![]() Snap-On posted net earnings of $88.6 million on sales of $754.3 million last year. Heide said every territory includes between 175 and 225 professional mechanics, all of whom make their living with the types of tools sold by the company. “I’m just about to lose everything I own,” he said. Pollock mortgaged his home and possessions to make his initial investment, only to lose $79,000 in six months before selling his dealership back to Snap-On. The territory, which Pollock has given up, included about 180 “mechanics” by the company’s count, he said, but some were workers at an upholstery shop, a bowling alley, and eight employees of a single car-detailing garage. Pollock, one of the dealers who filed suit Tuesday, said his dealership, a new territory in El Monte, could never be profitable. He said that in 10 instances where dealers went out of business and later claimed they had received inadequate territories, the average replacement dealer in the same territories produced 82% more sales.īut Timothy E. Heide argued that dealers who sue Snap-On are poor businessmen. The company buys back all unsold tools from a dealer who goes out of business. The rest is paid to the dealer giving up the territory for amounts still owed by his or her customers. The company has a right to change the size of territories at will because dealers do not pay any sort of franchise fee, he said.Ī new dealer makes an initial investment of about $65,000, he said, of which about $35,000 pays for a start-up inventory of tools and $5,000 pays for a lease on a company truck. “It relates only to the forum for hearing it.However, a state court in Michigan and a federal court in Virginia have ruled in other lawsuits that Snap-On can shrink existing territories, Heide said. ![]() “This decision has nothing to do with the merits of the case,” the company said. In a statement, Snap-on said it disagrees with the ruling and is considering its options. “This decision has nationwide implications for all 3,400 current Snap-on dealers, as well as all former dealers and their wives who claim that they were defrauded in franchise agreements by Snap-on,” he said. Marks praised the decision by state Superior Court Judge Mathias E. This past summer, an arbitrator ordered Kenosha, Wis.-based Snap-on to pay Casey $314,608.$81,000 from an inventory loan for his first business. By May 2002, the debt created from two loans caused his original franchise to collapse. Casey still owed$81,000 from an inventory loan for his first business.īy September 2001, Casey’s second franchise failed because of poor sales. The sale violated the company’s own rules against selling another franchise to a Snap-on franchisee who owes money, the attorney said. But in December 1999, Snap-on Tools sold Casey a second franchise, loaning him $95,000 for inventory, including tools, Marks has said. Nancy Casey gave her husband $40,000 she inherited from her father to become a Snap-on dealer.īrian Casey started a Snap-on franchise in early 1998 and became a successful franchisee. The three women, including Nancy Casey of Middletown, claim that Snap-on deliberately induced families to invest their money into a franchised tool route when the company knew that the territory did not contain enough customers or that a previous dealer had failed, said Marks, the women’s Red Bank lawyer, in a statement. Marks believes the women will have a better chance of winning their case in court rather than before an arbitration panel. Marks of Red Bank, claimed that the wives are not subject to the franchise agreement. According to its franchise sales agreement, legal disputes between Snap-on and its franchisees must be settled through arbitration and not in court.īut the attorney for the three women, Gerald A. had argued that the wives’ claims should go before the American Arbitration Association, not a state court. A group of wives of former dealers for Snap-on Tools, a franchise in which tools are sold to mechanics and other businesses out of a truck, have a right to have their lawsuit against the company heard by a jury, a judge has ruled.
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