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Matco Franchise Cost Recovered in 3 to 5 Years (2023)

Written by: Vetted Biz Franchise Research Team
Last Updated by Ailen Faiad: January 25, 2023
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matco franchise
This article is based on its 2022 FDD

Matco franchise is a manufacturer and distributor of professional quality mechanics’ tools and service equipment. If you enter into a Distributorship Agreement with Matco, you will purchase, resell, and service the Products, which currently consist of at least 18,300 items, as a mobile distributor under the Matco System.

Matco began operation as the manufacturing arm of MAC Tools in 1946 and, since 1979, they have sold their automotive tools and products directly to professional mechanics and enthusiasts. The company was formally founded in 1979 by Jeffery A. Butterworth in Stow, Ohio. Butterworth started the company in his garage with just four employees and a small line of hand tools.

Contents

How Much Is a Matco Franchise?

The initial Matco Franchise Fee is $8,000. You have to pay this upfront fee when opening a Matco franchise.

Matco franchise

Matco Franchise Cost

The estimated total investment necessary to begin the operation of a Matco franchise ranges from $76,819 to $309,133. The following costs are part of the upfront costs included in the initial investment for a Matco. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a Matco franchise in 2022.

Type of expeditureAmountTo Whom Payment Is to Be Made
LowHigh
Initial Franchise Fee$8,000$8,000Matco
Initial Inventory$50,000$84,000Matco or predecessor distributor
Acquisition and establishment of time payment reserve accounts$22,000$22,000Matco and/or predecessor distributor
Time payment line of credit$4,700$9,325Matco and/or predecessor distributor
Mobile sotre – 1 1/2 months’s lease payments$2,784$160,000Dealer or leasing company
Computer hardware$2,700$3,400Supplier
Computer software and internet service – three month’s payments$2,050$2,825Matco and internet and credit card service providers
Insurance – three month’s premiums$620$3,573Supplier
Travel, lodging and meal expenses$170$2,515Airlines, hotels & restaurants
Professional services$295$5,320Attorneys, accountants and other professionals
Fixtures, Supplies, Licenses$500$4,000Suppliers
Additional funds – three months$5,000$13,500Suppliers, as incurred
TOTAL$76,819$309,133 

Owning a Matco Franchise Requires Ongoing Fees

Minimum Inventory Purchases: Maintain an inventory of products; and maintain a ratio of purchase average to total sales of at least 60%. Also, initially, you will be automatically enrolled in the NPP program.

Computer Maintenance and Support Charge: $645 or $1,045 annually

License Fee for Credit Card Processing Software: $225 annually

License Fee for Signature Pad Processing Software: $45 annually

Additional Training Fee (for Business Partner): $295, on or before training starts

Field Training for Additional or Replacement Employees and Operators: $1,500 per week for field training provided to the 2nd and subsequent employees/operators; on or before training starts

Web Page Maintenance Fee: $195 annually, on the anniversary date of Web Page Agreement

Insurance: $210 to $1,191 monthly

Inventory Returns, Restocking Fee: 15% restocking fee (35% in limited circumstances)

Repair Kits: $10 to $40 per kit (but, generally $10 per kit)

Matco franchise

How Much Do Matco Franchise Owners Make?

All Reporting Distributorships

Top 1/3Middle 1/3Bottom 1/3
Average: $694,641Average: $449,242Average: $285,102
No. of Distributors Above Average: 187 (36.7%)No. of Distributors Above Average: 245 (48.1)No. of Distributors Above Average: 296 (58.3%)
Median: $644,369Median: $447,053Median: $303,025
Highest: $1,920,299Highest: $529,571Highest: $378,827
Lowest: $529,677Lowest: $380,269Lowest: $0

2021 Matco Median Franchise Sales: $447,053

Initial investment (midpoint)%Profit margin of median franchise salesEstimated ProfitsTime to recoup investments
$192,97610%$44,7056 years
15%$67,0584.5 years
20%$89,4113.75 years

Based on the median sales provided by Matco’s franchise locations, at an average of a 15% profit margin it will take around 4.5 years to recoup your investment.

This is longer than other franchise opportunities. You may not get a 15% profit margin, which would elongate getting a return on your investment.

Many factors affect the sales, costs, and expenses of your Franchised Store, such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace; the presence of other Industrial Materials and Tools stores; and the extent of market penetration and brand awareness that Matco stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.

Is the Matco Franchise Profit Worth the Franchise Cost?

To assign a valuation multiple for Matco franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.

Under $5 Million Net Sales

  • Estimated Selling Price = Net Sales * 0.56

When you go to sell a Matco franchise based on the median multiple of .56 and net sales of $447,053, it would sell for $250,349. This would make you some profit on the midpoint investment of $192,976.

Here is an example of a MATCO franchise for sale:

The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.

Matco (Franchisor) Income Statement Key Insights

Vontier Corporation and Subsidiaries Consolidated and Combined Statements of Earning and Comprehensive Income

 202120202019
Sales of products$2,712.7$2,459.9$2,484.0
Sales of services278.0244.7288.1
Total Sales2,990.72,704.62,772.1
Cost of product sales(1,445.9)(1,326.8)(1,349.3)
Cost of service sales(211.7)(189.7)(232.0)
Total cost of sales(1,657.6)(1,516.5)(1,581.3)
Gross profit1,333.11,188.11,190.8
Operating costs:   
Selling, general and administrative expenses(621.6)(508.4)(491.3)
Research and development expenses(129.3)(126.2)(136.4)
Impairment of goodwill(85.3)
Operating profit582.2468.2563.1
Non-operating income (expenses), net:
Interest (expense) income, net(47.8)(10.0)3.3
Write-off deferred financing costs(3.4)
Gain on settlement of investment3.3
Other non-operating (expense) income, net(0.3)2.1(0.6)
Earnings before income taxes534.0460.3565.8
Provision for income taxes(121.0)(118.3)(129.3)
Net earnings$413.0$342.0$436.5

Matco is a very profitable business for the franchisor with retained earnings of $413 million in 2021. This is a good indication of the company’s ability to support you.

How Many Matco Units Have Opened and Closed?

Outlet typeYearOutlets at the Start of the YearOutlets at the End of the YearNet Change
Franchised201917111771+60
202017711781+10
202117811854+73
Company-Owned2019110
2020110
2021110
Total Outlets201917121772+60
202017721782+10
202117821855+73

Over the last three years, the company has been expanding. Over the last three years, franchises have opened at a rate of 48 units a year.

Conclusion

Matco is competing with companies like Snap-on in the Tools market and has consistently strong profits.

While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Industrial Materials and Tools industry.

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