Owners call the UPS Store Franchise “Indentured Servitude,” and “A Nightmare”

Posted in News
Wed, Mar 21 - 9:48 am EST | 12 years ago by
Comments: 41
Be Sociable, Share!
Use Arrow Keys (← →) to Browse

Franchise Pick reader LEE recently shared this post:

I’m a Vet who has paid the initial UPS Store franchise fee, and although I thought I had performed “due dilligence” before making the commitment, I fear that I may be embarking on an expensive journey to nowhere. Does anyone know how hard the franchisor “comes down on you” if you decide to bail before signing a lease or legal franchise documents? I’d rather take a hard hit now than a knockout punch later.

Several current UPS Store franchise owners shared their advice:

frozenokiewi wrote:

Run now while you can…I have been doing this for 6 years changed from MBE to UPS Store in 2003. We have two stores and neither can break even. You cannot get out once you are in…eat your loss and run for the hills! Bid on some oceanfront in Arizona it would be a far more entertaining waste of money. PLEASE back out now.

cgpeanut wrote:

take the hit now from a fellow owner. this franchise is a nightmare at this time.

ACE wrote:

Listen to your gut, don’t get sucked in any deeper.

Take everything you got in writing and all contemperaneous notes you made as to what you were told to a good attorney and see if feels you have basis to rescind all agreements and get your deposit back.

If MBE is convinced that there is some risk to them, they will fold and give your money back. In any event, don’t throw good money after bad by going forward with leasing a location, going to UPS University and all that crap.

The loss of a deposit pales in comparision to what you can lose going forward in something you do not have confidence in. The losses can be more than financial.

Jim Brown wrote:

We’re not being negative, we’re just trying to save as many people as we can from our own fate. Think of owning a ups store as being an indentured servant: Working for free for your master. Do whatever you need to to stay far, far away.

Wontbefooledagain wrote:

Lee, call a lot of UPS Store owners; don’t just talk to the ones that the folks
at UPS/MBE recommend.  Talk to some that are in locations similar to those
you’re considering, and have been in business at least three years to five
years (That’s when reality starts to set in.)  You needn’t have lengthy, in-
depth conversations, though that can’t hurt.  But be sure and ask the simple
question:  “If you had this to do all over again, would you?”

James Dunn wrote:

You should count your blessings. I wish I had ran and only lost the $7500 fee.
These store have no value. After you beg and borrow 300k before you go out of
business you will find yourself broke and destitute. When you try to sell you
will find how worthless these stores are. I think it’s a sin that UPS is
targeting vets now. These criminals have no soul.

So far, there have been no positive comments encouraging LEE to move ahead with his investment with the UPS Store franchise.  Anyone out there have anything good to say about this franchise?  Should Lee move forward, or cut his losses?

Share your insight.  Leave a comment.  [Thanks to all contributors]

Use Arrow Keys (← →) to Browse

Be Sociable, Share!

Related Posts

  • Pingback: University Update

  • http://www.FranchiseFool.com Les Stewart

    Franchise Pick is to be commended for this “mosaic” of comments.

    I have, unfortunately, met dozens of investors in the past that have suffered without such a forum.

    Lee: these are very sound and experienced voices. Listen to them and keep in touch.

    You may want to consider “paying this forward” somewhat.

  • Peter Kann

    I too am thinking of opening a UPS Store in my hometown in NY. I sent them my letter of intent and I’m going for my executive interview next week.
    Is this a mistake and is there anyone out there who has any positive comments??

  • http://www.b5media.com/sean-kelly/ sean

    Check out the other posts on The UPS Store, Peter:
    http://franchisepick.com/category/ups-store/

    Also search for The UPS Store on http://www.bluemaumau.org and http://www.franchisepundit.com

    Ryan Knoll examines some of the economics of The UPS Store at http://franchisepundit.com/index.php/2006/07/28/ups-store-numbers-2/

    The theme of Franchise Pick is increasingly Do your homework, ask as many differing sources as possible before investing, especially current and former franchise owners. Contact information is readily available. Franchising with the right company is an excellent way to start or acquire a business. Emphasis on: The right company.

    Best of luck. Let us know what you learn, and what you decide!

  • John Barton

    Please please please. Anyone that reads this must understand what a horrible nightmare you will endure should you decide to buy into a UPS Store franchise. I did and lost 165,000 in just over 1 years time. I bought a 6 year old store that used to be profitable under the MBE brand. The store switched to UPS Store branding 2 years before I bought it and profits sank horribly. I’m a dual degreed, intelligent individual that lost his mind while buying into this place. I ended up getting the area franchisee to buy my store for a fraction of what I paid, just to save my soul. A 6 year old store made me less than $0 during the time that I owned it. UPS and your area franchisee will eat your lunch if you choose to take this one. Sure, there is an occasional success story of UPS Stores doing well in paper generating, lawyer driven towns, but those are so far and few between. I’m serious… $165,000 loss in just over a year. I have a capital loss that will last me through retirement. This franchise model simply will not work. Please don’t believe the franchise 500 rankings. There must be such a high level of financial influence that sways that list to get The UPS Store such a high ranking. I’ve never met a happy UPS Store owner, and I’ve met many, I’ve talked to them on-line, I’ve read their stories. I just thank God that I am young enough to recover from the financial devistation that this place caused me. PLEASE DON”T DO IT.

  • NOWAY

    The killer owning a UPS Store is the margins. They are simply too low, around 43%!!! NO Buisness can survive on 43% MINUS expeneses!!! Run like hell if you’re thinking about owning a UPS Store!!!

  • Mark

    If you intend to open a UPS Store think hard about it. We have 2. One is break even after 4 years and the other we are closing. When I advised MBE that we were closing, not one person from franchise relations called. I got an e-mail with necessary documents to fill out to close it properly. We wanted to try and move it but they won’t let you close while you move. Once you close you lose the franchise. I guess they have a huge back log of idiots like me who want to give them the $100k necessary to go broke. They care about no one but themselves.

  • http://www.b5media.com/sean-kelly/ sean

    Mark Sorry to hear about your stores.
    Do they let you walk away from the franchise agreement without claiming you owe future royalties, etc.?

  • Mark

    I don’t know much more yet. I cant imagine future royalties on no sales. If they take the franchise away it is no longer mine! I will try and keep you posted. We close tomorrow. I Overnited a letter to the CEO delivered Monday and havent heard ANYTHING from thste bastards. THey really just dont care

  • Lisa

    Mark, we are looking at the UPS “dream” but from what I’m reading it’s a nitemare. Would love to see if you would be talk with my husband and myself to let us hear your story.

  • Pingback: The UPS Store Franchise Owner’s Lawsuit Certified as Class Action at PIGASYS

  • Fred

    I own an MBE Store and will convert to ups.

  • Fred

    correction I will not convert to ups store

  • rich

    Hi there,

    Is there any remedies you think for ex-the ups store victims like us?
    We bought into the trap 2 years ago …. Am wondering if we can jump on the bandwagon?

    Thanks,

    Richard

  • patrick Perry

    Run like Hell Your lose now will not compare to your lose in a few years, I owned a UPS stor for twelve years. Stated as a Mailboxes Ect than after 10 yeaes change to UPS on their and the local bandits promises and great dog & pony shows. After losing over 175K in the last three years I did not get any help in buy out for a fraction of the actual value, Best thing I ever did in the UPS franchise was to strip the stor of everyting and move on with my life. Blood pressure down only work 40 hs a week and my wife will now talk to me. This is a bad idea in a dieing industry. Pat

  • May

    I was just about to fill the application and make the initial deposit. Thank God I run into this website, because I was initially scared. I can’t believe what I’m reading. I had this UPS dream for the past 5 years. This is the first time I read something about this.

  • Dave Thomas

    I have 30 years sales, marketing, and management experience and an MBA in Finance. I was considering a UPS store in the Phoenix area, until I went through the corporate financial statements. My goal was to make $100,000 per year income.

    I calculated a store needed approximately $650,000 in annual sales to generate that much.
    However, the average store only grossed approximately $375,000. Moreover, the agreement stipulated that the area franchisor had the right to open a store within one mile of any other store. The area franchisor had financial incentives to open other UPS stores near a successful store. The area franchisor also had a subsidiary that forced a store to purchase the buildout material, construction services, and supplies from them at high prices.

    They wanted to take me to talk to their “pet” stores to talk aobut the system. Instead, I went to three or four stores where I heard the truth. Nobody was making money! They all wanted to build a successful store so that they could sell it and get away.

    My advice: Run like hell !!

  • MICHAEL GORLANO

    I will make this short and simple. I purchased a 4 year old establish store in an upper income community that peaked in 04 at the top of the hype of this bambozling franchise. Closed it down 2 years later and am thankful that i lost only $400K and 3years of my life. DO NOT FOR ANY REASON GET INVOLVE WITH THIS MASTERFUL CORPORATE SCAM. This is my experiance with MBE/UPS! Do you want to share this experiance?

  • ANI

    I would say DON’T BUY INTO THIS FRANCHISE!! Now whether you choose to listen to all of those that say don’t or just do it anyway because you think you know more than those of us with years of corporate experience, MBA’s, PHD’s etc, then I have a store for sale right now. People, these stores are a nightmare. Have you found any website or blog from owners who do nothing but talk about how wonderful they are and how much money they are making? If so, post it here.

    My life has been ruined on so many levels after buying a new store, not a transfer. You may make money right from the start, no question. But in order to do that, you must be in the right location at the right time and that will be like knowing the numbers in the lottery. Those stores are 1 out of every 200 maybe, can you risk that? I can tell you that I made a bit over $45K in December (busiest month). Sounds like a lot to a newcomer…I still have bills that I cannot pay from that month. Most stores make around $18K to $28K a month, more in December. If bills cannot be fully paid on $45K, what do you think happens the rest of the year? Put your money into a CD and wait another year, read these posts, and then look at things again. I can assure you, by 2009, things will drastically change again and not for the better.

  • Carl

    Anyone have any knowledge of the pending lawsuits? After getting classified as class action, the suits have dropped out of the news. It’s been going on for 5 years now.

  • Jim Brown

    I will only comment on the MBE’s suits by saying this: It appears that they are going well. one of these has a class component on behalf of the converted stores.

    The UPS store’s suit does not have a class component. It is scheduled to go to trial in federal court in September, 2008.

  • http://www.b5media.com/sean-kelly/ sean
  • Davey

    Dave Thomas,
    Too bad you didn’t look around a bit more. Not all of these store are losers. For example, I am located in the Phoenix area and STR exceeds 700K, and I am very profitable, and have been ever since the changeover. Sadly, most stores have a different story to tell. Sometimes you just have to kick the rocks around a little more to turn up that gem.

  • http://www.franbest.com Sean Kelly

    Are UPS Store franchisees making a bad situation worse?

    THE UPS STORE Franchisees: Drop-Offs Can Drop Dead

  • DORENE IVY

    My husband and I are on the verge of buying a UPS Store franchise in an area where none exists nor do any Kinko’s/Fed X. Should we continue with this or would it be a waste of our money and time?

  • http://store0581@theupsstore.net Jimmie Clendenon

    I should have realized that there are more stores than myself suffering the same fate that we are. We have been in this operation for quite some time and still have yet to realize what we thought was our dream business. I am sorry to say that we are deep in debt and have to juggle monies every month to try and pay our creditors. I’m often wounder if the powers that be care whats going on with the franchise owners. I personally think that since the franchise is currently owned by BIG BROWN they can eliminate the AREA owners as they have their own personel that could do the job much more economical? Just my thoughts.

  • Carol Cross

    Sorry, Jimmie, that things are getting so tough for you.

    We are out of our “bad experience” with the “pig in the poke” that was sold as an “unprecedented opportunity” for security and success. We understand your pain! We avoided bankruptcy but we still have to pay on our Home Equity Loan that we used for some of the startup costs for the rest of our life. Every month this big multi-billion-dollar company benefits from our payment on this startup debt because another franchisee, of their choosing, got our business for nothing.

    Apparently, Big Brown wanted a “retail presence” in which they could compete with FedEx, and they knew that they could get MBE cheap and exploit the cheap labor and venture capital of franchisees instead of bearing the expense of building their own corporate units wherein they would responsible for fair wages, etc., under our employment laws.

    I believe UPS, on top, knew also that the status quo of law and process governing franchising would allow them to USE franchisees with immunity and impunity to grow their profits, even as thousands of franchisees would struggle and fail to make a living on their stores. UPS/MBE use “churning” as a management tool to remain visible in the economy.

    Remember that you are not alone and try to start thinking about some exit strategies. Been THERE —-Bad Place to Be. Remember that you are not alone and thanks for sharing your thoughts that will perhaps SAVE someone else who, this moment, is thinking about buying one of these stores.

    If the government and the law doesn’t stop franchisors from selling unprofitable franchises to the public, all we have is the INTERNET and our free speech rights to warn others.

  • Josh

    Every MBE/UPS document starts with a legal disclaimer – that should be your first clue!
    Location is everything and there are very few UPS Stores that are making money right now. In the SW most stores are in high rent shopping centers and sales are off 30 to 50% so good luck making any money. In the current depression people are not shipping anything so life is very tough. That is why so many stores are for sale.
    Fids something else!

  • PrestonF

    I have owned a UPS Store for 3 years and it broke even in 18 months. At the end of the 3rd year each owner (2 of us) were paying over $5000.00 in general expenses, such as cell phones, travel, dinners, etc… plus we paid each owner $5000.00 each in owner dividends. We anticipate paying owner dividends of $10,000.00 at the end of this year. Our basic investment was $200,000.00 and believe at the growth rate we are having we will make back our original investment in 5 to 7 years, plus covering many out-of-pocket expensed that we were paying out of our personal pockets in the past. Because of our success we have now purchased a second store in our market and think it will meet with the same level of success. It is important that the owners stay involved in their stores and get our in the local community and neighborhood and make sales calls and market the store. Success comes from hard work not standing behind the counter.

  • Bernadez

    If I could go back in time, I would’ve never opened one of this stores. Never ever!
    It is a very very veeery expensive school of the “know-how” of how franchises work.

  • Don O

    This is based on canadian experience but i hear it is all pretty much the same in the USA.
    My own very negative experience mirrors many others. Because there are a few success stories do not be fooled. The business model serves UPS well and The UPS Store poorly. We sold out ( at $ 125K loss) in Dec 2008 and thrilled to get out. One UPS Store exec advised that a third lose money, a third break even and a third are profitable. If you understand accounting that means two-thirds of the stores are WORTHLESS in that no one can make any more than a salary and likely not that – a new owner cannot pay a dime and have revenue to pay off the 10cent debt.

    Understand clearly that drop-offs are killers and they generate insignificant revenue compared to a LOT of work. Second is that UPS has many subtle ways of soliciting your regular shippers and getting them on corporate accounts and they become drop-off customers – you get a buck when they come in with open packages, no tape, no customs form , etc etc and they are typical one-visit clients. These two issues are the killers and you cannot fight it.

    The best advice I have seen on all these sites is simply: If you are silly enough to even think of a UPS Store franchise just speak with at least three other stores that are 3+ years in operation ( not a store they lead you to) and ask them if they would do it again. End of story.

  • Lynn

    Don’t do it! UPS does not give you a chance to run your own business. You have to go with their approved vendors. You are told what you can sell in your store. What hours you must maintain. UPS does not look at what sells in certain areas, they want all the stores to have all the same items. You have to invest in their advertising even if it is not suitable for your area. A friends of mine has a son who has a degree in Graphic Design and Advertising. Her fiance offered to hand him over his store. There is two more years left on the lease then he can either renew or completely go on his own. He looked into what UPS would allow him to do, which was not much! He declined. My friend is releived he declined. Imagine turning down a business which is handed to you even though you don’t have to continue with the UPS name after two years. That should tell you something! If anyone knows of any lawsuits against the UPS Store, please share — my friend and her fiance are at their witts end. They have used their retirement to keep afloat. They also make you update your stores every few years which could be as much or more than $40K and before you can sell it has to be updated. Also, there are no benefits. You would think you could get into the group plan with the UPS drivers but you are not eligible so that has been another expense for them. Feeling for my friends — and all their stress!!!

  • BScaller

    You are so full of brown matter you must be an employee in SAN DIEGO.

  • http://www.unhappyfranchisee.com UnhappyFranchisee.com

    Read more about what franchisees say about the UPS Store franchise opportunity at Unhappy Franchisee dot com.

  • http://www.platinumshieldassociation.com PSAMember

    UPS to finally face the jury! Trial begins April 26, 2010. After a 7 year wait, Mail Boxes Etc franchisees will get their day in court. To show your support, follow us at http://www.twitter.com/upsontrial, facebook and share with your friends. Become a facebook fan of Platinum Shield Association. Did you know that at the time of the 2003 conversion, there were over 3500 MBE stores in the United States. Today there are LESS than 80!!!

    See the video….
    http://www.youtube.com/watch?v=6dMgO7eGXq4

  • John S

    I am quite surprised to see all those comments about people losing money with UPS Stores. My family has owned one for almost 10 years and we have made money every single year before and after the switch to UPS. In fact since we bought, we have had 4 other friends and relatives buy their own stores and they are all doing fine. Just wanted to offer some balance in the comments, seems like it is possible to lose money in these stores but it is also possible to make money!

  • nick

    does anyone out there have some up dated information on a ups franchise, this is 2011 u know? my wife works part time in one of these stores that grosses about $260,000 a year the way she figures it out the ower looks to make 40 or 50k a year and wants to sell and retire. what is she figuring wrong?

  • Chris Coffelt

    I feel that UPS is not ethical. In my eyes they are ruthless and unfair. I own and operate my own store, TLC POSTAL CENTER, in Atwater Ca. I built a great ups shipping business up for about 10 years, and electronically did my end of day to UPS every day. They knew that my business was doing well and then they opened aa @#@$ UPS store up right across the street from me! It is my opinion that an ethical business person would not do that.

    I would love for anyone to share inside information with me such as printing pricing for large volume print jobs, ups pricing, and any other information that would help me to compete with them and cut into their printing business. Other than that I now offer more choices than the UPS store, FedEX, UPS, and U.S mail. !! It’s still good to be my own boss, and I am not going anywhere UPS store, so dig in your heels and know that every day you are not making as much money as you could have by being in a different location!

  • Onthe Wall

    All of the negative comments about UPS/THE UPS STORE are correct. My stores headed down the drain after implementation of Gold Shield business model. This model was significantly different from the MBE model. UPS changed the rules in the middle of the game even though the independent research UPS had commissioned told UPS going to this new business model may put up to 70% of the stores out of business. They withheld this information from us. Before locking up my stores I had 2 signs in the stores, ‘AT THE UPS STORE, WE DON’T SHIP, WE SINK’ and ‘I DIDN’T KNOW UPS ATE ITS CHILDREN’. It boils down to this, the average UPS STORE cannot pay its rent on shipping, what good is it. SO be forewarned before buying one!

  • Bobbi

    I have been a store owner in the Phoenix area for nearly 10 years. Things were great until… the economy took a dump. I lost a store, but then no one held a gun to my head to buy it. It was only 13 months old. Oh, did I say that I own five. Yes, five. My newest one is two years old. The last couple of years have been tough. I may have bitten off more than I could chew, but I still have 5 stores, all make money, and I am starting to see things return. If I had bought a Subway (which I almost did), I would still have to buy from their vendors, follow their marketing, and my store(s) would have to look the way they said. Franchising is the same everwhere. Franchises that don’t enforce compliance — fail, or fail to compete. Big example — McDonalds make their owners tear down and rebuild their stores at a certain point. Period. Literally, tear it down and rebuild it. This is a pretty good gig. I am in an area with way too many stores for it’s own good, but I still love it. Something’s working. Ask a McDonalds or Burger King owner how many hours he/she works — you find it the same in all Franchises. Owning your own business is hard work, not a hobby or a retirement ‘job’. I do this without a spouse, but enjoy the support of awesome staff. Get a grip guys, it can be what you want it to be.

  • success is not easy

    What all these complainers fail to realize is that the retail shipping market has completely changed. Online shoppers gravitate towards companies that offer free or very low priced returns. UPS gave these companies ridiculously low contract rates to secure their business (example: Zappos) Zappos is paying around $3 for each shoe return and the franchisee gets 1/3 of that just for scanning in the package. I would say thats a good deal. However, the owners of the past are just thinking about the days when customers would pay retail to return shipments. The Gold Shield program didn’t screw them over; the market landscape completely changed.

    I bought the worst performing ups store in the city I live in back in 2005. 5 years later it has grown to the top performing store in the city. I have watched the previous top stores in my city consistently decline and the owners of these stores just consistently bitch and complain about how ups has screwed them. The UPS Store franchise is no different than any other business. 9 out of 10 business fail in the first 5 years. Available numbers say 6 out of 10 UPS stores do not break even. Buying a franchise just reduces the probability of failure; it does not guarantee success.

    An earlier post talks about the UPS Store being indentured servitude. I do not disagree with you. I slaved away for several years inside the store. I enslaved myself by getting into over 200k of debt. I worked 80-100 hour weeks for over 5 years. I ate, drank ,and slept The UPS Store, and lived on less than $1000 a month. The experience was similar to my college years. I did everything imaginable to gain new customers and build new profit centers. I have paid off my debt and now the business I spent years taking care of takes care of me. I am able to rely on a passive income of 4k-6k a month. I oversee the bookkeeping and attend business networking events when I’m in town. I would say I spend around 2 hours a week attending to store matters. I travel for leisure 4-6 months out of the year. My main goal when purchasing the UPS Store was buying into a franchise that would help me achieve financial freedom. It took longer than expected but the final goal has been achieved.

    Since my venture into business I have seen dozens of people open new business and fail within a few years. People have no idea what it takes to succeed in business.

    I am sharing this story to provide a realistic outlook of what it is like owning a UPS Store franchise. You will have to work ridiculously hard for several years (especially if you are getting into debt to buy a store). There are going to be months when you lose money despite all your efforts. Several people will moan and gripe about these times and lose the passion and drive that it takes to succeed. This negative outlook will cause your customers to leave you because no one likes being around negative complainers.

    Personally, I do not think the average person has the mental or emotional fortitude required to succeed in business. Owning a succesful business can be very rewarding. However, If you want to work 40 hours a week and have a steady source of income; go get a job.

Be Sociable, Share!