$418

Business Description

The franchisor is Snap-on Tools Company LLC, a Delaware limited liability company whose principal business address is 2801 80th Street, Kenosha, Wisconsin, 53143. The franchisor will be referred to as “Snap-on”, “we”, “us” or "our" and we will refer to the corporation, limited liability company or other approved legal entity who buys the franchise as “you” or “your” throughout this disclosure document. References to "you" or “your” also includes, where relevant, the principal owner or owners of that company. We intend to do business related to this offering under the names “Snapon” and “Snap-on Tools.” Our parent corporation is Snap-on Incorporated, a Delaware corporation, whose principal business address is 2801 80th Street, Kenosha, Wisconsin, 53143.

Prior Experience

Snap-on Tools of Canada Ltd. began offering franchises in Canada for the same type of business offered by this disclosure document in the fall of 1993. The following additional Snap-on affiliates sell tools and equipment through franchises or similar methods of distribution in the following countries: Snap-on U.K. Holdings Limited (United Kingdom and Ireland) SNA Germany GmbH (Germany) Snap-on Tools (Australia) Pty. Ltd. (Australia) Snap-on Tools (New Zealand) Limited (New Zealand) Snap-on Tools Japan K.K. (Japan) Snap-on Tools B.V. (Netherlands and Belgium) Snap-on Africa (Proprietary) Limited (South Africa) Except for these affiliates, neither we nor any of our other affiliates have offered franchises in any line of business other than the offering of Snap-on franchises, as described above. Snap-on Credit, Snap-on Equipment and Snap-on SecureCorp have not conducted a business of the type to be operated by franchisees.

Business Offered

In 1920, the Snap-on Wrench Company was formed in Milwaukee, Wisconsin, to develop and market interchangeable sockets for various wrench handles in place of separate handles for each socket size. The company evolved through various entities and name changes to become Snap-on Incorporated, our predecessor and currently our sole member. During its first 25 years in business, Snap-on Incorporated sold its products through a sales staff employed by Snap-on Incorporated. Beginning in approximately 1945, these sales people became independent contract distributors, rather than employees, who purchased their inventory from Snapon Incorporated and who were responsible for all costs of operating their business. Snap-on Incorporated distributed its products through independent distributors (“Independents”) for approximately 45 years, and then modified its program to be a franchise in 1990. We (directly and through our affiliates) offer a product line including a broad range of hand and power tools, tool storage, saws and cutting tools, pruning tools, vehicle service diagnostics equipment, vehicle service equipment, including wheel service, safety-testing and collision repair equipment, vehicle service information, business management systems, equipment repair services, and other tool and equipment solutions. Customers include automotive technicians, vehicle service centers, manufacturers, industrial tool and equipment users and those involved in commercial applications such as construction, electrical and agriculture. These products and services are distributed through sales personnel employed by us or Snap-on Incorporated and our affiliates, independent sales personnel, independent distributors, or, in the case of certain products and services which are Products (defined below), Snap-on franchisees and Independents. We also conduct business through company mobile stores, which are operated similarly to the operation of the franchise we are offering to you. They service the same type of customers as you will service. As of December 29, 2018, our company mobile stores comprised approximately 3.5% of all Snap-on mobile stores. Snap-on may increase or reduce the number of company owned stores in the future. These stores pilot new sales and promotional ideas prior to introducing them to our franchisees and service customers in select new and open routes.

Initial Fees

The initial fees include an initial license fee of $8,000 to $16,000 plus additional fees and payments ranging between $107,770 and $117,770 for goods and services we provide you before your franchise opens. Initial License Fee. The initial license fee of $16,000 includes your initial training, which we estimate to have a cost of $3,000 (See Item 11), your technology package, which we estimate to have a cost of $3,000 (See Item 11), and a turnkey office supply package, which we estimate to have a cost of $400. Under the following circumstances the initial license fee and what is included in the initial license fee will vary: (a) Additional Franchise. If you are purchasing an Additional Franchise, which includes the purchase of assets by an existing franchisee from an existing franchisee to add an additional franchise or if you currently operate an additional van under a Franchise Agreement and meet all the requirements to make that a franchise, your initial license fee will be $10,000 and you will receive initial training for your employee, the technology package and the turnkey office supply package. (b) Renewal Franchise. If you are purchasing a Renewal Franchise, you pay an initial license fee of $8,000. This fee does not include initial training, the technology package or the turnkey office supply package. (c) Transfer Franchise. If you are purchasing a Transfer Franchise, other than as an Additional Franchise, you will pay a transfer fee of $10,000, unless a different transfer fee is specified in the selling franchisee’s Franchise Agreement. You will receive training, but you will not receive the technology package or the turnkey office supply package. Initial Inventory. You must purchase an initial inventory, which we pre-select for you, with a suggested retail price approximately between $158,000 to $172,000 and a cost to you approximately between $107,000 to $117,000. We pre-select your initial inventory so that you have a balanced inventory to start your franchise. After the initial inventory, you will make all decisions regarding inventory items you desire to purchase. Under the following circumstances, you will pay a lesser amount for your initial inventory or receive additional inventory without cost to you: (a) Additional Franchise. If you are purchasing an Additional Franchise, you will receive inventory having a franchisee cost of $20,000 at no cost to you (the “Inventory Incentive”). This incentive is designed to assist you in starting your Additional Franchise and providing ongoing continuity in the operation of that franchise. For that reason, in order to earn the Inventory Incentive you must operate the business under the Additional Franchise for a minimum of three years unless you transfer it to a franchisee approved by us. If, for any reason other than a transfer of business assets of the Additional Franchise to a franchisee through transfer, either (i) the Additional Franchise is terminated or (ii) you cease operating the van under the Additional Franchise during the three-year period after you start, you will be required to pay us the entire Inventory Incentive you originally received, which will be immediately due and payable. Except as so provided, you will have no further obligation to us for the Inventory Incentive. This incentive is available to an existing franchisee who converts an additional van to an Additional Franchise. (b) Veterans Discount. If you are a veteran of the United States Armed Forces who has been honorably discharged and you are purchasing your initial Snap-on franchise, you will receive inventory with a franchisee cost of $20,000 at no cost to you (“Veterans Discount”). (c) Employee Discount. From time to time during the effective period of this disclosure document, Snap-on may make available to certain groups of Snap-on employees the opportunity to purchase an initial Snap-on franchise and provide a discount on the initial inventory. An employee who qualifies for the Veteran’s Discount is not eligible for any employee discount, but will receive the Veteran’s Discount. (d) Unassociated Dealer. If you are currently in the business of selling and servicing tools for professional mechanics and other customers in the automotive aftermarket and related businesses, but you are not associated with us (“Unassociated Dealer”), we may provide you with a portion of your initial inventory, without cost to you, at the time you become a Franchisee. If you are purchasing a Transfer Franchise or Renewal Franchise, you will not be required to purchase additional inventory as long as your initial inventory meets our minimum inventory requirement. Computer Software License Fee. You will need to use the Snap-on software program described in Item 11. You must pay us the Software License Fee, which is currently $770, plus any applicable tax. This fee is not applicable if you are purchasing a Renewal Franchise. The initial license fee and Computer Software License Fee are non-refundable. Inventory is subject to our tool return policy, which is described in Note 3 of Item 7.

Financing

Snap-on Credit and Snap-on offer certain financing programs described below. If you choose to finance with Snap-on Credit and you meet all the requirements, Snap-on Credit may lend you funds to cover certain initial investment costs and expenses of your franchise. Snap-on Credit may also lend you funds to cover initial investment costs and expenses for an additional franchise to purchase additional inventory, finance your RAs or recapitalize your business. Snap-on Credit is owned by Snap-on Incorporated. Franchise Finance Program Through the Franchise Finance Program, Snap-on Credit offers a loan program to approved applicants to finance a substantial portion of your initial investment. While interest accrues from the inception of the loan, you will not have any scheduled payments during the first 90 days. Repayment of principal and interest is financed and amortized over a term of 10 years less 90 days. Snap-on Credit finances the following initial investment categories set forth in Item 7: initial license fee, initial inventory and Computer Software License Fee, and for a Transfer Franchise, RA Acquisition that is not subject to a post-closing investigation period. See Item 7 for a discussion of the amount of each of these investment categories. If you are borrowing funds to finance these initial investment costs for an Additional Franchise, you must pay off any pre-existing debt outstanding on your current franchise, other than any pre-existing liability to Snap-on Credit, prior to borrowing any funds under the Franchise Finance Program for the Additional Franchise. Snap-on Credit may, in its sole discretion, lend you additional funds to pay your pre-existing debt. Down Payment. You must make a minimum down payment of $21,500; however, Snap-on Credit may require a larger down payment or reduce the down payment. If you are (i) a current or former Snap-on or Snap-on affiliate employee (which does not include employees of a franchisee), (ii) a franchisee relocating your franchise, (iii) a current or former member of the United States Armed Forces, or (iv) a franchisee acquiring an Additional Franchise and have satisfactory credit, Snap-on Credit may waive all or part of this requirement. If you are purchasing a Transfer Franchise and are financing significant assets greater than the standard amounts, it is likely that Snap-on Credit will require a higher down payment. Loan Documentation. If you participate in the Franchise Finance Program, you must enter into a Loan and Security Agreement with Snap-on Credit and sign a Promissory Note evidencing the loan. If you participate in the Franchise Finance Program to finance these initial investment costs for an Additional Franchise, you must enter into a separate Loan and Security Agreement and sign a Promissory Note evidencing that loan. The current form of Loan and Security Agreement is attached as Appendix I.3 and the current form of Promissory Note you will sign is attached as Appendix I.4. If you are a participant in the Franchise Finance Program at the time you are acquiring a Renewal Franchise and your Renewal Franchise will be in a different name than your existing franchise agreement, you must assign any outstanding Loan and Security Agreement and Promissory Note to the company acquiring the Renewal Franchise (see Appendix I.3.C). Documentation Fee. You will be required to pay a documentation fee of $250. If you are purchasing an Additional Franchise, your documentation fee will be $100. This fee will be added to the first loan payment. Interest. The Promissory Note(s) will bear interest at a fixed rate set at least seven days before you sign the Franchise Agreement and will not change during the term of the loan. The interest rate will be the then current yield to maturity of like-term United States Treasury Obligations published by the Wall Street Journal (the “Treasury Rate”) plus an additional amount, between 5 and 8.5 percentage points, subject to a minimum interest rate charged a new franchisee of 7.60% and an Additional Franchisee of 6.90% and maximum interest rate, which is the maximum rate permitted by applicable law. As of January 7, 2019, the annual percentage rate of interest charged under the Franchise Finance Program was between 7.68% and 11.18% for a new franchisee and between 7.68% and 11.18% for an Additional Franchisee. Subject to the minimum and maximum interest rates specified above, the interest rate you will pay will be determined by the Treasury Rate at the time the loan is made and the additional amount you will be charged will be determined by your credit history. Determination of Loan Amount and Borrowing. If you are approved by Snap-on Credit, the loan amount for which you will be approved will be an amount equal to the initial license fee; initial inventory (provided the initial inventory amount does not substantially exceed the estimated initial inventory amount reflected in Item 7) and the Computer Software License Fee, and for a Transfer Franchise, RA Acquisition that is not subject to a post-closing investigation period, less the required down payment. This loan will typically not be approved unless the minimum Approved Loan Amount is at least $25,000. Term, Payment Requirements. You will not have any scheduled payments during the first 90 days after you sign the Loan and Security Agreement, although interest will accrue from the inception of the loan. On the first Monday after the 90th day of the term of your loan you will make your first weekly installment payment of principal and interest. The amount of each installment payment will be sufficient to pay your loan over 10 years less 90 days or such lesser term as specified in your credit approval and loan documents. You will be required to make level payments of principal and interest over the applicable term of the loan, but you will be required to pay any remaining balance, accrued but unpaid interest, or any other amounts due under this loan with the last installment. Prepayment. You may prepay your loan in full or in part without penalty at any time. Prepayments will be applied first to any accrued but unpaid fees or interest and the remainder, if any, will be applied to reduce principal in inverse order to maturity and will not relieve you from continuing to make the same weekly payments until the Promissory Note is fully paid. Termination of your Franchise Agreement automatically makes the loan immediately due and payable in full without notice. In addition, the loan may become immediately due and payable if you do not make timely payments according to the Loan and Security Agreement or any agreements related to the Loan and Security Agreement, including a van lease with Snap-on Credit or a thirdparty lessor. The loan may also become immediately due and payable if you otherwise default under these agreements and do not cure the default within the time permitted for cure. Defaults include misrepresentations and failures to act in accordance with the terms of these agreements, such as failure to maintain the collateral in a secure and good condition (see the Loan and Security Agreement, §6 and §7). If the loan becomes due and payable in full, you must pay the balance due on the loan, including any missed payments or amounts due in arrears, plus the expense of retaking possession of and removing or collecting, protecting and selling the collateral, court costs and reasonable attorneys’ fees. Upon default, interest will accrue at the stated rate plus four percentage points unless otherwise limited by applicable law. General Finance Program Changes. For all of the financing programs offered by Snap-on Credit or Snapon, the description above is effective as of the date of this disclosure document only, and Snap-on Credit or Snap-on may discontinue offering or revise or modify any program at any time. These modifications may include new and different credit programs with qualifications, credit availability and loss liability different from those now in effect (for example, Snap-on Credit may provide otherwise unavailable credit for customer purchases if you accept increased liability or additional recourse for the sale). These modifications may also include charges for certain programs as described in the Programs Manual. Security Interest. For each of the finance programs described above, unless otherwise specified, Snap-on or Snap-on Credit, as the case may be, will secure your obligation by a first security interest in your business assets including all inventory, tools, parts, equipment, chattel paper, contract rights, accounts, business vehicles, reserve accounts and all replacements and proceeds. Personal Guarantee. The principal owner or owners of a Franchisee will be required to jointly and severally personally guarantee all obligations of the corporation, limited liability company or other legal entity under all finance programs described above. Arbitration; Waiver. For each of the finance programs described above, all disputes under the applicable program documents are subject to arbitration (after mediation) and you agree to waive your right to a jury trial and in the case of the Snap-on Credit Van Lease Program, you waive any claims against Snap-on Credit arising out of the use or warranty of the van (Sections 6, 26 and 28 of the Vehicle Lease Agreement). The Franchisee Servicing Agreement, the Vehicle Lease Agreement and the Loan and Security Agreement contain grounds for termination of those agreements and acceleration of your obligations, separate from grounds for termination of the franchise set forth in your Franchise Agreement. Termination of any of those agreements as a result of a default creates a default under your Franchise Agreement.

Franchisee Revenue and Profit

Paid Sales The following Statement of “Paid Sales” (“Statement”) illustrates the various levels of sales reported by numerous franchisees in the Snap-on system for sales activity during the 2018 reporting period. Paid Sales are presented in $25,000 increments for paid sales between $175,000 and $1,499,999 per year. This information reflects a number of assumptions and limitations noted after the Statement, and which you should read together with the Statement. THE NOTES THAT FOLLOW THIS STATEMENT ARE AN INTEGRAL PART OF THE STATEMENT. The Paid Sales figures used in this Statement are reported by specific franchisees and should not be considered the actual or probable Paid Sales that may be realized by any franchisee. Paid Sales may be affected by a number of commercial variables and competitive market conditions. Some franchisees have Paid Sales equal to these amounts. Your individual results may differ. There is no assurance that your Paid Sales will be as much. NOTES: I. Franchisee Information Included in the Statement. We compiled the Statement from information reported to us by our franchisees. We have not attempted to verify the information received from franchisees and have no knowledge whether franchisees prepared the information submitted to us in accordance with generally accepted accounting principles. The Statement includes only information received from franchisees who operated for all 12 months of the 2018 reporting period and for which we have received Paid Sales information for the full period. Accordingly, franchisees who began or ended operations during calendar year 2018 are not included in the Statement nor are franchisees who failed to submit all Paid Sales information for all of 2018. Snap-on had 3,670 franchises that operated in all or part of 2018. Of those 3,670 franchises, there were 214 franchises that ceased operations due to retirement, cancellation, non-renewal or other termination and 129 that transferred their franchise business to a third party. Of those 343 franchises, 72 still operate one or more Snap-on franchise businesses. Of the 343 franchises that ended operations during 2018, 19 franchises operated for less than twelve months. Included in that 19 is 1 that became a Snap-on employee. Of the 129 franchises that transferred their franchise business to a third party, 1 franchise transferred its franchise business after operating for less than twelve months. Some franchisees reporting Paid Sales information have chosen to operate with a sales employee on either a full or part-time basis. Having an employee may impact their Paid Sales. We do not track which franchisees have sales employees. If a franchisee operated an additional franchise, that additional franchise is reported as a separate “franchise” in the Statement. The Statement does not include information on Paid Sales for Snap-on employees who sell tools and equipment to customers that are similar to a franchisee’s customers or Paid Sales of Independents because Independents are not required to submit Paid Sales information. II. Definition of “Paid Sales”. Snap-on franchisees do not have to report their total revenue to us. A franchisee’s Paid Sales (defined below) should approximate “total revenues,” except that a franchisee’s sales of tools and equipment purchased from a source other than Snap-on and the value of tools and equipment accepted by a franchisee as a trade-in may not be included in the Paid Sales figure reported to us. A franchisee’s Paid Sales means the sum of: (1) all of the franchisee’s cash sales and revolving account collections; and (2) all open accounts and credit sales assigned to Snap-on or Snap-on Credit by the franchisee. To the extent sales taxes are reported to Snap-on by franchisee, they are included in Paid Sales (each of these terms is defined below). All franchisees included in the Statement were requested to use the same definition of Paid Sales in the reports submitted to Snap-on. Cash Sales – Those sales for which a franchisee receives a cash payment, which includes debit and credit card payments, at the time of the sale, including any cash down payment received on an open account, credit sale or a lease. Revolving Account Collections – As described in Item 7, Revolving Account sales are credit sales between a franchisee and a franchisee’s customer where a franchisee extends personal credit, usually at no interest, to finance the customer’s purchase of tools and equipment. Revolving account collections are the collections made by a franchisee on revolving account financing extended by the franchisee. Open Account Sales – Open account sales are short term credit sales made by a franchisee to businesses which the franchisee assigns to Snap-on and for which Snap-on gives the franchisee immediate credit as if the franchisee’s customer had paid in cash (See Item 10). Included in Paid Sales is the dollar amount of the credit (which excludes any down payment and trade-in allowance) given to a franchisee when Snap-on accepted assignment of an open account. Credit Sales – For certain customer purchases a franchisee may assign to Snap-on Credit with Snapon Credit’s consent the credit sales contracts (including “Extended Credit Contracts”) for customer purchases (See Item 10). Snap-on Credit credits a franchisee the net sales price (which excludes any down payment and trade-in allowance) for the tools or equipment being sold. This credit is included in Paid Sales. Sales Tax – Most states require that a franchisee collect and pay sales tax on purchases made by franchisee’s customers. To the extent sales taxes are reported to Snap-on by the franchisee they are included in Paid Sales. III. Other Notes and Assumptions. Percentage totals may not equal 100% due to rounding. Reported Paid Sales are based on franchisee reports submitted weekly and do not correspond exactly with the calendar year. Some weekly reports cover Paid Sales beginning a few days before the start of the calendar year; others end a few days after. In all cases, Paid Sales figures above reflect no more than one year’s Paid Sales. The Statement reflects the various levels of Paid Sales in all parts of the United States, and the level of sales may vary based on several factors such as: your management skills, experience and business acumen, local economic conditions, local market for your Products and services and competition. Substantiation of the data used in preparing this Statement will be made available to you upon reasonable request; however, no information that relates to any specific franchise will be made available. Gross Profit The common definition of gross profit is the net sales made less the cost of goods sold. We sell Products to you at discounts ranging between 10% and 43.9% from suggested prices. Based on all franchisee purchases of Products from Snap-on in 2018, the average discount from suggested prices was 31.5 percent. This percentage does not include cash discount for the timely payment for Products purchased or any discount associated with the volume of purchases or percentage of purchases from Snap-on. You need to be aware that we do not have records that identify the actual selling price of Products sold by franchisees. This calculation assumes that the sale of Products by franchisees is at the suggested price. As it would apply to an individual franchisee, it is assumed that Products were sold at the suggested price; however, it is likely that some franchisees sell above suggested prices, that some sell under suggested prices and that some sell certain Products above and certain Products below suggested prices. It also assumes that a franchisee sells an average mix of Products, but the specific mix will likely vary by franchisee. You should also remember that this percentage is computed only for Products purchased from us and does not include items purchased from outside sources. This percentage is provided to you only as a guide as you determine your expected gross profit. You should not consider this as the actual or probable gross profit percentage that you will achieve. It will vary based on the Product mix you sell and the selling price at which you sell those Products. Substantiation of the data used in arriving at this percentage will be made available to you upon reasonable request. A sample Worksheet is attached as Appendix O. Other than the preceding financial performance representations, we do not make any financial performance representations. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing company outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to our management by contacting Thomas Kasbohm, Director – Franchise System, 2801 80th Street, Kenosha, Wisconsin, 53143 (262.656.5753), the Federal Trade Commission, and the appropriate state regulatory agencies. You will be asked to sign the Claims Representation Form attached as Appendix N as confirmation that you have not received any financial performance representations other than as provided in this Item 19. Please carefully consider this, and accurately complete this form.