Snap-on franchisor on how they are targeting the market

What were the key motivating factors in deciding to franchise your business?

In 1920 Snap-on ’s American founder Joe Johnson invented the interchangeable socket, revolutionising the automotive mechanics tool kit. Recognising the challenge of marketing the benefits of interchangeable sockets, Joe called on mechanics at their workshops. Success heralded the introduction of a greater range of tools and the appointment of self employed salespeople to continue the direct selling programme using vans. The Snap-on business still operates on the same basis and had franchising existed Snap-on would have been classified a franchisor in the 1920s. Today Snap-on is a US$2.5 billion Fortune 500 company with more than 5,000 franchisees around the world.

What in your view differentiates your franchise from the competitors?

Typically commercial rents and royalties are the significant expenses in a retail franchise. Snap-on franchisees operate from custom built display vans, which are effectively a store on wheels. Consequently the franchisees own their retail premises and take their stores to their customers. Fortune Magazine once commented ‘A Snap-on van is amongst the most productive retail spaces in the world’. There are no royalties payable in a Snap-on franchise. Being the manufacturer, Snap-on generates its profit from product sales to its franchisees, which inherently gives Snap-on a vested interest in the success of its franchisees.

What training do you offer franchisees and what is the cost of entry to the franchise?

Initially a franchisee attends a week of intensive training at the Snap-on Training Centre in Dallas, Texas, USA, which is followed by a further two days training at the Snap-on Head Office in Sydney. Once a franchisee starts in their territory their Field Manager spends a minimum of the first three weeks with them to oversee the training being put into practice. Monthly meetings and regular personal contacts are also provided by the Field Manager. The cost of entry is approximately $170,000.00 which includes training, inventory, start-up costs and working capital.

What is the strategy for the future growth of the system?

The success of the franchise business model is well proven. Similarly it has been well established that having a mechanical background is not a prerequisite to being a successful Snap-on franchisee. Our future growth will come from increasing the awareness of Snap-on and its retail franchise opportunity in the market place and also by our existing franchisees adding additional vans and franchises to their businesses.

What are the principal expectations of end-users in your business, and how do you meet these?

Snap-on is the largest independent tool manufacturer in the world and has a reputation for innovative, high quality tools, equipment as well as a legendary reputation for customer service. Although the benchmark for the tool industry, Snap-on continually strives to remain on the cutting edge of technology and meeting the ever increasing needs of their customers throughout the transportation service industry. Our end-users are professional tool users who demand the best in quality and service. Franchisees, who operate within geographically bounded territories, call on their customers every week to both meet and more often exceed those expectations.

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