• Franchising?

TradeTools & Tool Store Franchising?

We have nothing against franchises, in fact in many industries they work just fine, but the tool industry is not, in our opinion, one of them. Service industries, the food industry & some high end retail operations seem suited to the franchising model as they usually have something quite unique to offer. These are mainly businesses where a definitive model has been established & simplified over a great deal of time, and where a new entrant can pick up and become an expert by attending a training course spread over a few weeks at the most.

This was never really the case in the tool industry where it can take years of intense involvement before someone properly begins to reach a level of proficiency whereby they are capable of holding their own against a group of 'oddballs' like us. Plus, it takes a great deal of money to properly open & stock even one modern tool store, in fact, & looked at from a purely financial standpoint as an investment, you'd have to be a little mad to even begin to consider it in the first place! (Some have said we actually are?) And if you are not directly importing a solid 35% of your stock holdings directly into your stores from overseas manufacturers (we did an eye watering 350 containers just last year alone!) the likes of Bunnings, Masters, Blackwoods, plus a host of other billion dollar plus enterprises, could simply have us for breakfast anytime it suited them! Countless numbers of tool stores over the last 35 years have shut up shop for these very reasons.

This is all easily proven stuff, & TradeTools is one of the few tool store models in Australia where we have actually managed to make it properly work. And this has already taken us almost 35 years of trial & error, & we are still far from making what we have created a perfect model, but we're still trying, still learning.

Along the way, & as already stated, we have seen many tool & hardware companies come & go, in fact it has been heartbreaking in some instances watching well meaning people lose virtually everything they have ever worked for over an otherwise fruitful lifetime. But, this is an industry that takes no prisoners, the worlds second oldest industry &, like the worlds oldest industry, it can all too often end in tears!

And the reasons for this are simple. Even after taking into account that we own most of our many buildings outright (read: no rent!), have no overdraft or borrowings of any sort &, not forgetting that we pay zero franchise fees either, like many larger retail operators we currently feel lucky to see nett profit margins (that's after reasonable & closely monitored outgoings) of around 6% after tax. Admittedly, this is on a relatively high turnover but, as an investment, it's a shocker! Of course, we could increase our overall selling prices in order to then try and make it pay better, but our turnover would immediately begin to wither, & understandably so as the market can be an unsympathetic partner. Shrinking to greatness has never proven to be a very smart business strategy that we are aware of either! We can easily compete with the big boys, & have been doing so for decades, but anybody that can't genuinely do that has to be doomed to eventually fail.

And tools is what we do, in fact it's everything we do, & just about everything we know!

So, that is why we won't ask you to spend your hard earned money buying into a franchised TradeTools tool store in Australia. It's been tried before in our industry, and has ended in tears. As explained, rents and franchise fees alone could well sink anyone brave enough to try & compete with private tool companies like little old us, and we're relative pussy cats in comparison to some of the others out there I can promise you!

And all this, as we are all too regularly asked by many good well meaning people, is simply why we do not expand our model into a franchised operation to then try & sell right across this wide brown land of ours!

Now, this really is an insiders view of things, so now you know!


Greg Ford
Founder & Director