The UPS Store ads call The UPS Store franchise “the perfect opportunity to be your own boss,” a way to “take control of your business future & benefit from a world-class support system.”
How much do The UPS Store franchise owners make for their initial investment of $154,947 – $293,473, ongoing expenses and sweat equity?
According to an one ex-franchisee: not much.
“Former Store Owner” calls The UPS Store franchise a “dirty little scam” that basically exploits wannabe entrepreneurs by seducing them with visits to exceptional, high-volume stores, then, once they’ve signed up, squeezing the profitability out of their stores with mandatory purchases and exorbitant royalties.
Are you familiar with The UPS Store franchise opportunity? Please share a comment below.
To make matters worse, says “Former Store Owner,” their namesake shipper competes directly with franchisees by encouraging consumers to print out their own labels from home and simply drop off their packages at The UPS Store. The UPS Store franchisees get only $1.00 per drop off package, and are cut out of any share of shipping revenue.
Here’s the account we received from “Former Store Owner”:
I remember visiting the area stores and being allowed to ask questions with the area guy standing right there listening. The store owners would not speak freely and would ONLY answer what WE asked. So you had to know what you were looking for. So later, when people came to our store alone and asked about the franchise… we told them the truth and they ran for the hills!
We were driven to all the top performing stores and were duped into thinking this will be us. Little did we know that few stores make that much. Many owners that do OK only get about $40,000 a year. My wife had a job making 60,000!!! We owned the store for a few years and we made NOTHING, zero, nada!!
Here are the problems with the franchise…
They opened way too many stores that have to now compete with each other!
You are FORCED to buy overpriced equipment from the home office. You could easily buy it elsewhere for way less.
You are FORCED to obtain color copiers where you lose money each month. There are already businesses dedicated to this service and you cannot compete.
But here is the biggest dirty little scam!!!
The royalty fee is 8.5% of the gross sales. You are allowed to deduct the cost of stamps and packaging materials. You get 40% of ground package and 50% of air package costs. Shipments are the bulk of your business income.
Sounds great, right?
OK, if you shipped $20,000 in packages you have to pay the UPS 50-60% of that in your next bill so you never earned that money. You really only took in say $10,000.
But you pay a royalty on….. wait for it… $20,000!!!! So the 8.5% royalty is really 17% and that is nuts!
The store shipping rates are the same as the counter but they will NOT advertise that EVER! Many people still believe the outside stores charge more and.. they do!! All of those that are not UPS Stores.
At one point.. UPS was charging people 10% less than the store if they printed their label online. They drop it off at your store and you get… $1.00. But the customer would want YOU to tape their box.. for FREE! So UPS was making out at your expense.
We sold the store a few years ago and now… they have since been evicted and the store closed!
ARE YOU FAMILIAR WITH THE UPS STORE FRANCHISE OPPORTUNITY? PLEASE SHARE A COMMENT BELOW.
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After being in business for the past 30 years starting with Mail Boxes Etc. I was making good money until ten years ago when the franchise switch over to The UPS Store and made a fool out of me .I am sitting here working my rear off for UPS paying high rent so they don't have to . I can see soon in the next 5 years half of the stores will be out of business due to not making money on shipping anymore . You cannot depend on other services to make you enough to have a extra income. If you are thinking of franchising with The UPS Store don't let them fool you.
F.S
I am a current owner, who has just put my store on the market after a decade. This business used to be profitable, but now the game has greatly changed. IT is not 100 percent UPS's fault for the problems. Sure haggling and taking our customers away with on-line shipping labels and thinking print serve will ever be lucrative is nonsense. The way people ship things has greatly changed; as people are doing everything on-line now and the old way is becoming obsolete.
You can still do well owning a UPS store but you must buy a top of the line one that would cost you over 300,000 dollars if not half a million.
IF you do buy one then be prepared for 75 percent of your shipments to be drop offs and you must have a huge mail box stream to survive or you will go barely stay afloat.
The entire UPS model is terrible these days.
Most of my packages are drop offs now.
UPS continues to want us to master the print business and we are not Fed Ex. Only a few stores can do well in Print service.
Without solid revenues from shipping and MB services it is impossible to make it unless you own the property and do not have to pay rent.
We opened our store a little less than three years ago with no prior business experience. We passed the "break even" mark at 18 months and experienced 25% growth in 2014. We are ahead of that pace for 2015. The shipping industry is changing and the idea that a store will be highly profitable just through shipping is unrealistic in most markets. However, the broad base of services and products makes it very possible to succeed. The corporate pricing received on supplies and equipment plans, coupled with strong brand recognition and diversified product/service mix can translate into sustainable profitability.
As David noted above, UPS is encouraging print production in the stores. Dave notes that we are not "Fed Ex" and I would agree. I would submit that we don't want to be either. We are smashing "Fed Ex" services, pricing, and capacity on a daily basis.
In my opinion, a UPS Store is a good platform for business success. The systems are reliable, the brand recognition is powerful, the supply purchasing/leasing advantage is real, and the potential for growth genuine. We are in a medium sized, average market and we are capturing market share aggressively and growing every month.
I'm not sure where Randy's is getting his information, but I can say that in the Dallas/Fort Worth area that is NOT the case. Fed Ex DESTROYS The UPS Stores with their prices. Their Flat Rate shipping makes it impossible to compete. UPS doesnt and will not offer any Flat Rates AT ALL. It has been a topic of discussion at many owners meetings! Fed Ex also kills us on Next Day Shipments (EX: documents). They are almost 40% cheaper. The ONLY area we consistently beat them in is our large package shipping. Although FedEx will soon close that gap soon I'm sure.
Let's also take into consideration the 10% discount on UPS shipping we extend to customers who open a "House Account". Why in the world would anyone want to do that when UPS advertises a 16% discount on their website and they can print their own label (as David said).
Also, The UPS Stores are FORCED to purchase The UPS Store logo printed boxes from Schwartz. The cost for that is 34% HIGHER than comparable boxes through U-line.
Now there's the new "Retail Items" we are expected to purchase from Office Depot. Once again I can get the exact same items 25-30% cheaper from almost anywhere (even paying retail)!
The USPS products and services are cheaper too. A customer can get a mailbox for 3 months for what we charge for one month on a small mailbox. With the upcharge we HAVE to add to a book of stamps and to metered mail customers look at you like you are the devil himself when you charge them .80 cents for a .49 cent stamp.
Not long ago we were forced by corporate to buy Mini- Pakers (packaging bubble making machines). They will save you money they said. NOT TRUE AT ALL. It would save us money IF it didnt take 3 times as much product to package an item properly! There is a lot of waste on each roll too. Let's not forget that if the item doesnt have enough protection and you start getting claims that you will pay more for every shipment you insure.
I believe that just about covers EVERY possible area that an owner can earn profit from. The UPS Store as a company will NOT be able to continue at the pace it is going now. Each holiday season we ship less and less. Customers are buying and shipping directly through online retailers. TUPPS is pushing print thinking it will make up for the loss in revenue due to less shipping. It wont and here's why. TUPPS rolled out the 500 business cards for $5.00 promo. As usual they did it without TESTING and AS USUAL it was an EPIC FAILURE! The print site is NOT user friendly. I spent countless hours trying to help my customers design their business cards online. EVERY SINGLE CUSTOMER GAVE UP! That is inexcusable. Corporate does not know what they are doing and clearly doesnt know their customers either. The UPS Store needs to clean house and start fresh if they ever expect to be relevant. It's time for them to find a new CEO who has the guts to do what it will take to turn their downward spiral around. Do it right or don't do it at all. The UPS Store and quality printing is like trying to buy groceries at a hardware store. It simply will not work.
The only way to make a $1M by owning a The UPS Store is to start with $2M. Do the math... It is nearly mathematically impossible to make money with a UPS Store. If you have a couple hundred thousand dollars you don't need, give it to the homeless. You will be out $200K, but it will make you feel good. My wife and I owned three The UPS Stores for about eight years. It was fun and a change from my normal career, but it cost us $250,000. Do not get hooked into buying a UPS Store.
I agree with all the comments above except for Randy. I have been fighting this trend almost since the day I acquired my franchise. The downward spiral continues. Read on:
Two new programs have been pushed onto The UPS Stores by UPS this year. The first is now called dimensional weight pricing. Forget what the package actually weighs, the weight is now based upon the package dimensions. 60% of our customers who balk at the new pricing structure take their packages to USPS for price comparison and NEVER come back. This is now a daily occurrence. In our area, USPS's biggest advertiser is the new dimensional pricing of UPS.
Second is the new Access Point Program. Customers would obtain a mailbox from us to have their packages shipped to our store and we could hold them for up to 5 days all for the price of a mailbox. Second method is to pay a nominal fee to us to receive and store packages for non-mailbox customers. Now the Access Point Program says that anybody can have their packages shipped to our store at no charge to them. For that service, we get $1.00 per package. UPS has now found a way to eat into our mailbox revenue. The core of our mailbox business is for customers to receive packages. Now they have no incentive to open a mailbox.
Within the year, my franchise is up for renewal. I am retiring instead and not going to renew. One of my employees had expressed interest in acquiring the franchise but after seeing all the things that are being done to downgrade the business, he has cancelled all plans to acquire a The UPS Store franchise with a dying business future.
Far, that is the truth!!!
UPS continues to get you to invest heavy in copy and print services to offset shipping but the numbers do not add up.
I hope to sell my store soon and I know I will lose money but its better than being fully wiped out in 5 years.
I am guessing I am going to blow 40 grand or so and should of put it up last year.
80 percent of all my shipments are now pre-paid lol. Utterly insane.
UPS has a new program where customers can just ship packages to your store and not have a mail box. Just gets worse and worse.
You have to be a total fool to get into UPS. Very hard to survive right now and I Feel If I do not get out now then my store will be worth zero.
Wow! I was thinking about opening up a UPS Store. However after reading all the comments above, there is no way in heck I would do it now. Thank you all for sharing such great insight. Now whenever I print and online UPS label, I will be thinking about the store owner. & I might rethink about doing that.
You are better off going independent you will get great rates from UPS based on your volume and no royalties Randy is a corporate mouth piece