Franchise Startup Costs Vs. Total Investment

Purchasing a franchise involves various costs, which can be confusing. 

Below, we outline the differences between the cost to start a franchise and the total investment needed to own a mobile tools franchise.

In the tool distribution business, costs typically include franchise fees, initial inventory, and truck leases. However, one of the most misunderstood concepts regarding startup costs is the difference between out-of-pocket expenses and total investment costs.

Franchise Startup Costs

In summary, startup costs refer to the money you pay out of pocket.

To begin your journey as a mobile tool distributor, you will need an initial cash outlay, which is generally quite reasonable. This amount covers the essential costs to launch your business.

For perspective, franchises with low startup costs typically range from $5,000 to $35,000 out of pocket.

Matco Tools franchise startup costs are used for travel to our training facility and corporate office in Ohio, a down payment on your tool truck, and payment for truck insurance.

Living Expenses

"I have enough money in the bank to cover initial startup costs. Should I get a franchise?"

Not necessarily. In many cases, especially in households with a single income, individuals interested in starting a franchise may need to quit their job before they can begin selling tools on a route.

This means that, in addition to covering startup costs, new franchisees must also be able to support their living expenses until their new business generates enough revenue to cover those costs.

Living expenses refer to the estimated amount of money you need to maintain your lifestyle while your new franchise is in its early stages.

At Matco Tools, we take proper budgeting for living necessities very seriously. We avoid awarding a new franchise if it may financially constrain you.

In many instances, the living expense estimate provided by Matco exceeds what new franchisees actually spend. As a result, any budgeted funds for living expenses remain untouched in your bank account.

If you qualify for a Matco Tools franchise, you will be paired with an experienced Franchise Specialist who will guide you through this process and help you create a realistic budget.

Total Cost vs Out of Pocket Cost

The amount of money you need to pay out of pocket can vary based on several factors, including your financing options. Like any business purchase, you will likely need to finance your franchise with a loan.

To be considered for a Matco franchise, it's essential to have sufficient funds to cover both startup costs and living expenses. Once you're on the road, your business will start to recoup your long-term investments (such as the truck loan and inventory) while also generating income and profit.

Hypothetical Tool Franchise Example (Not Actual Costs):

The total cost of a franchise (hypothetical example: $95,000) is greater than the amount you need to invest to start a tool franchise (hypothetical out-of-pocket example: $5,000).

The time it takes to repay your loan (hypothetical loan amount: $90,000) can vary based on several factors, including business performance and your monthly payment.

Disclaimer: The numbers mentioned in this post are hypothetical and do not reflect actual Matco Tools franchise costs.

Each individual's financial situation is unique, and franchise investment requirements may vary based on your personal budget, the amount financed, and your equipment needs.

Why Choose a Matco Tools Franchise?

Many people dream of owning their own businesses. They want to make their own decisions, take time off when they choose, and have greater control over their income. Owning a Matco Tools franchise can help make this dream a reality.

You can work for yourself, but not by yourself.

Matco offers in-house financing that can cover up to 100% of startup costs if you qualify. This gives you the potential to keep more money in your pocket while enjoying greater flexibility.

By understanding the Matco franchise costs, earning potential, and expenses upfront, you can plan for success and hit the ground running in the mobile tool business.