They definitely are worth $640 because people buy them like they're going out of style. You think that's bad, check this out my friend. And these cabinets sell like hotcakes.
Here's how this racket works...
A classmate of mine is the Snap-On driver in my area. He bought the franchise reasonably from a guy who was retiring and looking to sell. He got a good deal on the truck (and has since bought a newer one). He had to pay Snap-On corporate $35,000 to get started with the franchise and that also backed up his line of credit for product.
Line mechanics are a strange bunch. Most of them make between $30K-40K but think nothing about being in debt up to their eyeballs to a tool truck. It's a combination of being an idiot and having a big dick swinging contest with your coworkers, because nobody wants to be the young guy in the shop with any tools that don't say Snap-On, MAC, or Cornwell. And because of that, the tool truck guys feed like sharks.
My buddy and I have talked about this a lot because it fascinates me how fucking stupid people are. He'll take anyone on credit. And I mean anyone. He does 19% APR as a revolving line of credit with minimum payments of $150 a month. The more shit you buy off the truck the better because he just keeps raking in those $150 payments as cash flow. Guys using him for credit love it because they get their $16,000 toolbox but no bank will give you a $16,000 loan for a tool box. A lot of those guys either don't have credit or collateral anyway. Repo's do happen, but he says they're easy because his policy is that if guy refuses or makes a repo tough on him, he cuts off the entire shop until he's either got the merch back or the money. If you're a shop owner the LAST thing you want is to get shut off by a tool dealer. Your guys are gonna hate it, and good luck hiring new ones. He told me he's only done that a couple times, and the money/tools show up in a hurry. Usually peer pressure does the trick. He also can normally get shop owners to meet him after hours to pick up big items so he doesn't even have to deal with the dead-beat in person. Snap-On used styuff sells damn near as expensive as new so there's nmo trouble selling the repo'ed stuff.
Basically it's one big "robbing Peter to pay Paul" operation. He's got tons of guys out there making $150 to $300 payments ad nauseum, and all he has to do is make his credit payment to Snap-On--the rest is fuel, insurance, and maintenance on the truck. I mean who gives a shit what or how much of it you sell as long as the minions keep writing you checks? It's all based on float and cash flow.
He doesn't make millions, but he's a single guy with no kids and I'd say he does way above average. It's really a matter of luck to get into a good deal like this otherwise everyone would be doing it. Someone in your area has to be looking to get out, you have to have a buttload of cash to get started, and your area has to be a money-maker with lots of decent shops. And the shops have to be just the right mix of guys who aren't so poor they can't buy anything but not wealthy enough that they pay cash for everything.
