Snap On Franchise Cost & Failure Rate | 3,500 Trucks/ Units and Counting

Snap-On Tools Company offers a license to operate a franchised mobile store selling high-quality repair and diagnostic tools and equipment. The company focuses on manufacturing and distributing tools and equipment to professional mechanics and other tool users around the United States.

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00:00 Introduction
01:00 Locations
01:16 License Fee
01:40 Initial Investment
02:15 Time to Recoup Investment
03:08 Sales
03:29 Failure Rate Breakdown
04:29 Conclusion

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Snap-On was founded in 1920 in Wisconsin, the company has evolved over the years through various names and entities to become Snap-On Incorporated. The CEO of the company is Timothy L. Chambers, who has been the CEO since 2009.

Competitors include other shops in the tools industry like BorgWarner, Husqvarna, Stanley Black & Decker, and ITT Corporation as well as other Snap-On shops nearby.

We will analyze if the initial cost is worth the potential returns.

The initial license fee to open a franchise is $16,000. This fee includes initial training, a technology package, and a turnkey office supply package. For every additional franchise, a fee of $8,000 is due.

Snap-On Franchise cost

The estimated initial investment for beginning operations of a Snap-On franchise is between $169,223 and $382,235.

Additional fees:

Monthly License Fee: $130

Computer Software Maintenance and Development Fee: $65 (Monthly)

These fees are comparable with other franchisees in the same industry.

The tools company is continuously looking for passionate individuals that are looking to invest in new opportunities. To qualify for a Snap-On franchise, you must have a net worth of at least 37,000 dollars. On top of that, Snap-On prefers candidates that are multilingual and can work independently.

The application process is very similar to most franchises. You fill out an application, if you are eligible you will have an interview and then you can start building your business.

2019 Snap-On Median Franchise Sales: $550,000

The highest-earning franchise made over $2 million in revenue whereas the lowest-earning franchise made less than $150,000. These numbers indicate that potential earnings can vary significantly and it depends on factors.

1- Based on a midpoint investment of $275,729 with estimated profits of $55,000 at a 10% profit margin it would take about 7 years to recoup your investment.

2- Based on a midpoint investment of $275,729 with estimated profits of $82,500 at a 15% profit margin it would take about 5 years to recoup your investment.

3- Based on a midpoint investment of $275,729 with estimated profits of $110,000 at a 20% profit margin it would take about 4 years to recoup your investment.

*payback period includes time to ramp up the initial operations for a Snap-On franchise

After five years in the business, when you go to sell your franchise based on the median multiple of .5 and net sales of 2019 of $550,000 it would sell for about $275,000. This is almost as much as the midpoint initial investment. Not an amazing profit when it comes time to sell. However, if you have over $1 million in revenue, the multiple is higher and you can recoup your capital and more!

Snap-On Incorporated is a highly profitable business, the numbers speak for themselves. Revenue has gone down in 2020 compared to 2019, but only by 4% which is an accomplishment considering that the Pandemic destroyed most businesses in 2020. You can rest assured that if you open a Snap-On franchise it will probably not be largely affected by future crises like the Covid-19 Pandemic.

In the last three years, Snap-On has seen a decline in franchised-owned units. Company-owned units have also been in decline except in 2019 when the company opened 33 units in one year. This decline in outlets can be an indicator that franchisees are not doing very well and are not seeing a significant profit. Relative to the total number of units, the Snap-On failure rate is not so high.

Snap-On is one of the most prestigious tool franchises in the United States. People trust its high quality and it is a safe choice every time you need tools for any project.

If you open a Snap-On franchise you can recoup your investment in 4 to 7 years depending on profitability, which is not awesome but still comparable to most franchises. On top of that, when you go and sell your franchise you will make most of your investment back. If you develop more locations you can make an even healthier profit margin.

Read here to learn more:

Want to speak with a franchise specialist about Snap-On or another franchise? Click here: