Owners call the UPS Store Franchise “Indentured Servitude,” and “A Nightmare”
March 21, 2007 by Sean Kelly
Filed under Business
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]
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.
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??
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!
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.
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!!!
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.
Mark Sorry to hear about your stores.
Do they let you walk away from the franchise agreement without claiming you owe future royalties, etc.?
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
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.
I own an MBE Store and will convert to ups.
correction I will not convert to ups store
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
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
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.
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 !!
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?
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.
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.
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.
What do you think?
The UPS Store Franchise: Follow the System and Succeed!
The UPS Store Franchise: This Dog Won’t Hunt!
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.
Are UPS Store franchisees making a bad situation worse?
THE UPS STORE Franchisees: Drop-Offs Can Drop Dead
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?
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.
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!
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.
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.
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.
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.