How Snap-on Tools’ survival tactics helped the franchise weather the Covid storm
When your business has survived everything a century can throw at it, there’s a level of confidence that you can handle a fresh crisis. And that played out at Snap-on Tools, which has been trading since 1920, and set out its survival tactics early on.
Managing director of Snap-on Tools Australia, Ajit Ponnambalam, told Inside Franchise Business Executive, there was a clear sense the Covid-19 pandemic was a manageable challenge.
“The pandemic was very unfortunate, but we knew we would come out of it. Our thought process was to make sure the franchise network remains intact so let’s do all we can to support franchisees at this time.
“Snap-on Inc. has seen the Great Depression, recessions, two World Wars, and never once reduced our quarterly dividend.
“We’ve got a track record and we were determined this would be no exception.”
There was of course regular correspondence with the US head office, says Ajit, and daily management meetings to keep on top of the situation.
Ajit reveals not only did the business keep franchisees on track through a variety of practical measures, it also added new product and new diagnostics during the pandemic.
“We didn’t go back into a shell,” he says. “We kept doing what we do – innovating and serving customers.”
He reveals that constant communication with franchisees was absolutely essential through this period.
Snap-on Tools’ survival tactics
The assets manager was designated as a point of contact for franchisees and he responded to all requests for help.
Snap-on Tools has a network of 155 franchised stores, some under multi-unit ownership, and was able to assist more than 100 of them through Covid.
The franchisor took action to suspend franchisees’ loan repayments, offered flexibility over regular tool repayments, took back normally non-returnable goods from franchisees and held back orders on a case by case basis.
“We sent out sanitation and safety packs and marketing material and kept franchisees aware of government assistance programs, and notifications and restrictions. We did all we could.”
Snap-on was designated an essential service as it was part of the chain keeping ambulances and trucks going. Ajit admits this put the business in a very fortunate position.
“All this combined gave our franchisees confidence that we would be in it for the long term,” he says.
“The upshot is that despite those dark days in March and April last year, by the end of FY 2020 in December our franchisees were selling more tools than a year ago.
“I should also say, the various stimulus programs helped our franchisees and our customers. I must acknowledge the contribution of the federal government with its JobKeeper program, and the state governments.”
There was already a process in place to help with mental health concerns too, in addition to the practical financial assistance available to struggling franchisees.
“We have for the last few years had an employee assistance program for franchisees and employees to call confidentially,” Ajit says.
Despite restrictions, some new franchisees joined the network, and Snap-on is ready for further growth.
“Looking ahead, if the first quarter is anything to go by, it should be very strong, our same store sales are much better than last year.
“Yes we had bushfires, flooding, and Covid at the beginning of 2020, but in perspective, the sales growth is still a positive development,” he says.
“If you can survive and grow in a once in a lifetime pandemic, chances are the future looks very good.
“We have 170-plus mobile stores and 140 staff; over 300 families depend on us to take care of them and their kids, and we took that responsibility very seriously.
“We are focused on growth, but as importantly, we want franchisees to sell more, become more profitable and become stronger.”