MAC TOOLS’ Bitter History (MacToolsSucks.com)

Mac Tools has a tumultuous history with its dealers and distributors. 

For more recent Mac Tools news, conflicts, issues and lawsuits, check out the posts indexed at our Mobile Tool Franchise Guide page.

Recently, we were given a link to an archived version of a now-defunct Mac Tools protest website called MacToolsSucks.Com.

While not much has been saved from the original website, we found (and reproduced below) a detailed history of when the troubles allegedly began for Mac Tools distributors, and the more contentious conflicts that arose between Mac Tools and its distributors in the 1990s.

The account below is reproduced from an archived page captured April 4, 2009 from MacToolsSucks.Com. 

The author is unknown (at least to us).

 

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A brief history lesson (Not the company line)

In The beginning……..

Mac Tools was founded in Sabina , Ohio in 1938 by a group of seven men who had a great deal of vision. Seeing the growth of the automobile industry, these fellows saw a huge opportunity and seized it and started building and direct marketing hand tools to companies and individual mechanics at their place of business. Government contracts during the war years solidified Mac’s place in the tool manufacturing business and was instrumental in the growth Mac enjoyed during the post war boom times.

After building a solid company with a successful sales approach, Mac was on the cusp of being a world leader in the hand tool industry. By the late 1970′s, Mac had grown as big as it could under the structure of the previous forty years. In 1980, after some corporate shuffling, Mac became a member of the Stanley Works giving it a profile and credibility that only the biggest tool company could.

Change is in the wind……

For many years, Mac Tools was run as a separate entity under The Stanley Works and by all accounts from those that were there, was profitable and was growing at a modest but reasonable rate. Then came the 1990′s and with it a new way of doing business. The direction Mac has taken this decade is far from the philosophies it’s founders prescribed to and quite frankly would make each and every one of the seven founders turn over in their grave.

The early 90′s saw a North America wide recession and profits of many of the big companies were down. Mac Tools had seen the last of its autonomy. The word from Stanley was a huge restructuring was in the works and this marked the end of the a long tradition in the tool business. Stanley assured it’s independent contract distributors that their investment and livelihood was safe and these moves would increase profitability for all involved. Many people accepted this and were supportive while others were skeptical and with good reason.

By aligning Mac Tools with other Stanley hand tool manufacturing, they created the Mechanics Tool Division within the Stanley works. This was done to streamline operations by eliminating duplication of processes and to upgrade tool forging technologies. This was the start of a downward spiral of employee, distributor and customer confidence in Mac Tools that they have seen over the latter half of this decade.

The first wave of discontent was created when it was decided to close old manufacturing facilities and build new facilities with modern equipment and techniques. Shortly after the closure of these older facilities, the distributor force began to experience significant supply problems creating a huge back order problem. While distributors from all over the world questioned the corporate entity as to why key items were suddenly not available, Mac continually told their people that it was temporary and, it seems, neglected to truthfully communicate the seriousness of the situation.

One distributor, who was tired of losing sales and not being able to provide timely warranty for his customers, called a manager and pressed for a concrete reason as to why this company who he was contractually obligated to buy his product from was unable to supply it. Months after the start of the back order problem this distributor was told by (former) manager Doug Millar that the reason was because Mac had been in negotiation with the United Steel Workers union whose members were employees at the plants that were closing. Mr Millar said that negotiations involving severance and new employment at new factories for existing workers had fallen through and that on the last days of operations at the plants slated for closure, the union brothers and sisters committed sabotage on the equipment that was to be moved to the new factory causing the turnaround time to change from one month into several.

When asked why this was not communicated earlier to the distributor force, (former) national sales manager Steve Eyre said it would have destroyed distributor morale. Many distributors all over North America were angered because they had a financial stake in this company and believed that they were owed all applicable information that could effect the performance of their individual distributorship business. After over a year, problems persisted and many people left the business for reasons ranging from anger and frustration to bankruptcy. Many of the distributors interviewed felt the same way in that if they were a salaried employee, they did not need to know everything but as a contract distributor with tens of thousands of dollars on the line it was essential to know as much as possible.

Still recruiting???

Adding insult to injury, Mac Tools continued to recruit new distributors even though they could not adequately supply the ones they had let alone any new ones. The distributors who started at this time were at a huge disadvantage for obvious reasons and many had a tough time making a go of it. One of these distributors named Claude Gaumont was so angry about what appeared to be false information during the time he was recruited, he looked into lawsuits, but was dissuaded because of the monumental task of fighting this giant. He eventually quit the business and in his own words "has not looked back".

As existing distributors saw new distributors starting, many noticed that many of the key items they were needing, but were on back order, were available in "starter inventory packages" the new guys were receiving. Often, after a new distributor cycled some of his inventory and went to reorder, he too was faced with a huge supply shortage just like the rest of the distributor force.

It is very interesting and certainly worth noting that the turnover rate of distributors is traditionally high. Certainly higher than Mac will tell a potential distributor when they are being recruited. Mac has an aggressive recruiting program as they always need warm bodies to replace their departing distributors. In fact, the district managers are paid bonuses and receive accolades for having the most "starts". As long as there are new people to fill routes, Mac gives little effort to retaining existing distributors and assisting them in clearing hurdles that often have been placed in front of them by Mac themselves. As one former manager said "it is easier to start a new guy than to try and clean up the problems of an existing one".

If it is easier and they are paid for new starts, than why would they try to lend support to existing guys? Many of the managers who practised this have quit because they know it is an unethical practice, but many more practice this on a daily basis as it appears to be company policy.

Still more???

During this very tumultuous time, Mac decided to implement a new credit system for customers who want to make large purchases. Traditionally, it is the distributor who finances customer purchases on a short term basis, however larger purchases required more formal financing for a longer term. This system is called Mac Advantage and although it was conceived to increase sales on large-ticket items, increase market share and contribute to Stanley’s bottom line it has been very unpopular with a great deal of distributors and customers.

When Mac Advantage was introduced to the distributor force, it was presented to the distributors with several key points; 1) Annual interest rate of 12%. 2) No recourse to the distributor if account defaulted. 3) Start date April 1994. The system Mac Advantage was to replace was called "Mac Cap"and because it was 18% per annum and full recourse to the distributor, it was very unpopular. Distributors were told that all contracts under the Mac Cap system would automatically roll over to the new Mac Advantage system on the conversion date. Once the presentation was made, distributors from all over were told to promote and sell contracts based on this criteria.

After being told this information and given the mandate to sell, distributors from all over did what they were told based on the information that they had been given. The system was not implemented until March 1995 (not April 94), the interest rate was 18% per annum (not 12%) and there was recourse to the dealer (not "no recourse"). Quite a bit different from what was communicated from management.

Customers were angry because they were told their interest rate was going to be 12% not 18% and the distributors were angry because they were not given the same system described to them earlier. During this time, the distributor’s credibility was quickly eroding due to product availability issues and because of the way Mac Tools presented and implemented the "new and improved"system.

Not only were problems created during the initial phases of the Mac Advantage system, the bulk of complaints were about to become apparent. Often, distributors (past-present) have stated that contracts, customer payments and credits due were apparently "lost" creating a delay in receiving credit notes. This causes many distributors unnecessary grief and cash flow problems and erodes the professional image and credibility distributors work to build and maintain. Many customers have had problems with Mac Advantage ranging from missing payments, interest over charges, timely service and even alleged fraud perpetrated by an "agent" of Mac Tools. Complaints about this system have come in from customers, distributors and managers from Vallejo, California to St.Johns, Newfoundland from Vancouver Island to Dade county, Florida.

Distributors demand action!!!

Distributors were now getting frustrated and many of those who have litigious freedoms, particularly in the U.S., began looking to the courts for vindication. A landmark decision by the Supreme Court of Idaho awarded one such distributor named Bill Griffin $500,000 in compensatory damages based on Mac’s "wanton, malicious and outrageous conduct" and the "repeated and flagrant violation"of Idaho’s consumer protection act (little FTC act). This decision opened the door for others with similar complaints and the attorney who represented Mr. Griffin himself settled over fifty claims against Mac Tools for a total of more than $1.8 million in 1995 alone. Many cases have been argued or are pending all over North America, with virtually all of them based on the same complaints.

Growth At What Cost??

Along with the restructuring and re alignment on the manufacturing side of their business, Mac also began implementing other changes to the distribution and the time honoured sales approach that had been with them for almost sixty years.

In order to help streamline distribution, warehouse facilities in California and Canada were abruptly closed causing many loyal employees to once again lose their livelihood. The distribution restructuring caused Mac Tools Canada to cease to exist causing not only the aforementioned loss of jobs, but also caused the Canadian distributors even more grief as they were now dealing with international borders as well as the difficulty of being amalgamated with a completely different system. Operational problems were now very common causing many Canadian distributors a great deal of loss and in turn many deemed this newest obstacle the last straw and quit the business many had put so much into.

Now that Mac Tools had laid the foundation by streamlining the business (many believe on the backs of loyal distributors, employees and customers) they were poised to increase their market share. What they did was unveil a plan to replace the entire U.S. distributor force, through attrition (who have a financial stake as contract distributors), to an employee distributor force (with no financial stake). This way they can expand into new markets and more importantly can increase the bottom-line by reaping not only the wholesale profit they have always had, but by now reaping the retail profit that the traditional distributor used to have. Not only is it more profitable for them, but employees have no reason to enter the legal forum as do traditional distributors when perceived wrong doings can’t be rectified any other way.

Forced Out?

Many traditional distributors who are still with Mac in the U.S. feel that they are actually being forced out to make way for a new "Mac Direct" employee distributor. Many feel that the already scarce product line is being given to the employee distributors before the traditional distributors, creating even harder feelings.

One fellow from Indiana recently said "I got forced out by having a hard time getting the product that my customers wanted. Therefore I was having a hard time collecting money, which started me on that hold problem." Another distributor said "I was in for 5 years as a traditional distributor and I was a top performer, $166,000 in sales in the first 5 months of this year. I quit because I could not get enough product. it seems that the employee distributors did not have the same problem" By all indications it seems that the traditional distributor is going to become a memory with Mac Tools….except in Canada.

Only In Canada, Eh?

When Mac Tools Canada was closed it ceased being a separate entity from Mac Tools Inc. Now it is considered a district under the U.S. system. It has the distinction of being the only district to continue to recruit in the manner it always has, in other words it is business as usual in Canada and you will not see any employee distributors in that district. Why?? Good question, so we did some in depth investigation and came up with an appalling explanation:

When Stanley decided they wanted to increase their market penetration (by expanding the sales force with employees) and profits (by reaping wholesale and retail level profits) one district was left out of the equation….Canada. It was determined that the cost of business in Canada was prohibitive, so they would continue as always with traditional distributors. A letter sent out to the entire Canadian distributor force in August of 1997 confirmed this by saying "There are no plans to introduce Mac Direct in Canada. …. The geographical size of Canada and population would make managing the employee distributor very costly, and not feasible." If it is too expensive for the Mac Direct program to operate profitably, then how can an individual distributor do it?

According to an independent financial report commissioned by a group of distributors in eastern Canada, they can’t. The report, entitled "Mac Tools Distributors’….Chances Of Success!…" outlined key issues that were prohibitive to the Canadian distributor. Such things as "inappropriate financing of inventory levels" and "gross margins realized on products sold are insufficient to cover fixed operating costs, debt servicing requirements and satisfy personal financial obligations." were discussed at length and the conclusion, just as the Stanley report determined, it is too costly to do this business in Canada.

Business As Usual!

As mentioned earlier, District Business Managers (DBM’s) are paid bonuses for recruitment to keep the routes filled. The rate of turn over is high because not only is getting product and support difficult, but distributors also begin to realize the lack of profitability. Fresh recruits assure that the wholesale profit Mac has enjoyed for years is not lost and the lack of profit at the retail level is squarely on the shoulders of individuals thus dissipating the loss over the distributor force and reducing Stanley’s exposure. Great for profit, bad for the people who buy into the program.

As the Mac Direct system goes full steam ahead in the U.S., more and more stories with great similarity are being told at a greater frequency. In Canada, it remains "business as usual." Recruiting is paramount, while retaining seasoned people seems not to be of concern. While deceptive statements and figures during recruitment keep new people coming in. The reality of the return on investment keeps people leaving. But rest assured, a new distributor will be recruited…….and so the cycle continues.

The system has gone through radical changes in the latter half of this decade. Ranging from U.S. traditional distributors being cast to the wayside, to Canadian distributors walking through a revolving door as cannon fodder in the relentless pursuit of profit, to loyal customers losing value of their investment because of a shrinking product line and no equally valuable replacement. Distributors, customers and employees are tired of taking the loses so the corporation can continue to profit. Much of the strategies have since passed, but the effects Mac has had on a great deal of families will live on for years to come.

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MAC TOOLS Dealers Warn Against Franchise Conversion

A group of feisty franchise owners from competing mobile tool brands are joining together to protest unethical industry practices and push for change.

The Tool Dealers Association is inviting franchisees and ex-franchisees from Snap-on Tools, Matco Tools, Mac Tools & Cornwell Tools to fight the alleged predatory practices common to all of their mobile tool franchisors.

Unhappy Franchisee has documented franchisee complaints from all tool franchise brands.

(Visit the Mobile Tool Franchise Guide for a list of mobile tool franchise posts).

One of the first initiatives of the Tool Dealers Association (TDA) is to circulate a message urging MAC Tools dealers to withstand corporate pressure and refuse to convert their “distributorship” agreements to franchise agreements.

MAC Tools Anti-Franchise Flyer is Circulating

Mac Tools has long-maintained that it sells a distributorship, not a franchise, and therefore is not required to provide the disclosure documents or follow the laws governing franchise relationships.

However, Mac Tools has been hit with lawsuits claiming that the Mac Tools distributorship is, in fact, an illegal franchise (See Is MAC TOOLS Stanley Black & Decker Selling Illegal Franchises?).

Mac Tools evidently has come to the same conclusion, so they are urging their Mac Tools distributors to convert over to their new franchise agreement.

A flyer being circulated by the Tool Dealer’s Association warns that the new franchise agreement is a deceptive document designed deprive distributors of important legal rights and to burden them with even more fees and required purchases.

Here’s the copy of the flyer submitted to UnhappyFranchisee.com:

 

 

WARNING – - DON’T FRANCHISE !!!

Mac Tools has been deceptive to its distributors for years by telling them Mac is not a franchise.  Mac is now trying to cover its deception by “converting” Mac distributors to franchisees.

 

Present Mac Tools distributors should not convert to the franchise agreement as not only will it cost you more and you will lose rights. Mac will charge a distributor an annual fee of $990 every year they are a franchisee.

 

Mac distributors are presently protected by various state laws. You may lose these protections if you sign a franchise agreement. For example, certain states provide protections to distributors against termination and the Mac franchise agreement has a very short time – only one year from the time the dispute arises in which to bring arbitration- not suit in New York City! Distributors have nothing to gain by becoming franchisees, they can only lose.

 

Also Mac’s requirement that a distributor purchase 80% of the national purchase average is illegal. It is a hidden franchise fee because it forces a distributor is to buy more tools than he can resell to his list of calls.

 

Finally, Mac’s franchise documents do not list the number, names, addresses and phone numbers of distributors who left Mac last year. That again is deceptive because it hides how many distributors failed in business.

 

According to the Small Business Administration, 31% of the SBA loans granted to Mac distributors have already ended in default (http://www.bluemaumau.org/sba_loan_failure_rates_franchise_brand_2011).  The actual failure rate of Mac Tools distributors, including those without SBA funding, is likely much higher.

 

Mac distributors should join the Tool Dealers Association to make sure that what they worked to build up is not taken away from them!

www.tooldealersassociation.com

Printable Flyer (WORD):  Mac Tools Franchise Warning

The warnings emanating from the Tool Dealers Association were prompted, in part, with those who experienced a similar conversion when Snap-on Tools converted their distributors to franchisees, a process that (according to the TDA) burdened dealers with increased fees and burdensome restrictions’.

ARE YOU FAMILIAR WITH THE ATTEMPT TO CONVERT MAC TOOLS DISTRIBUTORS TO MAC TOOLS FRANCHISEES? WHAT DO YOU THINK? SHARE A COMMENT BELOW.

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Mobile Tool Franchise Guide

Mobile Tool Franchise Issues & Index Read more

Mobile Tool Franchise Guide: Franchise Resales

Franchise owners of mobile tool franchises (such as Snap-on Tools, Matco Tools, MAC Tools, & Cornwell Tools) complain that their franchises have little-to-no resale value.

[This post is a work in progress.  If you have input on the resaleability of mobile tool franchises, please share a comment below.]

An analysis of the the Matco Tools Franchise Disclosure Document by law firm Marks & Klein* (MATCO TOOLS Franchise Report Alleges Distributor Churning) reported:

“During the three year period from 1/1/08 to 12/31/10, seven hundred fifteen (715) Distributors, forty nine percent (49%) of the total number of MATCO Tools Distributorships open at any time during the period, left the MATCO system.

“Of that 715, only fifty (50) transferred their MATCO Tools business to third party franchisees…

“If a MATCO Tools distributor desired to exit the system during this three year period, and hoped to sell its business through a MATCO approved transfer, that franchisee had less than a seven percent (7%) chance of success. Statistically speaking, such a low success rate indicates that the MATCO Tools businesses run by distributors who were leaving the MATCO system were so unprofitable as to be unmarketable.”

“Everything Snap-on does is contrary to us gaining wealth” – Franchisee Jim Lager

On our post SNAP-ON TOOLS Franchise Complaints, Snap-on Tools franchise owner Jim Lager alleges his franchisor intentionally interferes with its franchisees’ efforts to sell their franchises:

i am trying to sell off franchises and there is no value what so ever in my business. Snap-on does everything they can to inhibit the sale diminish the value…

I am at least a little pissed off at Snap-on because i am trying to sell one of my franchises to one of my dealers. Believe me there is NO BLUE SKY in your business/job. Let me tell you why. snap-on has something called a schedule 1. This lists everything you as a selling dealer has to sale, Inventory, accounts recievable, truck, used tool, discontinued tools, computer, and other things you might sell a dealer. The schedule is bullshit because Snap-on credit will only finance 2 things on that schedule. Inventory and accounts recievables.

The kicker is the maximum accounts recievable or R/A they finance is $55,000.00. So if we do a good job and put a bunch of money on the street, turn it well, Snap-on rewards us by saying they wont finance it when we go to sell it. by the way you can’t go to a bank for financing because if you do, Snap-on tools, not Snap-on credit puts an all encompassing 1st lien against your business. NO BANK WILL TOUCH THIS AND TAKE A 2ND POSITION. Snap-on does this to keep routes cheap and bring in young naive guys with little education to run volume. Snap-on protects themselves. Everything Snap-on does is contrary to us gaining wealth. their training and even volume discount is designed for us to sell high volume at low profit margins.

Understand all my routes do between $10,000 and $14,000 a week. I am very succesful and always have been. snap-on only looks out for us when we force them to. I was a field manager in the 90′s. I will tell you you will never hear a discussion in Snap-on asking themselves what Snap-on did wrong when a dealer is failing. Here is how the discussion always goes. “What can we do to get rid of this guy and put another one in his place.”

…Snap-on loves fresh meat.

* Marks & Klein is a law firm with current litigation pending against Matco Tools & MAC Tools, and past litigation against Snap-on Tools on behalf of franchisees.

ARE YOU FAMILIAR WITH THE MOBILE TOOL FRANCHISES?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

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Mobile Tool Franchise Guide: List of Calls (LOC)

Mobile Tool franchises typically provide franchisees with a “List of Calls.”

[Note:  This page is a work in progress.  Please feel free to suggest additions/corrections below.]

Matco Tools franchise FAQ states:  “Matco Tools gives new franchise owners a “List of Calls,” which contains at least 325 potential customer names and contact information. Each territory is identified by the District Business Manager through surveys and customer interviews. This helps eliminate time-consuming cold calls, while increasing productivity and sales… Each Matco Tools Franchise has their own territory and “List of Calls,” so you never have to worry about overlapping or competing with other franchise owners.”

Snap-on franchise website states:  “The very first day you start your new business, you will have an established list of calls with plenty of professional tool users within it. The list of calls each franchisee is assigned is an established, protected list that the franchisee visits each week. A solid foundation of existing and potential customers means you don’t have to wait for customers to come to you; they are expecting you to call on them.”

Mac Tools states:  “One of the best things about Mac Tools is that franchisees are given a ‘List of Calls’ containing at least 325 potential customer names and contact information. Each territory is identified by the Business Development Manager through surveys and customer interviews. This helps eliminate time-consuming cold calls, while increasing productivity and sales.”

Cornwell Tools website doesn’t mention a LOC, but states:  “…you will receive an area of responsibility with achievable sales potential that correlates to success… Geographic routes are assigned and surveyed by your District Manager for solid potential for new and repeat sales… Daily computerized printouts of customers at specific locations, their buying history, their potential needs, and their outstanding balances due are generated by special software available for Cornwell Dealers from an outside vendor.”

Here are some of the complaints alleged by Matco distributors and ex-distributors related to franchisees’ List of Calls (LOC).  The allegations are not necessarily true, but worthy of investigation for prospective franchisees:

- Some List of Calls do not provide enough sales potential for dbrs to be successful or even sustain the minimum purchase requirement

- Some LOCs contain outdated, inflated customer counts, closed shops & shops counted multiple times

- Some LOCs contain high percentages of lower-potential customers (lube shops, road techs, tire techs, older techs, students who can buy through corporate program, etc.)

- The number of potential customers in a LOC (325) is only guaranteed at signing.  That number will dwindle via attrition (shops closing, downsizing, etc.) and Matco is under no obligation to replace them.

- Some LOCs are geographically dispersed with unmanageable driving time and fuel costs.

- Distributors are forbidden to call on or sell to customers not on their LOC, even if customer requests them or is not being serviced

- Preferential treatment given to some distributors who are given leeway in calling on shops not on their LOC, others aren’t.

- Some claim Matco often prefers to put new or available customers on a LOC they can sell to a new franchisee rather than an existing distributor even if it is on their route or they are struggling

- Successful distributors had shops removed from their LOC to give to others, then were terminated when their sales declined below the minimum.

UnhappyFranchisee.com commenters provide this information and advice regarding Mobile Tool Franchise List of Calls (LOC) (If you have comments or corrections, leave them below):

Former Distr wrote:

Matco places emphasis on the List of Calls of at least 325 potential customers. One thing that may not be discussed or considered is ‘Quality’ of that list.

I have many customers that are in their 50′s and 60′s and their tool buying days are coming to a close. On the other end how many on the list are tire techs or lube techs that may never progress in the business?

Be aware of your potential customer base and their tool purchasing power, their income level, their desire to be a automotive or truck technician, many just need a job and have no desire to pursue a career in the industry. Others are truly pursuing a career.

Economic conditions vary across the country. Not sure how you can investigate it but are your customers credit worthy?

Analyze the shop on your list of calls in which these people work.

Is it just a small mom and pop shop, minimum wage/no benefits shop with a high turnover, or is it a High end progressive business, focused on quality, education and providing for future growth for their employees. These facts will help determine the quality and stability of your potential customer.

Be honest with yourself, out of the 325 potential customers, how many can afford to pay you to the terms necessary for you to survive the business. You need quality businesses with a low turnover rate.

Tommy Cheung wrote:

Signs to look out for:

-  overinflated head count, go to the shops listed and count the techs for yourself, do not include road techs that are never there, for example.

-  ask when you are given a shop in between distributors, and neither want goes to that shop, ask why?

-  check to see if you are going all over town, because the d.m. will try to find failed shops , just for headcount.

-  the d.m dosen’t visit every shop when doing a head count, some he will call and some he just copies from previous records.

Todd Allen Peterson:

Your Head Count will have close to the min. of 325 customers on your “List of Calls” Matco knows this is a low number because they want you to go out and establish more customers so they can start another guy on a route when they take them away from you. 325 customers in a none established route is a joke. I promise you will not be in the top of Matco Distributors unless you have around 500 min. to call on because the top guys every year have that many. If they say they only have 350 on their list of calls they are paper trailing some of their other accounts…

 

richard on November 27th, 2011 8:28 pm wrote:

i have seen…  other distributors were allowed to have customers, big spenders, in my area but we were told that we had an assigned area but i was told that we didnt have specific ares just a list of calls but i couldnt go in another distributors area to solicit from someone that he did not go to… there is too much greed and corruption going on here to even imagine for most people to comprehend… i have reported other distrubutors selling out from under me but it was okay because they were one of the good ol boys. you complain .they tell you to grow up. you try to play the way they play and its against the rules. its all bs…

 

Debbie*Lady Matco on November 30th, 2011 5:25 pm wrote:

Matco promised 325 potential customers.  NOT delivered – my List of Calls – is supposed to be certified mechanics that must purchase tools to do their jobs.  MY list is HIGHLY inflated and I have IN WRITING the proof to back it

guest2 on December 1st, 2011 2:18 am wrote:

I… drove my list of calls and reviewed all documents before signing and knew what I was getting onto. You still have to treat this as YOUR business and those distributors that do that do fine.

Former Distr on December 7th, 2011 10:17 am wrote:

I have my list of calls in front of me, the one that Matco will probably give to any prospective franchisee that is interested in my old route. The one that I provided to my Lawyer.

How can I service 80% of my route when

-3 shops, totaling 47 prospective customers are listed THREE times

-6 shops closed totaling 18 prospective customers

-employee counts are off by more than 20 people

- 6 shops were given to another distributor to call on – 26 prospective customers

PROSPECTIVE FRANCHISEE’s – DO NOT Trust the ‘List of Calls’. I don’t remember how much time you are given the list in advance of signing papers, but VISIT EACH AND EVERY SHOP ON THAT LIST PRIOR TO SIGNING!

In addition to the problems above, I had 3 shops on one road that REFUSED to allow Matco Tools in because of the previous Distributor.

Make sure you know how many in each shop actually buy tools. There is a difference between a ‘mechanic’ and a ‘tire tech’. Check for the number of ‘students’ working, they will not buy from you, they will buy through the Matco Tech Ed Program, that goes for Instructors too, I have three of those in my area, they also buy direct from the Tech Ed Program.

Relentless on December 8th, 2011 10:45 am

Wow! These statements imply that we have territories with our “List of Calls”. So we don’t have to Overlap. Very Interesting. Kind of implies you can call on shops as long as their in your territory.

Why would Matco tell you this to get you to sign and go to training, then when your successful come to you and make you give up the shops you established with your DM. My RM told me they were unsecured and I didn’t have a territory I had a “List of Calls” and if I didn’t comply “Yes” I could be terminated.

By the way this Distributors route was laid right over the top of me since I had established the shops and not gone off my route. Kind of contradicts the above statement. Don’t you think?

Former Distr on December 14th, 2011 11:47 am

The whole basis of your potential business is that List of Calls, and they neglect to even know if it is valid. I have written proof that it is a ‘fabricated’ list, and that no one ever personally visited the ‘calls’ to verify they were in fact even a business at that location.  This is fraud that goes all the way to the top.

Bob Tremblay on December 16th, 2011 7:40 pm

I became a Matco distributor in 2007. when seeding my route with my DM I found shops that were not on my list of calls a couple were not being serviced and he stated I could service them and he would add them to my list of calls. several other ones belonged to another Distributor.

when I finally got into my route I found out several of my shops here taken away from a couple other distributors. This did not make them happy and made it difficult for me to do business with them.  I also found out that my route was made up from a distributor that matco had terminated. he had 3 routes then downsized and went back to 1 route keeping the best shops. The portion of the route I received was the portion that he found to be unprofitable and wouldn’t service any more. Thats why Matco terminated him.

Debbie Solko on 2011/12/30 at 3:02 pm wrote:

Economic conditions of a area MUST be considered! Regardless of the stories otherwise, one MUST consider the reality of the buying ability of their potential customers. Research the average income of your prospective techs. As simple as a phone call or looking in the Want Ads If the local shop is only offering $10 – $12 hour and it I’d FLAT rate- How much will REALLY be left for these guys to buy tools ?? I know guys that simply can’t afford a $25 weekly payment Hell that is $100 bucks a month! Then there are the techs on a LOC that are seasoned veterans, they have a lot and NEED LITTLE! Ask yourself can you really get 200 of the guys that make so little to spend $25 week, every week?

Former WI Distributor on 2012/01/01 at 4:07 pm wrote:

I was with Matco for over 8 years and forced out due to low purchase average. After losing 15 – 20 shops in my territory I could not keep up with the economic downturn. After asking multiple times for an expansion to my route since the one next to me was vacant…I was shot down. My customer count (True) was in the area of 200-225. The new distributor now has both routes. I had to call on vacant areas 20 miles way to keep my TP going. My first 5 years were the best but when I started losing shops and asked for help I was thrown to the curb. Now after losing over $150k, Im determined to follow through with this lawsuit.

Matco has many fraudulent ways of doing business with all the risk on the Distributor…

[Note: This page is a work in progress. Please feel free to suggest additions/corrections below.]

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MAC TOOLS Franchise Disclosure Document (FDD) 2011

MAC TOOLS FDD Franchise Disclosure Document (see downloadable FDD below) states that the division of Stanley Black & Decker has discontinued its tool distributorship program and is now offering the Mac Tools franchise opportunity instead.

This is notable, as a number of lawsuits have alleged that the Mac Tools distributorship was, in essence, technically a franchise all along, and that Mac Tools was violating state and federal laws by selling it as a distributorship.

According to the 2011 Mac Tools FDD (Franchise Disclosure Document):

“Mac Tools has manufactured products and offered distributorships for the mobile distribution of professional hand tools and equipment to professional mechanics for over 70 years. Until March 2007, Mac Tools offered its traditional tool distributorship in all states. The traditional Mac Tools distributorship is not a franchise, in that no franchise fee is required to be paid to Mac Tools. In March 2007, Mac Tools began offering franchises for Mac Tools Businesses within Kentucky, while continuing to offer its traditional distributorship in other states. In November 2011, Mac Tools began offering franchises for its Mac Tool Businesses in all states and ceased offering new non-franchised traditional distributorships. While Mac Tools no longer offers its traditional tool distributorship, niany existing distributors continue in operation.”
 Mac Tools FDD (pdf format):

 MAC TOOLS 2011 Franchise Disclosure Document

 

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More on Mac Tools:

MAC TOOLS Lawsuit Documents: DEE C. WALTER v. MAC TOOLS, INC.  December 28, 2011

MAC TOOLS Lawsuit Alleges Fraud, Labor Violations  December 24, 2011

Is MAC TOOLS Stanley Black & Decker Selling Illegal Franchises?  December 23, 2011

MAC TOOLS Guilty of Franchise Fraud?  November 7, 2011

MAC TOOLS Lawsuit Documents: DEE C. WALTER v. MAC TOOLS, INC.

Complaint & Jury Demand in the lawsuit DEE C. WALTER v. MAC TOOLS, INC., a Division of STANLEY : BLACK & DECKER, INC., Case 3:11-cv-01997, filed December 23, 2011 in Connecticut District Court, is posted in its entirety, including exhibits, below:

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF CONNECTICUT

__________________________________________

DEE C. WALTER

Plaintiff,

v.

MAC TOOLS, INC., a Division of STANLEY : BLACK & DECKER, INC.,

Defendant

__________________________________________

COMPLAINT AND JURY DEMAND

Plaintiff Dee C. Walter (“Plaintiff”), by and through his attorneys, Marks & Klein, LLP, for his Complaint as against Defendant Mac Tools, Inc., (“Mac” or “Mac Tools”), a division of Stanley Black & Decker, Inc., (“Stanley Black & Decker”) (collectively “Defendant”), allege and aver as follows:
NATURE OF THIS ACTION

1. This lawsuit arises from Defendant‟s willful failure to properly compensate Plaintiff, who is a former Mac Tools distributor, for certain warranty and repair work that Defendant requires all Mac Tools distributors to perform, in violation of the Fair Labor Standards Act 29 U.S.C. § 201 et. seq. (“FLSA”).

2. While Defendants have historically purported to sell “distributorships”, not franchises, Plaintiff did indeed purchase a franchise as defined by state and federal law.

3. Defendants have violated Federal Trade Commission (FTC) Rule 436, which requires a franchisor, such as Defendant, to provide a prospective investor/franchisee with 23

2. Items of information that is critically necessary for Plaintiff, or other potential franchisees, to fully evaluate the nature of the business investment being contemplated.

4. With regard to state-specific laws, Defendant violated Connecticut law, particularly the Connecticut Unfair Trade Practices Act (“CUTPA”), by, among other things, failing to provide Plaintiff the necessary Uniform Franchise Offering Circular (“UFOC”), before Plaintiff purchased his Mac Tool Distributorship, which in reality is a franchise.

Furthermore, since Plaintiff purchased a Mac Tools franchise, as opposed to a distributorship, Defendants also violated the Minnesota Franchise Act, by improperly terminating Plaintiff‟s franchise and not allowing him the necessary time to cure any alleged “defaults” Defendants allege Plaintiff had pursuant to his franchise agreement with Defendant.

5. As a result of Defendants‟ foregoing violations of state and federal law, Plaintiff seeks compensatory, punitive, statutory, and treble damages, as well as attorneys‟ fees and costs from Defendant.

Complaint & Jury Demand [pdf format]:
DEE C. WALTER v. MAC TOOLS, INC., Complaint

Exhibits:
DEE C. WALTER v. MAC TOOLS, INC., Complaint Exhibits

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To contact the author or site admin, email UnhappyFranchisee[at]gmail.com.

More on MAC TOOLS:

MAC TOOLS Lawsuit Alleges Fraud, Labor Violations  December 24, 2011

Is MAC TOOLS Stanley Black & Decker Selling Illegal Franchises?  December 23, 2011

MAC TOOLS Guilty of Franchise Fraud?  November 7, 2011

MAC TOOLS Lawsuit Alleges Fraud, Labor Violations

According to a lawsuit filed by Marks & Klein, LLP, Stanley Black & Decker-owned Mac Tools tricks individuals into becoming Mac Tools distributors/franchisees, then forces them to perform repairs, process returns, and become repo men on a regular basis for no compensation.

In doing so, Mac Tools violates the Fair Labor Standards Act (FLSA) and the Minnesota Fair Labor Standards Act (MFLSA), according to the lawsuit.

The complaint, filed on behalf of Dee C. Walter, a Minnesota Mac Tools distributor of 39 years, also alleges that Mac Tools fails to comply with federal and state franchise laws.

Mac Tools has maintained that its opportunity is a “distributorship” and not a franchise.

[See Is MAC TOOLS Stanley Black & Decker Selling Illegal Franchises?]

[See  MAC TOOLS Guilty of Franchise Fraud?]

“MAC dictates… with an iron fist.”

Mac Tools markets its mobile tool distributor/franchise opportunity with an emphasis on the freedom and autonomy Mac Tools provides.

But the lawsuit filed by franchise attorney Jerry Marks tells a different story.

“Mac captures its ‘distributors’ with false promises, then dominates, controls, and exploits them,” the suit alleges.

“Mac aggressively dominates and controls the methods, details, and day-to-day business activities of the distributors to the detriment of the distributors and for the sole and exclusive purpose of inflating Mac’s sales and profits….”

In sharp contrast to the freedom promised in Mac Tools franchise ads, the suit states “Mac dictates every minute of a distributor’s day with an “iron fist.”

“…warranty repairman for no compensation”

According to the suit, Plaintiff Dee C. Walter would have never signed up with Mac Tools if they had disclosed that he’d have to do 10-15 hours of work per week without compensation:

This lawsuit arises from Defendant’s willful failure to properly compensate Plaintiff, who is a former Mac Tools distributor, for certain warranty and repair work that Defendant requires all Mac Tools distributors to perform, in violation of the Fair Labor Standards Act 29 U.S.C. § 201 et. seq. (“FLSA”)…

A significant requirement that the Distributor Agreement, as well as the preceding “Disclosure Document” failed to disclose was the fact that distributors would have to perform certain repair and warranty work on broken tools purchased by Mac customers….

Mac and Stanley willfully failed to disclose any of the repair work that a distributor must perform in both the Disclosure Agreement and the Distributor Agreement. Instead of properly disclosing this additional, material and significant obligation to Plaintiff and other distributors prior to their entry into the various agreements, Mac and Stanley instead thrust these obligations on unsuspecting distributors after they have already entered into the system.

Had these burdensome obligations originally been disclosed by Defendants, plaintiff would not have entered into the various agreements and the Mac franchise system….

Mac’s failure to disclose the numerous hours of warranty repair work that a distributor would have to perform each week, and Stanley failure to pay distributors a statutory mandated wage for the services performed constitutes an intentional fraud by omission and a violation of the Fair Labor Standards Act (FLSA).

The suit alleges that Mac Tools put an unfair burden on the longtime distributor:

Specifically, Mac required Plaintiff to repair or replace any broken items a customer may have had that were under warranty…

By way of example, Plaintiff was required to replace “stripped gears” in the heads of ratchet wrenches or replace defective tool chest drawer rails. Mac failed to compensate Plaintiff for the time he spent repairing this equipment…

Furthermore, Mac required Plaintiff to spend countless hours throughout each week packaging and returning broken warranty tools such as air guns, electronic diagnostic equipment, and floor jacks, without compensating Plaintiff for his time.

Additionally, Plaintiff incurred significant expenses in the hundreds of dollars on shipping charges returning warranty items to Mac, without Mac ever reimbursing Plaintiff…

Mac also required Plaintiff to spend countless hours per week repossessing equipment that Mac customers purchased directly from Mac, but could no longer afford to pay for. …

Plaintiff consistently spent between ten (10) and fifteen (15) hours a week performing these unpaid job requirements for Mac.”

For violations of the Fair Labor Standards Act (FSLA) and the Minnesota Fair Labor Standards Act (MFSLA), the Plaintiff is seeking “unpaid wages, liquidated damages, attorneys’ fees and costs of suit, prejudgement interest, and declaratory judgements that Plaintiff was acting as employees of Mac while performing any repair or warranty work entitling them to unpaid wages under the FSLA [and MFSLA].”

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Is MAC TOOLS Stanley Black & Decker Selling Illegal Franchises?

Law Firm Marks & Klein LLP, of Red Bank, NJ, has fired another salvo at MAC TOOLS, INC., a Division of Stanley: Black & Decker, Inc., with a lawsuit filed today in the United States District Court for the District of Connecticut (Case 3:11-cv-01997 Walter v. Mac Tools, Inc.).

The lawsuit was filed by Marks & Klein on behalf of Dee C. Walter, a Mac Tools distributor in Minnesota.

The lawsuit alleges that while the business opportunity is marketed by Mac Tools as a “distributorship,” it meets the state and federal legal definitions of a “franchise.”

In selling a franchise to Mr. Walter without providing the information, disclosures and review time required in the sale of a franchise, the suit contends that Mac Tools violated Federal Trade Commission (FTC) Rule 436.

The suit also contends that the illegal sale of a franchise to Mr. Walter (as well as Mac Tools’ subsequent termination of said franchise) violates state-specific laws, including the Connecticut Unfair Trade Practices Act (“CUTPA”) and the Minnesota Franchise Act.

According to the suit, the lawsuit arose out of Mac Tools “willful failure to properly compensate” Mr. Walters for warranty and repair work required of all Mac Tools distributors.  Requiring services to be performed without compensation, as Mac Tools does, is a violation of the Fair Labor Standards Act 29 U.S.C. § 201 et. seq. (“FLSA”) the suit contends.

“As a result of Defendants ‘foregoing violations of state and federal law, Plaintiff seeks compensatory, punitive, statutory, and treble damages, as well as attorneys’ fees and costs from Defendant.

The Mac Tools Caution Flag is Out

The allegations that Mac Tools and Stanley Black & Decker are selling what amounts to an illegal franchise could have far-reaching consequences.

There are currently Mac Tools distributors in all 50 states.  If the allegations are proved correct, each distributor could claim they were sold an illegal franchise.

In October, 2011, a A federal judge has cleared the way for Marks & Klein, on behalf of the spouse of a former Mac Tools distributor, to proceed with fraud claims against the Mac Tools division of Stanley Black & Decker, Inc. in a New Jersey state court.  (Read MAC TOOLS Guilty of Franchise Fraud?)

In that suit, Marks & Klein contends that Mac Tools violated FTC (Federal Trade Commission) regulations by selling plaintiff Ms. Elba Maria Ceballo  and her husband a tool sales route as a “distributorship” when, in fact, it was an undisclosed “franchise.”

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MAC TOOLS Guilty of Franchise Fraud?

Mac Tools calls its distributorship business opportunity a “Journey Worth Your Lifetime.”  The spouse of a former Mac Tools distributor has another term for it:  “Illegal franchise.”

Elba Maria Ceballo claims that Mac Tools knowingly misclassifies its distributorship program as a “business opportunity,” and, in doing so, fails to comply with federal franchising laws.

Mac Tools Distributorship:  A Journey Worth Your Lifetime?

According to the Mac Tools website:

“Being a Mac Tools Distributor is a life-changing opportunity and commitment.

“We believe it is a Journey Worth Your Lifetime. It gives you the freedom and responsibility to go as far and as high as your abilities and hard work take you.

“You are on the road and master of your own fate.

“Yet you are part of a company and community with an esteemed heritage, innovative strategies for growth and one that is completely dedicated to your own personal success.”

…OR Illegal Franchise?

A recent press release by the plaintiff’s law firm Marks & Klein, LLP provides an overview of the complaint:

“Wife of Mac Tools Franchisee Permitted to Proceed With Fraud Claims in N.J. State Court

“NEWARK, N.J., Oct. 12, 2011 /PRNewswire via COMTEX/ — A federal judge has cleared the way for the spouse of a former Mac Tools distributor to proceed with fraud claims against the division of Stanley Black & Decker, Inc. /quotes/zigman/590745/quotes/nls/swk SWK +0.69% in a New Jersey state court.

“The Hon. Mary Cooper of the United States District Court for the District of New Jersey issued an Order and written opinion on Oct. 5 granting the motion of Elba Maria Ceballo, the wife of a former Mac Tools distributor, to remand her lawsuit back to New Jersey Superior Court, Middlesex County (Ceballo v. Mac Tools, Inc. et al, 3:11-cv-04634-MLC-DEA). Ms. Ceballo’s lawsuit charged that Mac Tools violated FTC (Federal Trade Commission) regulations by selling her and her husband a tool sales route as a “distributorship” when, in fact, it was an undisclosed “franchise.”

“’FTC regulations provide important protections to individuals and families who invest in small route sales and other franchised businesses,’ said Ms. Ceballo’s attorney, Gerald Marks of Red Bank, NJ-based Marks & Klein, LLP. ‘One of the major protections is the requirement that the seller of a franchise provide a buyer with a Franchise Disclosure Document (FDD) that contains over 22 items of information, including the names of all current and former franchisees so that the prospective purchaser can contact them to determine if they feel they believe the business investment is worthwhile.’

“Ms. Ceballo, a resident of Perth Amboy, NJ, contends that although she was entitled to receive an FDD, one was not provided because Mac Tools fraudulently mislabeled its business as an ‘independent distributorship.’

“After the lawsuit’s original filing in State Court, Mac Tools removed the case to federal court, arguing that Ms. Ceballo only named a district manager of Mac as a defendant to keep the case in state court and avoid federal jurisdiction. Marks & Klein immediately moved to remand the case back to state court, arguing that Ms. Ceballo had independent, factually specific fraud claims against the district manager and that the federal court did not have jurisdiction.

“’Despite Mac’s protestations that our client named the district manager solely to manipulate jurisdiction, the Court rejected Mac’s arguments and agreed that Ms. Ceballo had asserted valid claims against all of the named parties,’ said lead counsel Marks, who has represented tool dealers in various franchise and distributorship systems for the past 20 years. ‘We are extremely pleased with the Court’s decision to properly remand this case to State Court, where it belongs. Mac’s suggestion that its district manager employee was named solely to defeat federal court jurisdiction was a red herring and a futile attempt to avoid what may become a class action.’

“Louis D. Tambaro, another member of Marks & Klein, added: ‘We are excited for the opportunity to try our claims on the merits before a New Jersey state jury of Ms. Ceballo’s peers. Unfortunately, we have had to contend with Mac Tool’s efforts to throw up procedural roadblocks; however, those delay tactics were handily defeated and will similarly not be tolerated in the future. “’

“’We expect Mac to make additional efforts to stall the case,’ Mr. Tambaro continued, ‘but are confident that the case will be rightly and favorably decided by a Middlesex County jury.’

SOURCE Marks & Klein, LLP

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