosure documents. I looked at their most recently filed documents and many of these online allegations also show up as legal cases against Matco.

There is currently a class-action lawsuit alleging that due to the level of control exerted over Matco franchisees, one of the primary complaints, that they are not independent, franchised distributors but should be considered employees of Matco. Other lawsuits include fraud and civil conspiracy based on fraudulent and deceptive financial projections. (2x) Unjust enrichment, fraud, deceit and negligent misrepresentation, (2xx) and a few more pages of people suing Matco and Matco suing its distributors. Now lawsuits aren't the end of the world most larger franchises will have them, but these type are definitely a red flag. I would want to speak with many existing franchisees to determine their sentiment.

So is Matco a good business? It is likely the distributor making almost 2 million is happy as are many others but there are quite a few red flags including the complaints and lawsuits. One of the comments I saw when researching this piece really sums up my sentiment. "I have seen a lot of Snap-on, Matco, mac and Cornwell dealers fail and succeed. I can only speak for Snap-on however. If you do your homework when you get in. Get the right training and support and get a good route you can make money. Understand though if worked properly You just bought a 6 day a week JOB working 12 hours a day. At the end of the year if all went well you made 60 – 70 grand. To me thats a job"

So this comment was for Snap On - a similar business, and today that figure is probably higher, but it speaks to the crux of the issue and something we always speak about on the channel. Do you want a business, or do you want to buy a job. There are many businesses that are suited to ultimately step away from the operations and allow you to become a passive owner. Are you comfortable running a business in an executive capacity or prefer working in the business? If you love the tool industry, love talking to people and driving Matco could be a good business. If your goals are to build a franchise empire it might not be. As we always say there is no perfect franchise for everyone, it depends on you!

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https://www.matcotools.com/franchise/investment/earning-potential