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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38 thoughts on “MAC TOOLS Guilty of Franchise Fraud?”
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MAC Sucks! that’s why they have a website mactoolssuck.com
Matco has one of those websites too: http://www.unhappyfranchisee.com/matco-tools-franchise-complaints/
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I started with Snap-on tools in 1992. I have been both a sales rep for Snap-on tools, an independant dealer, then a a field manager and now I have 5 franchises in the dealer area. The problems with Mac and Matco are not isolated to just these two companies. I am tired of watching Snap-on take advantage of nieve unsuspecting potential new business owners looking to own there own business. I am going to start a Snap-on dealer association that warns and protects future and current Snap-on franchisees. Succesfull or unsuccesful,,,,,Snap-on is like Hotel california. “Once you check in you will never check out”. With ANY MONEY that is. Even if you are succesful Snap-on has made sure you will have to GIVE your business away. God forbid your not succesfull. Many more details to come. I can assure you I know Snap-ons system and game playing better then those in Kenosha. I intend to educate.
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I was a Mac dealer for some years. Mac sucks and the brand has been destroyed. The tools are garbage too. They are an undisclosed franchise and will dump dealers if they aren’t national average. If you wanna sell tools don’t even use Mac as a dart board… And if they ask you to be a dealer run. Run. Run for the hills…
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Beware current Mac distributors. Mac is asking distributors to sign a franchise agreement. By signing this agreement you just spent an extra $900 a year and now own a route which you will never be able to sell. Don’t sign…. Don’t sign…..
I am fighting to sell my Snapon franchises and Snap-on is doing everything to get in the way. These tool routes, all of them are worthless
Mac tool distributors reading…. Don’t sign any contract. You will never be able to sell your route…
Mac may try too to sweeten the deal at tool fair.. Don’t sign… You will regret it…
Snap-on did the exact same thing 10 – 15 years ago. They sweetened deal to convert dealers up front. I now run 5 franchises very succesfully in Dallas. I am in the top 10 in the world for Multi-franchises. I am trying to sell my routes but snap-on has rendered my routes virtually worthless. Restrictions on trucks, accounts recievable and financing make it impossable to have value in our businesses. Don’t sign anything. I started a web site called Snapontoolsdealerassociation.com. I am getting a lot of pressure to remove this site from Snap-on. They don’t like it at all. I am thinking about changing to mobiltooldealers association and supporting all tool dealers. I used to be a field manager for Snap-on so I understand how they(tool companies) work. they want to keep these routes skinney and cheap so they can bring young fresh blood in willing to work 12-14 hours a day until they are all used up and then turn route over to someone fresh and nieve.
all tool dealers be aware of value of your business when you sell. I sold 2.3 million in 2011 and Snap-on wants me to give it away. they say there is no value and a corporate manager says 80% of businesses never sell anyway so, for us to expect to get anything for our businesses is a little out of line. Bet that wasn’t part of discussion when the recruiter sold you the business. All tool dealers(Mac, Matco, Snap-on and Cornwell) need to stand together and force these companies to be fair and honost.
Site will likely be changing soon to represent mobiltooldealersassociation.com. Please watch for it and lets stand together.
There is little difference between Mobil Tool companies and how they treat their dealers or distributors. Like Snap-on did 15 years ago, MAC is seeing the writing on the wall.
Mac 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 them more but will they lose rights.
Mac will charge a distributor an annual fee of $990 every year they are a franchisee.
Next, Mac distributors, at this point are protected by various state laws. They will lose these protections if they sign the franchise agreement. For example, certain states provide protections to distributors against termination and if it occurs, damages must be paid to the terminated distributor. 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 all Mac distributors fail in business (http://www.bluemaumau.org/sba_loan_failure_rates_franchise_brand_2011).
Mac distributors should unite and make sure that what they worked to build up is not taken away from them.
dealers need to unit and speak loudly about these companies willingness to abuse their powers against dealers.
http://www.snapontoolsdealerassociation.com. Soon to become all tool dealers association.
There is an attorney in New Jersey that has represented many Mac dealers as well as Snap-on and Matco very succesfully. Google an attorney in New Jersy named Jerry Marks. It may be the smartest thing you’ve ever done.
What has Mac Tools done too make there brand name reputable in the past years? So now they want you too franchise a system that works??? Last time I checked they have a failed system.. Now they want you too pay monthly fees on a failed system??? They are insane….. Dont sign.. Call Jerry Marks and be educated on your rights… Your routes are a tough sale… Dont be brain washed… Read what Matco Dealers are saying…. Read comments on Jim’s web site for tool dealers….
Just got notice from the Director of Franchising for Snap-on tools today in writing.
“In accordance with the terms of your franchise agreement, Snap-on is providing notice to you that there will be an increase in your monthly License fee. Effective March 2012, Your Monthly License fee will be increased from $102.00 to $107.00.
Mac dealers – ask yourself, What will you get out of franchising. 15 yrs after Snap-on franchised, what value do we as Snap-on dealers get???? If you have been in your route for a long period of time you may have legal ownership of that list of calls. If you sign up for the franchise you will forfeit that ownership and in addition you will be paying Mac tools to forfeit that ownership. Think about it.
Is there a precedent for the “legal ownership” premise somewhere…can you give more detail?
I would highly suggest you contact Jerry Marks, an attorney in New Jersey. I am sure he will have some free advise and direction for you.
Attn Mac tools distributors.. Don’t be fooled. Don’t sign that franchise agreement. You don’t have too sign. Don’t sign. You lose rights if you sign…
Watch for this site to convert to http://www.mobiletooldealersassociation.com. for the health and welfare of all tool dealers.
Watch out for the sales pitch. Here is what converting to a franchise will get you. Snap-on did and look where Snap-on dealers are now.
1. Smaller routes than Mac
2. Smaller margins than Mac
3. Franchise fees increased to $107.00 each and every month.
4. report business credit to personal credit so you can never buy anything that will compete with paying tool bill.
These tool companies are unethical and think we are stupid. DO NOT FRANCHISE. IT WILL COST YOU IF YOU DO. DON’T DO IT.
ALL THESE TOOL COMPANIES PROMISE THE SAME THING. AN OPPORTUNITY OF A LIFE TIME. OWN YOUR OWN BUSINESS. FELLOW DEALERS AND PROSPECTIVE DEALERS. IF YOU OWN YOUR OWN BUSINESS, SHOULDN’T YOU BE ABLE TO SELL YOUR BUSINESS? YOU WILL NEVER SELL YOUR BUSINESS. NEVER. THESE TOOL COMPANIES HAVE BEEN PROMISING FOR YEARS IN BLUE SKY. THE PROBLEM IS THEY DON’T WANT US TO SELL. THEY WANT TO GIVE AWAY ROUTES TO YOUNG FRESH MEAT THAT TURNS HIGH VOLUME FOR A WHILE THEN CRASH AND BURN AFTER BEING ALL USED UP.
MY SUGGESTION IS GET A JOB IF YOU WANT TO JUST WALK AWAY SOME DAY OR GO BUY A REAL BUSINESS THAT YOU CAN SELL SOMEDAY.
I just read Mac tools failure rate on sba loans is 35%. that was only out of 50 people. Pretty bad.
Mac tools has always had a failed system. Now by signing it is gonna cost you. Don’t be fooled. Don’t sign.
Tool Dealers Association is distributing a flyer that urges Mac Tools distributors NOT to convert to the franchise program. I’ve posted the flyer and their objections to the franchise agreement here:
MAC TOOLS Dealers Warn Against Franchise Conversion
I’ve also updated the full list of links showing all Unhappy Franchisee posts on mobile tool franchises, complaints and discussions. Check it out here:
Mobile Tool Franchise Guide & Index
Mac Dealers – If you convert this is what you have to look forward to. Lets look at Snap-on tools FDD. The only way these companies make more money is by shrinking us and putting more dealers o the street.
From pg 65 of snap-on FDD-see below:
We grant you the right, subject to the terms provided below, to use the Snap-on Program, and to
purchase Products from us for resale only at the locations identified on your List of Calls.
“Products” are the tools and equipment manufactured and/or distributed by us and made
available by us for resale by our franchisees.
The List of Calls consists of a series of business addresses or “stops” at which we have
determined that there are, or should be, tool users who purchase their own tools. While the
number of potential customers on a List of Calls will vary to some extent from franchisee to
franchisee, it is our intent that each List of Calls contains at least 200 potential Core Customers at
the time a Franchise Agreement is signed. Potential “Core Customers” are full-time professional
mechanics and other customers in the automotive after-market and related markets who are
required to furnish their own tools in the normal course of their business. Remember, these are
potential Core Customers, which does not mean that they all will purchase Products from you or
that they all are creditworthy. It simply means that it is up to you to sell Products on terms you
deem appropriate to the potential Core Customers at locations on your List of Calls. The
business located at a stop and/or the number of potential Core Customers located at a stop will
change from time to time during the term of your Franchise Agreement. It is not possible for us to
assure you that you will have the same number of potential Core Customers, or even 200
potential Core Customers, during the entire term of your Franchise Agreement, particularly in
markets which have negative economic changes.
Mac Dealers, us snap-on dealers pay over $100.00 per month to own a franchise that loans us 200 potential customers. In fact read from FDD. It says, “it is not possible for us(Snap-on) to assure you that you will have the same number of potential core customers, or even 200 potential core customers, during the entire term of your franchise agreement.
Do not franchise Mac dealers!!!!!!!
Lets analysis 200 potential customers. The average mechanic makes $400.00 – $500.00 per week. Lets say you as a dealer get all of those potential customers. Remember there are 4 tool companies with dealers trying to get their money. But you are good so you get it all. Lets assume this mechanic can spend $50.00 per week on tools. Best case scenario you get $10,000.00 per week in paid sales. More real is a scenario where you get half the customers. 100 customer and half of their money of $25.00 per week. paid sales of $2500.00
I will tell you that no dealer in any brand can survive with 200 potential customers. Any succesfull dealer in Snap-on has bigger routes that were cheated and Snap-on will never let you sell that route whole. Never!
If Mac delaers convert you will be going down the same path as Snap-on. Take your pick, Cancer or heart disease if you franchise.
Mac dealers think about this. Snap-on who franchised about 15 years ago extracts profits in everyway possible from Snap-on dealers.
Snap-on gets a piece of our credit card fees. While Snap-on does not require us to use Chase Paymentech, there is only one credit card provider that can be used in Snap-on’s operating system. In Snap-on’s FDD they admit they derive income from the fees we are charged to run credit card fees. while this is not illiegal it certianly is unethical.
what this means when we are collecting credit card payments on Snap-on credit accounts that Snap-on makes 18% interest on and in addition as us dealers collect payment we are charged a fee that Snap-on gets a part of.
These tool companies should be trying to increase our profits as dealers, not extract every last drop of blood from us.
I was a Mac Tools distributor and joined a class action lawsuit back in 2005. Can anybody tell me the disposition of this lawsuit?
Mac dealers, let your voice be heard. Join http://www.mobiletooldealersassociation.com.. Be loud and clear what’s on your mind.
Hey Robert M. check out my story at stanleymactoolslawsuit.blogspot.com. I think we were part of the same group. Email me if you have any questions.
Mac tools will try to trick you into a franchise they lie cheat and use false programs such as their old mars program where they would train you give you a route and a small starter inventory and a used truck put you on the street for a short while then try to force you into buying the route and if you declined they would try to sue you for breech of a false contract loosened I hate mac tools and hope that the company goes out of business and the scaling employees go with it
Screw mac tools
they all do mac, snap on- cornhole ,matco,sk ,become a dist for any one of them and sell enough to keep your franchise and sell aftermarket items or from wholesalers customers do not even pay atten:
Tim the tool man 98,to125,000 every year for the last 20 years ,i made almost 7500 this week ,get out and work you lazy ass
Tim the Toolman Independence Ky