Unlike the casual hobby enthusiast, when professional automotive, aviation and marine technicians think “tool,” they usually think “Snap-on.” That’s not just because Snap-on invented the now ubiquitous ratchet with interchangeable “snap-on” sockets, but also because it dominates the market with an 88 year-old brand whose high-quality reputation is backed up by a tool warranty that is the envy of the industry. With over 19,000 products in its offering, this $2.8 billion, S&P500 company long ago expanded its line of hand tools to include an array of electronic computerized diagnostic equipment, information and management systems, and shop implements like hydraulic lifts and tire changers.

But there is another side to Snap-on: it’s a franchise with more than 4,000 franchisees in a network that spans more than 130 countries. It’s this franchise success story that has been getting a fair amount of recognition lately with various business leadership awards, due in part to the stability of company, the growth of its franchise system, its massive size, and the availability of franchisor-provided financing to qualified prospective franchisees. Who better to speak about the Snap-on buzz than Barry “Bazzz” Young, head of franchising for the Kenosha, Wisconsin based company. Bazzz, a 28 year Snap-on veteran who started out in the trenches as a Snap-on franchisee himself, has made it a personal goal to make sure that the franchise-side of the Snap-on story gets told.

BOJ: How did your Snap-on story begin?

Bazzz: I joined Snap-on in 1980 as a franchisee in Birmingham in England. I did that for three years. And then over the next 18 years I held various positions of various responsibilities supporting our franchisees in England, until I became national sales manager there, and then in 1999, I moved to Australia to look after Snap-on’s businesses in Australia, New Zealand and South Africa. And then most recently in February of last year, I moved to Kenosha in Wisconsin which is the home of Snap-on to look after our franchise system worldwide. So if you’re confused by this accent, it’s because I’m an Englishmen from Australia living in Wisconsin.

BOJ: Where did the Snap-on story begin?

Bazzz: Snap-on was founded in 1920 on the idea of the interchangeable socket. So if you’ve ever handled a ratchet and a socket, where one snaps on to the other, that’s where Snap-on began.

The interesting thing for Snap-on is that it invented this revolutionary product, and it invented it at a time when North America was going through the Great Depression, so what it had to do very early on in its history was to come up with a way of selling its product to its customers. The solution it came up with was to take the product to its customers at their place of work. So rather than setting up Snap-on for sale in fixed site locations, we were delivering our tools to the customers at their place of work from the earliest days. And indeed when you look at our franchise today, its pretty much what we still do.

From long before we were called a franchise our business model was really exactly the same. Of course, mobile stores were perhaps not quite as large or as glamorous as they are today. We’re going back to the earliest days of the motor vehicles. We literally have photographs here of Snap-on sales people driving Model T’s with boxes on the back delivering tools to customers at their place of work.

BOJ: Why the truck, or “mobile store,” as you call it?

Bazzz: Particularly in recessionary times, consumers are choosing where they are going to go to spend their money. When times are tough they probably choose not to go to the store. We overcame that then, and to some extent to this day still do, by eliminating the choice for the customer. We go and visit him where he is. That’s the reason for the mobile nature of our franchise.

BOJ: Who are your customers?

Bazzz: Our customers are professional technicians who service cars, trucks, motorcycles, boats, light aircraft, really any kind of transportation. They’re professional technicians, rather than hobby users.

There are a couple of other companies who over the years have copied our model. Snap-on pioneered this mobile tool distribution channel. Some of the other large tool brands that you may know, Craftsmen, for example, sell their products through large stores like Sears. But their target audience is very different. You are less likely to see products like Craftsmen in the tool box of the professional technician.

What has changed over time has been the technology of the cars that they work on, the individuals are actually very much the same. I would argue that today they have to be better educated, more technically competent. Cars years ago were relatively simpler than today. Today, an average family car has dozens of computer systems in the car managing the engine, the transmission, the comfort of the passenger, so motor vehicle technicians today aren’t just turning wrenches.

Of the 19,000 products that we’ve got in our line, a growing number of those products are electronic computer-based diagnostic tools, where the technician plugs this tool into the car. Today the car and the diagnostic tool talk to one another. And diagnose not just what’s going on with the car today, but also what’s gone on with it since it was last serviced.

BOJ: How big is the market of professional technicians?

Bazzz: There’s something around 1.3 Million Professional Technicians in the U.S. And the number is growing. One of the things that we know is that the average age of a car is something around 10 years now and actually getting older. With that comes the fact that these aging cars need to be serviced. And indeed, as cars become more complex, there are much less incidence of people fixing cars themselves. If you go back to when I was a younger fellow, popping the hood and changing the spark plugs or adjusting the distributor were things anyone could do. But today, if you pop the hood of your car, it would probably frighten you to death. You certainly wouldn’t think about going in there and tackling it yourself. So from a franchise point of view, the opportunity is one for growth, not only for our customers but also for our franchisees.

BOJ: How is a franchise territory defined?

Bazzz: In establishing a territory for a franchisee, we would have surveyed every outlet or workshop that was likely to employ professional technicians. So at the point that you join our franchise, we have a complete list of calls that directs you where the technicians are, who the shop owner is, how many technicians work there, etc. So, as a new franchisee, there is very little cold calling required. Unlike a franchisee who joins, say, a carpet cleaning franchise that says “OK, we’re giving you a territory that’s got 100,000 addresses in it, now off you go and good luck to you,” we say, “Here’s your territory, here’s a very specific list of every potential customer in your area, or at least every one we can find, and here are the names of the people that run the shops, how many technicians are there.”

So for example, if there’s a marine shop, we would know not only where the shop is, but also what kind of boats they fix, and whether they’re open 52 weeks of the year because they’re in Miami or 6 months of the year because they’re in Milwaukee.

Because we know specifically where the customers are, routes or territories are defined by a list of calls. That list of calls is exclusive to the franchisee.

BOJ: What happens when a new customer moves into a territory?

Bazzz: All the franchisee needs to do is apply to us to have them added to the franchisee’s list of calls, and unless there is a really good reason why we wouldn’t, we would.

BOJ: Are some territories better than others?

Bazzz: I suppose if you are selling hamburgers, there may be some territories that are better than others where people are more or less likely to buy a hamburger. But the thing about our business is that our customers fix cars. A Chevy Impala is just as reliable or not in New York as it is in Kenosha, Wisconsin, or Carmel, California. Because the product that our customers service breaks down just as often as not with the same problems and requires the same kind of tools or diagnostics to fix all over the country, we argue that all territories are the same.

In a more rural territory, you might have to start earlier and finish later, and indeed you may consume more fuel in the process, but what we find is that you are actually less likely to come across a competitor as well. In a town or city, you may well have less windscreen time, but it’s where everybody else is as well.

We’ve got something approaching 3,500 stores in the US, operated by about 3,000 franchisees. And if you add up all of our competitors in the same market, all of them together comes to something slightly less than we’ve got. So because the competitors have less stores and less franchisees, they clearly don’t go to the places that are less obvious like the more rural locations.

BOJ: When does the franchisee visit his or her customers?

Bazzz: Our business is based on a weekly call. So every one of our franchisees calls on every one of their customers every week. Now, obviously with 19,000 different products in our line, if you were a technician from the time you were 16 to the time you were 60, you couldn’t own all that we make, probably.

A typical relationship between a Snap-on franchisee and his customers is very close and very informal. You could select any one of our franchisees and they will know all of their customers by first name, often they will know the names of their wives and family and how their kids are doing in school because they see each other every week.

BOJ: Do you offer credit to customers?

Bazzz: One of the things that is a great advantage to us and our franchisees is that we provide credit systems to allow the customers to buy the product. Because we are the purveyor of the finest hand tools in the world, what comes with a premium product is a premium price. So we have credit programs that allow the customer to buy them. And what that necessitates is the need to call weekly to collect the money. Because we go in there every single week, we also have the opportunity to sell more tools.

We have a couple of different credit programs. One that is operated typically for lower value sales by our franchisees directly. But we also have our own in house finance company called Snap-on Credit. So if the customer wanted to buy a particularly expensive product then we would have credit available for that customer. And then we manage that. The franchisee receives credit for the sale up front. So its great for his cash flow. And then Snap-on manages the collection of the money in that case.

When we sell our tools, for the most part they are sold on some form of credit. If a customer of one Snap-on franchisee leaves, very likely he hasn’t left to become a brain surgeon, very likely he’s gone to become a technician somewhere else.

So if he turns up in another Snap-on territory, he’s very easily identifiable. So one franchisee says to the other, “Hey, I’ve just had a new technician turn up in my territory, does he owe you any money?” “Yes he does, he owes me $500.” “OK, no problem, transfer the account.”

So the incidence of losing money on customers who choose to flee the franchisees is pretty rare.

BOJ: Can you take us through a typical day in the life of a Snap-on franchise owner?

Bazzz: Franchise owners operate from their home, and typically keep their mobile store at their home. Their day would start with reviewing their customer plan for the day. They manage their business through a very sophisticated point of sale system that is held on a laptop computer. They would make sure they have any special orders that would have been delivered to them overnight that they may have ordered the previous day to deliver to their customers that day. And then they would set off. They would try to be at their first call as their customer is opening their doors.

The point of sale system is not just a cash register, its also their inventory management system, their credit collection system, their customer database. It’s very sophisticated and very successful.

Typically he gets to the end of his day, hits some combination of keys, and the point of sale system prints out as much information as he could want surrounding the results of the day to either think about his day or plan his next week.

We also have a very sophisticated system of metrics where the franchisee’s figures are uploaded into a system where he can go online on the web and look at his own performance against the business plan that he has set as well as benchmark himself against every other franchisee in the system.

BOJ: Do you need to be a technician yourself to become a Snap-on franchisee?

Bazzz: Many do have a technical background. The facts are that because of the industry we serve, our brand is most well known to technicians and people that work in automotive service. But it’s absolutely not a requirement. We’ve got a system and a process that’s been developed over 88 years, so as long as we get people who have a strong work ethic, are committed, are enthusiastic, and are determined, they can lay that across our system and have every reasonable chance of success. In fact, we’re really unconcerned about teaching tools. We’re one of the largest tool companies in the world. We can teach tools. What we can’t teach is work ethic. I don’t think you can teach a lazy person to be busy or a boring person to be interesting. Like most franchise systems, we’re very proud of our process. It’s well defined. Its well practiced. Its been used by thousands of franchisees in multiple countries around the world. It’s been tried, its been tested, we know it works.

BOJ: How does one know he or she is a good fit for Snap-on?

Bazzz: We are keen to make sure that people are comfortable in the environment in which they are going to work. They are going to work in a mobile store, that is actually a truck. So you’ve got to be comfortable driving a truck. When you get to your customer you’re going to be going in and out of work shops. So what we do as part of the selection process is make sure that every prospect rides with at least three current and existing franchisees. For one, they get to experience the environment. Secondly, of course, they can do their due diligence and ask questions about what it’s really like to be a Snap-on franchisee.

BOJ: Is any training offered?

Bazzz: Yes. Once we’ve both decided we want to move forward, we have a very well-established initial training program that takes six days at a customized training facility in Dallas.

Once that’s completed and the franchisee is ready to hit the road in their new store, they are then supported on the road every day of the week for at least the first three weeks. A trained professional franchise developer will ride with the individual, call on every call, introduce the new franchisee to customers, help them with selling techniques, cash collection techniques, information about where to go to find information. That’s the first four weeks at a minimum. And if the franchisee requires it, we’re happy to stay for additional weeks if that’s necessary. Typically it is not, but we’re very keen to make sure people have the best start.

Then after that we have a sales developer who rides with a franchisee at least four times a year, sometimes more than that depending on the need. Other franchise systems, so I am told, turn up at the franchisee with a clip board and measure whether you are being compliant to the system. And although we do that as well, our focus actually is about making sure we are sharing techniques and benchmarking each franchisee against the best franchisees in the system.

BOJ: What makes Snap-on stand out as a franchise system?

Bazzz: If I think about the best franchise systems in the world, typically they’ve got a very powerful brand, which we have; they have a great product, which we know we have. In fact, the independent consulting group, Frost and Sullivan, recently measured that Snap-on is the most preferred tool brand by as much as 9 to 1.

Amongst the many things that Snap-on is famous for is its warranty. Our warranty is the envy of all tool companies. Assuming that the technician broke the tool using it for what it was designed for, we undertake to repair or replace it at any time.

BOJ: How does Snap-on advertise?

We are vigorously involved in motor sports. We sell a high performance professional tool and race teams are notorious as a tough environment for tools to survive. So we have the best race teams in most of the race series supporting our brand and we at the corporate level spend millions of dollars on such activities.

We also advertise in technical journals that are provided to the motor industry or the transportation industry we are represented every month in terms of our product.

We handle all the advertising at the corporate level, not that the local franchisees can’t or don’t do some local activities in their local communities, actually we encourage franchisees to be active in their local communities and there are some great stories about franchisees being active in their community, but as far as advertising, we handle that.

Snap-on has done a great job over its history at convincing the world at the large that we are the best tool company. As an international visitor to America, I regularly used to be questioned at immigration “so why are you here, and what do you do, and who do you work for” and as soon as you mention Snap-on I almost never entered America without an immigration officer who didn’t say “oh Snap-on, what great product, I’ve got a brother who that did that.” Everybody’s got a great story about Snap-on.

But one of the things I think we’ve done less well over the years is letting the world at large know that we’re also one of the best franchise systems in the world. Here we are with 4,700 plus stores around the world operated by more than 4,000 franchisees, which as far as I can tell makes us one of the largest non-food franchise systems in the world, and yet somehow we are not quite as famous as some of the other leading franchise systems as a franchise.

BOJ: Do you charge an advertising fee?

Bazzz: Unlike most other franchise systems, we don’t charge an advertising levee. And in fact, we don’t charge any royalties.

BOJ: Really? What is the business model then?

Bazzz: Our business relationship is very simple. Because we’re also the manufacturer of the tools, Snap-on makes its money not by selling franchisees franchises per se and charging royalties thereafter, but instead by selling tools at wholesale prices to our franchisees who then go and sell them profitably at retail prices to their customers.

BOJ: Can consumers purchase Snap-on products without going through a local franchisee?

Bazzz: They can. We have a website where customers can go and buy the odd tool every now and then. But for the professional technician, he demands a different level of service. He wants somebody to come around check his tool kit and deal with any warranty issues right then and there.

Franchisees benefit from our web presence because we make available to every franchisee a customized version of the website. So a customer can go to each franchisee’s website and shop with the benefit of the catalog and all of the technology that’s behind the website but with a front end that looks like the local franchisee.

BOJ: Does Snap-on provide financing to prospective franchisees?

Bazzz: Not only do we provide financing to the franchisee’s customers to buy tools, but also if you’re interested in our franchise, we are able to offer financing packages to you to establish your business. That’s important because if as a small business owner you decide that any franchise is the one you want to pursue, you’ve got to go to your bank manager with a business plan and whatever due diligence you’ve done in support of the franchise opportunity you want to buy. You have got to convince the bank manager not only that you are a good business person but also that you have found a good opportunity.

The good news is that if you use Snap-on finance, of course we don’t have to convince ourselves that it’s a good opportunity – we already know it is – so all you’ve got to do is bring us a good business plan and convince us that you are the right individual. And if you do that, then we’re going to lend you the money.

BOJ: How has the current economic slow-down impacted Snap-on?

Bazzz: I don’t think Snap-on is recession proof. I don’t think there is such a business. But if you think about the mobile nature of our business, the very fact that we go to our customer at their place of work and stare lovingly into their eyes every week, gives us a relationship with them to at least give us the opportunity to make sure that we continue selling stuff even when things are a little tougher.

If you’re a franchisee in a bedding store, and people say “Look, times are tough, I’m going to delay the decision to buy a bed,” then they just don’t come to your store. And all you would be able to do I suppose is increase your marketing spend to encourage people to do so.

Because of the mobile nature of our business, we’re coming to see you whether you think times are tough or not. That does gives us an advantage.

BOJ: How about fuel costs?

Bazzz: Fuel costs are affecting all businesses today. Whether your franchise is mobile and you deliver the goods or whether your franchise is at a fixed location and your suppliers are bringing the goods to you, either way you are going to be affected by the cost of fuel.

However, as a responsible franchisor, what we are doing that the individual franchisee would find hard to do is to investigate ways to save on all sorts of costs, and particularly on the cost fuel.

We recently launched two entirely separate systems of saving on fuel. For example, one was a set of batteries and technology that allows the franchisee to operate the air conditioning and heating systems in the truck without having the truck idling.

One of the other things we introduced was an auxiliary power unit that provides power for those same systems but only consumes about 1/10th of a gallon of gas per hour.

BOJ: Is the trend toward greater environmental sensitivity impacting Snap-on?

Bazzz: What we do is sell tools to professional technicians. That means that the technician can more easily, more quickly, more professionally keep your car, my car and everybody else’s car and truck running at peak performance. This is important because the difference between a poorly tuned car and one that’s well maintained in terms of fuel consumption can be as much as 20%. So, I would argue that by making sure that we help our customers keep their customers in tip top performance, we have the potential to help save hundreds of millions of gallons of fuel every year.

BOJ: What motivates Snap-on in general, and you, Bazzz, in particular?

Bazzz: If our franchisees are doing well, then we’re going to grow our business. So at Snap-on, we focus on how do we help our franchisees sell more tools. Given that they buy our tools from us, if they sell more tools, then we’re going to sell more tools. So we are absolutely aligned with our franchisees in terms of our mission. Rather than worry about how we’re going to sell tools to franchisees we worry about how our franchisees are going to sell more tools to their customers.

My absolute goal, and I believe I’m going to see it, is that not only will Snap-on be recognized as the best tool company in the world, but also that Snap-on will also be recognized as the best franchise system in the world. I think we’ve got everything we need to do that. | BOJ