The California Department of Financial Protection and Innovation (DFPI) oversees financial services and enforces consumer protection laws in California. Matco Tools is under DFPI investigation for unfair business practices, breach of contract, retaliation against franchise owners, and illegal franchise targeting.
The DFPI started an investigation into violations by Matco Tools in May of 2024. As of February of 2025 multiple instances of franchise law violations have been uncovered.
Key Allegations
Matco allegedly:
- Misrepresented its ‘no-risk’ franchise model, hiding financial risks. This includes falsely promising that “no-risk” items could be returned for a full refund, only for franchisees to later discover that some items were non-returnable and others were subject to a 15% restocking fee.
- Retaliated against franchisees raising concerns through forced separations, PSA suspensions, and excessive fees.
- Engaged in potential fraud and cover-ups, manipulating records to obscure credit card processing failures in MDBS and mislead franchisees.
- Covered up known software issues in MDBS, failing to disclose pricing and sales revenue discrepancies that negatively impacted franchisees’ businesses.
- Engaged in unfair business practices, deliberately blocking the sale of franchises between owners, pushing some franchisees toward financial hardship and potential bankruptcy.
Suspicious Leadership Shake-Up
In the Spring and Summer of 2024, Matco saw the sudden departures of a District Manager, Regional Manager, Vice President, and the company President. The timing of these exits has fueled speculation of an internal cover-up linked to the DFPI investigation.
What’s Next?
The ongoing California Department of Financial Protection and Innovation (DFPI) investigation into Matco Tools is expected to result in significant penalties, lawsuits, and heightened regulatory oversight. In the most severe scenario, it could even lead to a forced sale of the company if violations are deemed severe enough.
Franchisees must remain informed, explore legal options, and demand full transparency from Matco Tools and its parent company, Vontier. As regulatory agencies tighten their scrutiny, franchisees should be prepared to protect their rights and financial interests.
Matco Tools could face millions of dollars in regulatory fines, with potential class-action lawsuits emerging nationwide following the release of the DFPI’s findings. These lawsuits could lead to tens to hundreds of millions of dollars in legal judgments, settlements, and legal fees—posing a serious financial threat to the company.
As the investigation unfolds, the future of Matco Tools hangs in the balance. Stay tuned for further updates on what could become one of the biggest legal and financial battles in the franchise industry.
