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How Much Does It Cost to Open Matco Tools Franchise?

Do you want to open a tools retail business by buying Matco Tools franchise? If YES, here is how much it cost to open a Matco Tools franchise successfully. Matco Tools company started operations in 1946. They have their corporate head office at Stow, Ohio and presently they have an estimated 1,815 franchise units in operation.

Matco Tools Corporation is the franchisor. Matco is a manufacturer and distributor of professional quality mechanics’ tools and service equipment.

The franchisor has developed a distinctive business system relating to the establishment and operation of Matco mobile distributorships which sell tools, tool boxes, service equipment, automotive diagnostic services, software subscriptions, and other goods and services, including, for example, apparel, model cars and other collectible items, and consumables (such as mechanic’s hand soaps), and such other items that Matco may in its sole discretion offer.

Matco, backed by one of the largest companies in the country, handles all franchise investment financing in the office. They may finance up to $89,000 of the initial inventory and all or part of the Time Payment Reserve, sometimes with no down payment required.

If you qualify, they may provide financing for an additional $30,000 to cover other startup expenses. Each situation varies based on your finances, however, the investment needed for a new franchisee can be relatively low compared to other franchise opportunities. Matco Tools will even help you figure out how to borrow from your own 401(k)/IRA to get your business started. Getting started is easier than most people think.

Matco Tools Franchise Startup Costs

Your Initial Inventory

A Matco distributor buys his inventory directly from Matco at a significant discount. He then sells the tools to his customers at a higher (list) price. They will start you with an initial inventory of the tools most likely to be purchased by your customers. Almost all distributors finance their initial inventory, which in 2017 ranges between $63,000 and $86,000.

A Time Payment Reserve Account

Upwards of 70 percent of a distributor’s customers pay “on time” (like a credit card account). You’ll need to fund this account so that you can begin offering time – based payments to customers immediately.

Your Truck Lease

This is generally a much smaller figure, as you will need to pay for three months of the lease and insurance.

Professional Supplies and Systems

This includes a computer, software, and items like business cards and office supplies. In the grand scope of things, this is a much smaller amount than would be required for many other franchise businesses. Any new business will have similar franchise startup costs. Consequently, most people will seek financing to cover their initial costs. Matco do their best to make it easy for anyone with the will, passion, and desire to own their own business to do just that.

Matco provides in-house financing for those who qualify, making it far easier for many of their distributors to get the franchise investment capital they need. In some cases, they may be able to finance all your initial costs.

Below is The Investment Tables (Estimated Initial Investment)

  • Initial Franchise Fee – $7,000 – $7,000
  • Initial Inventory – $50,000 – $88,000
  • Time Payment Line of Credit – $22,000, $4,700, $22,000, $9,325
  • Mobile Store — three months lease payments – $5,385 – $125,750
  • Computer Hardware – $2,700 – $3,400
  • Computer Software and Internet Service – 3 months payments – $2,050 – $2,750
  • Insurance – 3 months premiums – $427 – $3,412
  • Travel, Lodging and Meal Expenses – $170 – $2,515
  • Professional Services – $150 – $2,000
  • Fixtures, Supplies, Licenses – $500 – $4,000
  • Additional Funds – 3 months – $5,000 – $13,500

ESTIMATED TOTAL – $78,082 – $274,327

Minimum Inventory Purchases

Maintain an inventory of products at least equal to the starter inventory; and maintain a ratio of purchase average to total sales of 60 percent. Also, during the first year of operations the franchisee must participate in the NPP program.

  • Computer Maintenance and Support Charge – $645 or $1,045
  • License Fee for Credit Card Processing Software – $150
  • License Fee for Signature Pad Processing Software – $45
  • Additional Training Fee (for spouse) – $295
  • Field Training for Additional Replacement Employees and Operators – $1,500 per week for field training provided to the 3rd and subsequent employees/ operators.
  • Web Page Maintenance Fee – $195
  • Insurance – $145 to $1,137
  • Late Fee on Open Purchase Account – 5 percent of amount due per week; maximum $100.
  • Inventory Returns, Restocking Fee – 15 percent restocking fee (35 percent in limited circumstances).
  • Repair Kits – $10 to $40 per kit (but, generally $10 per kit).
  • Successor Distributorship Fee – 50 percent of Matco’s then-current initial franchise fee.
  • Administrative Fee for Selling Outside of the List of Calls – Up to $5,000 per occurrence.

Please note that the above information has been compiled from the FDD of Matco Tools. Year of FDD: 2022.

The Summary of the Fee Expected from Potential Investors

Matco Tools has the franchise fee of up to $7,000, with total initial investment range of $91,785 to $269,665.

  • Initial investments: $91,785 – $269,665
  • Net-worth Requirement: $25,000
  • Liquid Cash Requirement: $25,000
  • Initial Franchise Fee: $7,000

4 Steps on How to Get or Open Matco Tools Franchise

Although acquiring an Matco Tools franchise requires a relatively large initial investment, the amount of profit that you can bring in on a regular basis can make it worth your while. Once you’ve determined from the information above that you can meet the minimum financial requirements to become a franchisee, then complete the request information form on the company’s website and submit to Matco Tools. Matco Tools will then contact you.

i. Once the company decides to proceed, they will need a completed Corporate International Application Form. They will email this form for you to complete and return. It requests basic information that tells the company about the people or company interested in franchising Matco Tools, LLC internationally.

ii. Once it has been determined that you meet the financial requirements and the area in which you wish to develop is available, you will then be considered an applicant for franchising with Matco Tools, LLC. Whereupon, you will be contacted by a member of the company’s New Business Development Team who will help guide you through the remainder of the process.

iii. Once a member of the New Business Development Team has contacted you and approved you to move forward in the franchising process, you will need to complete the following items (it is not necessary to complete the following items until you have been approved to move forward).

This list is not all-inclusive and is provided to potential franchisees as a guide. Completing the required steps does not guarantee acceptance into the Matco Tools, LLC franchising system.

  • Company & Personal Financial Statements, Store Income Statements—(P&L) (Latest Annual & Interim)
  • Business Operating Plan, Resume/Brief Biography

iv. Before the company enters into a Development Agreement with you, they may be required to complete certain registration and disclosure processes as required by the governing authorities in your area of interest.

In conclusion,

The process of buying Matco Tools franchise is indeed simple. They will guide you through every step to becoming a healthy, happy Matco Tools franchise owner. They are all out to turning passion into profits for their franchisees and building healthy communities for their members.