FRANCHISE LAWSUIT Alleges Matco Tools Scam, TD Bank Fraud

Matco Tools & TD Bank worked together to scam Matco franchise owners, the Small Business Administration (SBA) and American taxpayers, according to a class action franchise lawsuit filed by Marks & Klein, LLP of Red Bank, N.J. yesterday.

The press release issued by Marks & Klein, LLP is included below. intends to follow this case and other allegations against Matco as they unfold.

If you are familiar with the Matco Tools franchise or distributorship programs, please share your insights or opinions with a comment below.

Representatives of Matco Tools, TD Bank or others are invited to submit clarification, opposing opinions or rebuttals for publication.  Contact the site ADMIN at UnhappyFranchisee[at]

Also read:  MATCO TOOLS Franchise Complaints.

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Marks & Klein franchise lawsuit press release:

Father & Son File Lawsuit Against Matco Tools and TD Bank

Class Action Lawsuit Claims the Tool Company and Bank Engaged in Widespread SBA Loan Fraud

TRENTON  – A father and son – David Villano, Jr. and David Villano III, through their attorneys, Marks & Klein, LLP of Red Bank, N.J., today filed a class action lawsuit against TD Bank and Matco Tools, Inc. alleging the tool company franchisor and the bank engaged in a loan fraud scheme to encourage unsophisticated borrowers to enter into risky business loans to buy Matco Tools franchises.

The scheme enabled Matco to sell more franchises and TD Bank to make risky loans without concern. The bank knew if the loans failed, the loans would ultimately be repaid by United States taxpayers through the SBA guaranteed loan program. Data from the SBA shows that from 2000 to 2010, Matco Tools’ SBA loans had a staggering 37.3 percent failure rate.

“It is most unfortunate that SBA loans, which are designed to assist aspiring entrepreneurs to finance a new business venture and benefit the economy could, as alleged in this case, be used for such deceitful purposes,” said Gerald A. (Jerry) Marks, Esq., lead plaintiff counsel.

“Many individuals like the Villanos have unknowingly been exploited,” Marks said. “We are seeking treble damages to discourage this sort of conduct from happening again in the future. United States taxpayers have unwittingly been `bailing out’ lenders like TD for years on defaulted loans that should never have been made in the first place.”

The lawsuit alleges that Matco and TD conspired to make loans using secret three-year income projections, in violation of FTC franchise disclosure regulations. Specifically, Matco would deliver the secret three-year income projections to TD Bank with a letter, instructing bank officials not to disclose the projections to loan applicants.

The bank would then use the income projections to qualify the loans for SBA financing. But Matco kept the projections secret because it knew of the high rate of failure among its franchisees and feared the lackluster projections would be used by failed franchisees filing suit.

The lawsuit further states that Matco, TD Bank and other unscrupulous SBA lenders preyed upon the Villanos and other unsophisticated borrowers because of their perception that the lender would not make the loan unless it believed the Matco franchise was an acceptable business opportunity.

According to the lawsuit, TD Bank profited through its collection of loan origination fees as well as interest on the loan principal, which it collected from borrowers while these improper loans were current. When the loans would ultimately fail, TD bank and other lenders would pass along the loss to the American taxpayer, as SBA loans are 90 percent guaranteed by taxpayers, according to the FDIC.

Matco, as the franchisor, would likewise profit from the sale of a new franchise and having its franchised distributors sell tool products for two to three years in a designated route, before ultimately failing and being replaced by a new franchisee.

“Matco and TD had the ability to perpetuate this scheme because of a self-serving lending culture that was more than happy to originate and collect fees and pass along the risk of loss to its customers and taxpayers, even if the law was being violated,” said Louis Tambaro, Esq., another member of Marks & Klein. “By bringing this lawsuit as a national class action, we look forward to exposing the dark underbelly of a destructive lending culture.”

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25 thoughts on “FRANCHISE LAWSUIT Alleges Matco Tools Scam, TD Bank Fraud

  • Pingback: MATCO TOOLS Franchise Complaints : Unhappy Franchisee

  • Keith Joudrey

    On March 1, 2008 at age 58 I started, what I thought and was assured by Matco Tools, was the last career move I would ever have to make. Being in tool sales for most of my working life (but not as a franchizee) this appeared a good opportunity. The initial presentations from Matco turned out to be a first class snow job as I later realized. Without going into all the financials of the distributorship, and after working my route for seventeen months 12 to 14 hours a day and having to take a home equity loan out to subsidize this business, I ended up losing a total of $70k. Long story short, Matco made $$$ off me and I incurred a lot of debt.

  • Todd Allen Peterson

    On July 11, 2004 at age 34 I started my Matco franchise. I grew my franchise with the approval of my District Manager ranking 41 out over 1500 Distributors and helping my District become a #1 District in 2005 where I was asked to explain to other distributors at Expo how to become a successful Distributor.

    Little did I know that the New Regional Manager who awarded me and asked me to speak to others would come to me 4 mo. later after he had fired my District Manager and cut a top 50 distributor’s route ask me to surrender my customers to a guy who was wanting to start his own franchise. I was told by this Regional Manager that if I didn’t comply that “Yes” I could lose my franchise.

    After I surrendered my customers they said I was giving the new Distributor “junk shops” and that I needed to give him a good chance of succeeding. I ended up surrendering almost half of my customers and reducing my head count to almost the min. of a new distributor. He had over 100 more than I had and 130 more than I had when I started my franchise in 2004.

    I would have quit but buying a bigger truck and having an inventory 5 times what I started with I had no choice but to try and continue on. Matco gave me a separation letter on July 12, 2010 stating I had 90 days to cure not being at 80% of the national average and if I defaulted within a year I could be terminated. I didn’t agree with letter and stated to Matco that it was wrong to threaten me with termination when I had requested twice in 2009 and once in 2010 to have a resurvey of my route be performed due to low head count because of the economy and that it was their fault I couldn’t meet their min. requirements.

    On July 26, 2010 I received a survey of my route stating I had 328 customers and I was only seeing 67% of them. I immediately called management and reported this lie of my route my District Manager had made with shops that were closed and shops I had never added to my route list and shops I had never heard of. Two days later on July 28, 2010 my District Manager informs me he is giving me over 100 new customers to call on and states his hands were tied before and that he is sorry for what had happened.

    With my new customers I quadrupled my purchase average in the 4 months and after the 90 day cure period I still had my franchise. Sometime in Nov. 2010 my District Manager surprised me with a visit and because cautious from the letter I asked him “What have I done now” he stated that I was doing “Great” and that I had cured the violation. I then pointed out that it was getting slow, (end of November thru January is typically slow on sales and collections due to customers being out of town or buying presents) and that I was concerned about the one year clause in the separation letter and my District Manager tells me not to worry that everything is going to be fine and that he will let me know before something like that happens.

    On Feb. 11, 2011 I was terminated from Matco with my Regional Manager stating that I was terminated because I repeated the same infraction. After pointing out to the Vice President of Matco that I was falsely terminated and I should have been given 10 days to cure a second violation he informed me that I had never cured. In a separate meeting when I was trying to amically resolve my dispute with Matco over my false termination. I plead my case to the Vice President of Matco over breakfast only to have him say that everything I was telling him didn’t matter and if I would sign a statement saying I would not say anything negative that they would take the inventory that I return and give me full credit but only the items they would except. I declined.

    People need to know about this company and I’ll be shamed if I get bought out by crooks and liars. Especially when I should be entitled to that money anyway.

  • David Lary

    Im going to keep this short and to the point. In 2006 Matco said your in. I knew I had great credit but not that good. 127000k loan through TD bank. I was the 3rd dist. in about 7 years. Makes me wounder now. After I closed up shop I knew I got screwed.

  • Pingback: MATCO TOOLS Class Action Lawsuit, “Secret” Sales Projections : Unhappy Franchisee


    I have posted the full Matco Tools TD Bank Class Action Lawsuit complaints.

    I have also posted a copy of the alleged “secret” three year projections that the lawsuit claims Matco furnished to TD Bank but forbade them from sharing with the loan applicant and Matco distributor.

  • Pingback: MATCO TOOLS 2011 Franchise Disclosure Document (FDD) & Other Resources : Unhappy Franchisee


    Just added a reference page for documents, including the 2011 FDD which includes number of distributors, number of terminated distributors, as well as financial performance claims (Item 19) and lots of other info:

    MATCO TOOLS 2011 Franchise Disclosure Document (FDD) & Other Resources

    If anyone has relevant docs or links to add to this page, email unhappyfranchisee[at] Thanks


    Check out:

    MATCO TOOLS Franchise Report Alleges Distributor Churning

    This Marks & Klein report alleges significant franchisee churning, up to 49%. Everyone involved with the Matco Tools brand should be paying very close attention to this discussion and read this report, because things are getting real serious, real fast.

    Our intent is to provide a voice to both sides of the issue and let readers decide for themselves. Matco Tools officials are invited to submit a clarification and/or rebuttal to UnhappyFranchisee[at]

  • Pingback: MATCO TOOLS Franchise Defenders Speak Out : Unhappy Franchisee

  • Pingback: MATCO TOOLS Distributor Franchise : Unhappy Franchisee

  • william Buedinger

    Boy ,this dosen’t sound like the Matco Tools i knew , i was a “charter Distributor ” haveing begun in may 1982 and was with them as a distributor until at 65 i retiered NEVER ONCE HAVEING HAD ANY PROBLEMS WITH MANAGEMENT. I was NOT a franchisee , although myself and all other distributors were offered the opprotunity to become a franchise — I and many of us at the time choose not to go that route . Certenly not all new bussiness startups are succesfull , and any who do start a new bussiness have to know it takes 2 to 3 years to become profitable , the early years requireing reinvestment in the bussiness to grow BUT PERSONALLY IF I WAS TO AGAIN START UP A NEW BUSSINESS (IF I WAS YOUNGER ) MATCO TOOLS WOULD AGAIN BE MY CHOICE.

  • Snapon1

    People reading this and are affected need to call Jerry marks at marks & klein in red bank nj…

  • Brian Fulton

    I as well was a Charter Distributor starting in 1987,then Franchisee in 1993,until
    my retirement in 2011.Previously to starting my Matco business I worked for a large
    Tire Co. for ten years in various capacities including sales and management then ran a service station for 5 years before meeting my Matco Man. I was looking for
    a self-start,motivating career and signed up with Hard money and personal loans
    up the ying-yang. 24 years later and 3 divorces {not because of the business},all
    my obligations fulfilled, I retired and got into another form of the Automotive sector
    of sales. During that 24 years with Matco I saw an awful lot of faces and changes
    that for the most part were incredibly beneficial. All companies in the very fast-paced and competitive business of selling store to door tools had a lot to learn
    in a little time.For me Matco seemed to respond to those needs for improvement
    and support much faster than the competition.
    Unfortunately what you are dealing with in this business is recruitment of a lot
    of Beer-minded recruits that could not fill a wine glass,including the levels of
    recruitment through the rank and file within the Company promotions to various
    positions. You could be selling a Hot-Dog Franchise to them and ultimately they
    would fail. The business for me provided a steady,yet hard working income for
    almost 24 years,but you had to work it,it is not for everybody.
    As for Churning,litigation will certainly have a field day with this one as usual,
    however I hope it will not result in the demise of a needed profession run by
    professionals [Death of a salesman}.

  • Organized

    I started with this company nearly 2 1/2 decades ago and have literally seen it all, in my territory alone 27 different tool dealers have come and gone and 13 Matco district managers as well. It really was a great company back in the 80’s-90’s then Danaher (Wall St.) came along and took Matco down the sewer with all that implies. And the sewer rats run the show now.

    Brian is correct in that Matco targets the uneducated unsofisticated beer crowd with somewhat decent credit. Most of them do not understand much less read an FDD or UFOC and just take for granted they will receive “World Class Support” heavily promoted by the managers, once the check is cashed you are on your own. Then when a Franchisee fails management will put the full blame on the rookie Franchisee every time.

    I remember thinking how strange it was that Matco had to bribe and pressure us to try and get us to sign the Franchise agreement. If it was such a great deal then why the heavy bribes, cash toolboxes etc…Now it is plainly clear why!!

  • Todd A. Peterson

    While these guys are boasting of Matco and what they did with a TOTALLY different AGREEMENT. The AGREEMENT Matco is selling these days, is in most cases, an unviable route to begin with. PRE-DEFINED list of BULLSHIT! Then when the New Distributor can’t keep up with the above guys who have retired on purchase average because of their separate AGREEMENT. Matco says CHURN ON and hires another Distributor to take their place.

    Think about it! A company that LIES in their advertising. Uses illegal web sites to advertise their Franchises as an Employment Opportunity because word of mouth IS NOT WORKING ANYMORE!!!

  • Sal Cefalu

    I was a Matco tools distributor for 10.5 years. Then I was forced out do to my purchase avarege below 80% of the national avarege.

  • Todd A. Peterson


    Defend your rights! Look me up on face book Todd Peterson. Wearing a softball uniform. Red and White. Leave me your Phone # and I will call you and tell you what to do. DO NOT let Matco continue this crap with others. They have a MASSIVE Ad campaign trying to APPEAL their Franchise CRAP to our VETERAN’s coming home from OVERSEAS! We got plenty of seats on our train and if we get to full we will add more cars. Matco will PAY for the lives they have ruined.

  • Pingback: Mobile Tool Franchise Guide : Unhappy Franchisee

  • Is it me or do some people need to relize they need to move on? This game is won by those who figure out how to play it. Mistakes you will make .poor guidance may occur but ultimately it is you that needs to figure it out. some of my BEST customers are wash help ,service writers hell even used car salesmen/women. so your head count may be low FIGURE IT OUT. so u have a ton of miles to drive FIGURE IT OUT (shaved 50 just by rearranging) so tired of oooo boohooo whoa is me. everyday is a new battle what did you think owning a biz was about?

  • Pingback: Is Matco Tools Taking Advantage of US Veterans? « Give Me Liberty

  • Addison

    I certainly understand the frustration of a business that sadly didn’t work out. But Danaher is too well-run a company to allow Matco Tools to operate illegally, and frankly, Matco corporate management isn’t going to do that either.

    A franchise is not a guarantee of anything. You have to do your due diligence. Life in the US is “buyer beware”, that’s part of our freedom. I see a lot of intense feelings here being vented, but ultimately the anger will not go anywhere, or for some it will turn into a class action lawsuit where you get chump change and the law firm keeps 60% of $20 million. Given that how Matco is operating is legal, why are you letting Congress off the hook on this? Change the regulations! If you direct your rage at your representatives you can make a permanent change to the issues you see working against you.

  • Dennis Milashouskas

    My name is Dennis Milashouskas and I have owned and operated my own business for over 20 years. My business has me traveling a great deal. I was looking for something locally and there was a Matco route available right in my neighborhood! I actually bought the route that one of the parties involved in the class action suit Dave Vilano used to own. I am separated from Matco now and owe 100,000 that I don’t have. If anyone has any advise I would appreciate the help.

  • Hello, Dennis ( & all others…)

    Sorry to hear of your troubles with Matco.

    My firm, Bridge Management Consulting, helps small business owners who are struggling with overwhelming debt resulting from a failing or closed business.

    We’ve handled several franchisees who need to get out of their particular franchise hell, and we’ve successfully fought back on behalf of our clients. Don’t give into them!
    Feel free to contact:

    Ryan Lineham, Director of Client Services

  • I was a matco distributor. Matco has a financial sheet completed by the DM and potential investor. They base the break even on a number that’s impossible to obtain. Its based the number of days you can work per year. Marco assumes the investor will work 51 weeks a year which drives down the BE and makes the biz seem appealing. Please look into the way break evens are calculated. They are all over stated.

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