1,505 responses to “The UPS Store vs FedEx Kinko’s”

1. Wow, very interesting information as I had been researching UPS Stores franchises as well. Regardless of what Dave (the I’m not a UPS employee 🙂 ) say’s, this is a potential franchisee that will stop inquiries immediately and look elsewhere. I don’t know about anyone else but the whole reason I am looking at franchising versus doing a startup is to limit my potential risk and this sure sounds risky when we are hearing from current owners being unhappy and in some cases, losing their shirt. My question is, why is none of this information being conveyed to those that dub this a top 5 franchise. Maybe I’m a pessimist which is why I was doing research on issues with UPS stores before proceeding further. Very insightful stuff and thank god for the internet. Dave, maybe you should list your last name so it can be verified that you actually own a franchise. Somehow, I suspect that you will not… 🙂

2. Hi Pragmatist,

   I understand your cynicism in regards to me really being a store owner. I’m not one to post to forums very often so I’m a bit shy to list my last name. I am probably being way too paranoid, but as a voice actually showing support, I don’t wish to create the potential problem of having unhappy UPS Store owners calling me to vent their opinion (Probably wouldn’t happen, but who knows?)

   Perhaps some facts that an owner might know that will alleviate your concern:

   1. The internal system for shipping and collecting payment is called POS/CMS.

   2. Each Friday, UPS Store owners receive a weekly newsletter called Notes & News via MBEWEB (internal website)

   3. Annual fee for technical support is $395.00

   4. Two types of royalties are collected 1)From MBE corp that is collected on the 15th of each month and 2) From a local co-op (ours is collected on the 5th of each month)

   5. Royalties are calculated by multiplying ~8% x Gross Revenue minus cost of stamp and metered mail sales.

   6. Training takes place one week locally, 8 business days in San Diego, then another week locally. The San Diego portion forces you to stay over a weekend on your dime.

   With that out of the way:

   I agree with you: I think that the internet is a great vehicle to express views, but usually angry stakeholders will vent far more than the happy stakeholders. Perhaps you are seeing skewed results when you research the UPS Store opportunities.

   I also respectfully disagree with your assertion that “none of this information being conveyed to those that dub this a top 5 franchise.” On the contrary, I think that the bulk of the data that these respected magazines gather is overall very positive about our stores. The unhappy owners simply voice their views far more than the satisfied owners who have no reason to voice their positive feelings.

   As for this year, my first quarter revenue was up 10%, and April is trending to be up a whopping 25% vs last year. Needless to say, I’m very satisfied overall. Of course, there are processes that I want improved (i.e. Shipping Canada Standard (Ground) is a pain in the rear and the margins really stink), but overall, I’m very glad I purchased the store…

   I hope we can continue this discussion on this forum, and I hope I earned your trust. Feel free to ask any UPS Store related questions, and I will answer them honestly.

   Regards,
   Dave

3. I was thinking to permit FedEx to use my business as a drop-in point, based on their request. But are they not using Kinko’s? Why would they ever consider using Xerox Document Centres as a drop-in point? Your views on this would be appreciated much.

   Regards,
   S Johnson
   Bahrain

   PS: BTW, this is one of the best interations/posts i’ve ever seen. Keep the hogh spirit going on.

4. Sheen,

   Keep in mind that when someone has a FedEx shipment ready to drop off, FedEx has been paid. At this point, they don’t care if the drop-off point is at FedExKinkos, a FedEx drop-off mail box, or your store.

   In fact, the value your store adds for FedEx is that their customers have yet another convenient place to drop off packages. If convenient enough, customers in your area may always choose FedEx over UPS due to your store’s location.

   Dave

5. An analysis of the network numbers for The UPS Store was compliled and presented to the various committees, as well as MBE Corporate – MBE has yet to refute them, in fact a “committee member” advised me that they agreed with the research. The numbers clearly identified that over 60% of the network is at or below break-even based on the bench marks provided by MBE & it’s committees. The numbers in reference were based on 2004 data – the same researcher has now stated that 2005’s numbers refect that the trend is increasing beyond the 60% level.
   Yes, profitable stores are operating in the network, but many of those who may still consider themselves profitable have seen a sharp decline in overall profitability in the past 12-24 months, with no positive changes on the horizon.

   MBE and UPS have been advised of the situation & appear to have publicly turned a deaf ear to our concerns. One MBE “representative” who is in a position to make a difference, replied when ask for help with our plight “I have to answer to a board of directors also”. UPS is controlling the strings, and they apparently have no concern for, in my opinion, the failing franchise they continue to sell & represent.

   In my opinion, MBE/UPS have already damaged our franchise by forcing us to focus public attention on this issue. We have been left with no other option, but to file a Lawsuit in California Court (March 21, 2006). Our attorney is Robert Shapiro.

6. Dave,

   Just a little history on my own store, and I do believe you’re a store owner:

   * Opened in December 2002 as a MBE
   * First store in my area to reach $200k STR (basically gross revenue for non-owners) in my first year
   * First in my second to reach 300k
   * Bronze club
   * Top 10% in the nation for document services for January
   * STR growth up 5% over last year despite stores popping up all around me

   You are one of the lucky one’s: You bought an existing store. However, in my first year as an owner I fought with many of the posters here. Some of them have owned stores for a very long time. Many of us have information that you are not yet privvy to. It can’t get better, based on the Franchise Offering Circular you signed, it can only get worse. I suggest you get a copy of the complaint filed by Robert Shapiro (yes that Robert shapiro) on The UPS Store’s behalf. It’s available for any of you at http://www.brownshield.com. Good luck to you Dave, and I mean that from the bottom of my heart, but I ask you to please not encourage others to buy in to this franchise until several serious corrections are made. I ask you as a “successful” store, at least in corporate’s eyes.

7. Bernie,

   Thanks for the information…it will be very interesting to see the outcome of the lawsuit.

   For what it is worth:

   I will not blindly encourage potential franchisees to invest in UPS Stores. Conversely, I will not make a blanket statement saying that investing in The UPS Store is a bad decision.

   I will say this based on my experience:

   1. I wouldn’t start a new store from scratch unless you have enough cash to be in the red for 2-3 years.

   2. This is a business venture. Therefore, there is risk. You should absolutely complete your homework before buying or starting a new store. Look at historical financials (if buying an existing store) and perform some serious cash flow analysis. Look at location, competitive environment, etc etc.

   As you noted, I am not privvy to some data that you have. I can say, however, that not all UPS Stores are doomed to failure. I have mixed feelings about the Brown Board lawsuit: it brings negative press for the successful franchisees, but it might bring about some change to improve margins as noted in some of the posts above.

   Dave

8. Pragmatist, I have two UPS Stores that I am quite happy with. Both are ten years old and Mar and April revenue are up 20%. Both are solidly profitable. And fun! Even after ten years!

   You can find many reasons to NOT buy any business and you probably will end up NOT buying any business. I see it happen over and over again. And that is fine and it is safe.

   What Bernie and Larry are saying is true! But not all UPS Stores are suffering. A fair percentage are doing just fine-but it is way less than half. Dave will agree with me on that.

   My point is–there are attractive existing stores out there, and there are attractive potential locations out there–but like Dave says, a new store will not be at all profitable for at least two years–but that is true of almost any business, especially non-food businesses.

9. First of all Dave, happy to hear you are doing so well. We unfortunately have not been so successful, re-located from MD two years ago with what we thought to be a successful store in Fl. but after two years we have seen the UPS agenda. We two were told we could see a potential of a million dollar store but have found that MBE and UPS were never straight forward or honest. We have invested our retirement monies and life savings and UPS and MBE continue to bleed us dry. We believed in the UPS name and we two believed that we were investing in a premier shipping and packing company, but now Stuart Mathis has decided to change the sales pie and has stated we are now to become the premier document service company competing against the document services king “Kinkos” what a farce!! We can’t even obtain our own document services equipment without a legal document of approval from MBE who owns what we can or cannot purchase. Afford high speed copiers, you have got to be kidding when our shipping costs are the same as any consumer from the street. They as the parent company are giving corp. like Bank of America much better rates than they are giving us their drop off points. Well Dave you must have fuller pockets than the rest of us and hopefully you wont’ continue to be threatened by UPS that they are going to suspend you. They sold us a store in a location that yields high rents but then had the nerve to come back at a later time to tell us we had too much overhead. Well the UPS realtor that sold us the store sure made a heafty profit and they didnt have a problem with high overhead when they had their hand out to take our money. But luckily UPS can’t decide when I decide to shut the doors. With our anticipated suspension of shipping services close at hand, resulting in our locking the doors, we are preparing to take no prisoners. With the Wall Street Journal article of May 8 and re-inforcement by Robert Shapiro our one two punch will be high-lighted by extensive media coverage as we lock the door while all of Orlando watches. One less Mom and Pop shop once again beaten down by greedy corporate moguls. But UPS won’t be remembered for document services but for shipping, and hey they have our customer database to promote. Well Dave lets go over some of your facts. The POS/CMS cost approx. $6K and allows MBE to access your POS data at will. The training was paid for by us the franchisees and was lacking in professionalism and complete data and resources. Yes tech support is approx. $500 mo. and I still haven’t received a closure on my tech issues. And a montly newsletter that you are paying for which never addresses our concerns. But with pending litigation we are hoping to make our dreams come true. Just waiting for the UPS settlement team to show up. Price is getting higher every day.

10. Dave (or any successful UPS Store owner)-

    I’m doing research on opening The UPS Store franchise from scratch. If I may ask, in terms of profitability, are you including the initial startup costs (ie. 200k) in your 2-3 year estimate for getting out of the red? Hope so..?

    I’m making a business decision to leave the corporate world for the long term, and I do understand it will take some time to earn back the startup $200k, but I’m still hoping the monthly revenues during this 1-3yr period can pay for both business & personal expenses (monthly home mortgage, etc.) while working to get back the initial $200k. From my research this franchise appears to have some excellent qualities, and I tend to believe SOME dissenent owners may be lacking in the proactive ‘make it happen’ skills necessary to adapt & overcome in this changing environment (stuck in the charge what you want MBE era where smart customers left).

    However, my question is more about whether The UPS Store will eat into every penny of my life savings over the next 2 years in addition to the initial $200k?? Yes, I’ll definitely invest extra capital to grow a successful business/franchise, but hope there is regular income as well…

    Please advise – Thank You!

11. Kevin,

    The answer to your question is “it depends”. I have noted above the importance of cash flow…below is an example that I hope helps you. (My apologies in advance if this is too rudimentary for you)

    Let’s assume you borrow $200K via an SBA loan to start the biz (these loans can be very difficult to obtain, by the way). This will leave you with ~$3000 monthly payment. Of course, you may fund the business by leveraging your house at a much lower monthly payment amount.

    Fixed monthly costs (I will make up numbers that you can obviously change to suit your situation)

    Loan $3000 (includes principal and interest)
    Labor $4000 (2 full timers, one part timer)
    Rent $3000
    Leases: $800 (depends on number of copiers, etc)
    Insurance: $200
    Other: $2000 (utilities, local marketing, etc)

    Total monthly FIXED cost is $13000

    Now, let’s assume your gross margin is 40% starting out (includes royalties). You will not initially have any mailboxes, copy business, etc…you will primarily have shipping.

    In this case, you will need $32,500 in sales/month just to break even. Believe me, this level of revenue per month takes at least a couple of years if you are not in an extremely high demand area.

    What if your first month open you only did $15000 of business…You would have gross margin of $6,000 and fixed costs of $13,000…you’d lose $7000 in one month and still have all of your personal bills to pay…

    In summary, there is a very real risk that you will not have any cash generation to pay for the mortgage. You will need to toggle the “knobs” (i.e. reduce labor dramatically, find a different means of financing, etc). Get to understand your breakeven point and turn these knobs accordingly.

    Hope that was somewhat insightful (and not too confusing)

12. i am a ups store owner. i own two stores, been in the system 13 years. both of my stores are profitable.
    a couple thoughts
    1.we are oversaturated with too many new ups stores

    2. the ups store store model as presented when for coversion from mail boxes etc was good, but we have not adapted to the compitition from the fed ex kinko’s merger, but more importantly from the new shipping initiates from the post office. we took business from these two, and now they are fighting back and ups stores are losing. customer counts for established centers are dropping. the franchisor looks at total network sales and is pleased because the total network sales are up,sales are up because they are diluted between too many centers. but too many centers stores are not profitable, many will close thier doors in the next few years unless the franchisor fixes this broken business model. instead of fixing the broken business model the franchisor is spending time getting ready to do battle with the brown board and thier attorneys.

    3. too many new franchisees were looking to “buy a job” and lacking in entrepeneurial spirit, the same spirit that was found in the old mail boxes etc franchisees.

    4. until the brown board’s legal challange is over, the future for ups stores does not look good. those stores that look for help and guidance from the franchisor will fall by the way side. those center that that take it upon themselves to solicit business, constantly moniter thier staff and look for opportunies for improvement, that put the time in thier centers to up-sell ,cross sell, and work hard to increase thier customer base will do well. those who are looking for others (the franchisor or the brown board) to fix thier problems will not do well.

    i feel sorry for all the new center owners taht were sold a dream that has turned into a nightmare

    mik l

13. I too left the corp. world after 20+ years and was a computer specialist for 10+ and was so excited about investing in The UPS Store but my dreams were short lived. Not only do you have to consider your initial investment but all rent is not the same geographially. The margins are closer to 38% with the ups charges and royalty fees. And lets look at the recent pending lawsuit that Robert Shapiro has taken on, as I think you will find there is a lot of merit to our claims. Do what you will but I would strongly reconsider as you will still be under the corp. umbrella.

14. Those certainly weren’t the encouraging metrics I was hoping to see… but thank you very much for the feedback!!

    Fortunately, should I proceed with this franchise opportunity, my costs would be much lower (financing & rent) and I would plan on working full-time at the franchise (not absentee) in order to lower payroll and effectively promote / solicit new business. However, that still leaves me around $9-10k in initial fixed costs per month, for which I’ll need to achieve approx. $300k in annual sales just to cover my fixed costs (38-40% gross margin). The WSJ report said average The UPS Store pulls in $300k per year. Luckily I’m not in a high-rent area, with no other The UPS Stores within 50 miles, but I’m very curious as to how other stores are covering their fixed costs, let alone personal expenses??? Profitable stores are probably around 400k in sales…

    Sounds like to be profitable a new owner would need to focus on just about everything BUT shipping … ie. mailbox rentals, document servicing, payroll, etc. My question- Which areas generate the most profit within The UPS Store, and which should a new business owner focus on first in addition to developing a new customer base (ie. Mailbox Rentals, Document Servies, Freight Shipping, etc.).

    I’m trying to determine if this franchise opportunity would be possible. In summary, if you were in the position of a new owner during this period (and many of you are cringing at the thought), how would you attack this first??

    I truly appreciate your constructive feedback (both positive & negative).

    Thank you in advance!

    -Kevin

15. Well it really all comes down to brand perception, if your looking to buy a UPS franchise consider the consumer, do they look at UPS as a premier shipping brand or as a premier document services provider, which is what UPS is now promoting in regards to The UPS Store and then take a look at the success of Fed-X and Kinko’s, two brands the consumer recognizes, one for shipping, one for document services. You do the math and then see if you can be profitable. And don’t forget you are tied in to MBE/UPS vendors, you can’t get competitive on any supplies or equipment you are looking to purchase, you must use their approved vendor. I wasn’t allowed to purchase a router (an earlier v they had used previously) for under $100 I had to purchase a router from MBE for $500. I just hope you look at all angles as I would hate for you to continue to put in your own money into a business where you will never succeed at. We bought a franchise with a premier shipping and packaging brand not an off-site secretarial service. Take a look at the resources you are given which surely sets you up to fail. At the least give yourself a few months because there is a lot more media coverage to come and it will show UPS for what it is, another big corp. not concerned about us little people, just out to make themselves rich.

16. Kevin,

    We are in our 4th year, and we are approaching our $500K revenue goal. Our gross margins are creeping higher because we have diversification in mailboxes and copies.

    I treat my store like it is called the Dave Store. Obviously, the UPS brand drives awareness, but I do NOT expect demand to magically show up because of the brand.

    In regards to your questions: Think about your competitive environment:

    1. Mailboxes are essentially 100% margin. Is there a post office anywhere near you? Do you think there is pent up demand for this service? Mailboxes are slow to ramp, but once you sustain at a decent level, they are pure margin.

    2. Copies: There is plenty of venom when it comes to copies (the original editorial above questions UPS and copies, but this forum has evolved into an anti-UPS store thread). Having said that, I have joined referral groups and partnered with real estate agents to grow my copy business considerably. Once again, is there a copy shop anywhere near you? If not, you have a huge opportunity. Through my networking, people have learned about my copy services. I do not rely on the UPS Store brand to grow this profit center.

    3. Packaging: Are you near antique stores? Are you near any businesses that may be interested in packaging expertise?

    Lastly, I am not advocating that the UPS Store is the road to riches (see Brown Board concerns above). You sound smart enough to understand that. Look into competitive environment, location, territory, your personal fit into the franchise model, your ability to withstand a couple years of financial pain…Take these all into consideration.

17. Well Dave I just think Kevin should be aware of all the facts and weigh the pros and cons, I an only showing him the other side of the coin. And when UPS touts that you can become a million dollar store, and then as quoted in the Wall Street Journal on May 8 by Stuart Mathis, “this was only a sales pitch to get MBE to convert to The UPS Store”. I did expect customers to magically appear given the influence UPS has on consumers when it comes to shipping. UPS indeed misrepresented the facts and people need to be very wary when deciding on investing their life savings into what they thought was a sound business based on not only the UPS brand but how most see UPS as a company. And it’s a little hard when you have to compete with your own parent company located in the Staples or the Office Depot right down the street. But hey looks like Dave must be a genuis bottom feeder waiting for the franchise to hit $50,000 or maybe he can’t see if it looks like a duck, walks like a duck, smells like a duck, must be a duck. Quack, Quack. Hey you know what the Bank of America’s rates are compared to ours, The UPS Store? I do…

18. Dave –

    Thank you very much for all the useful information, it was all informative! Also, very impressive revenue targets for your UPS Store (are you considering opening another store)?? … it appears you have taken the approach of proactively improving your business instead of relying on a litigation handout.

    Geographically, the area I’m interested in currently has a small UPS distribution center within a couple blocks, although their customer service center is a dungeon! I would hope this distribution center wouldn’t be competition, as they offer minimal services. There is a copy store (Kwik Kopy) within a few miles, but nothing else major. No UPS Stores within 50 miles (or FedEx Kinkos), just a Print, Pack & Post that would be my main competitor. The potential location is in new shopping center strip mall.

    Hopefully I’m on the right page, but thinking strategy about opening this franchise I would try working out some referral agreement with their business manager at the UPS distribution center. My hours would be more competitive than the Print, Pack, & Post (ie. probably open around 8:00am, and better overall hours for customers, etc.). I’d also work on putting together a comprehensive UPS Store website (I’ve seen a few good UPS Store websites on the internet). I would join the local chamber of commerce, and networking groups, and aggressively market my store, etc. Superior customer service would be my top priority, as I’ve seen too many businesses where sloppy service is just devastating!

    In summary, I’m still not sure if I’m going to pursue this franchise opportunity, but it doesn’t appear as bad as some people make it out to be. In addition, I’m hoping this lawsuit would actually work to make things more profitable for The UPS Stores??

    We’ll see… and thanks again!

    -Kevin

19. Kevin,

    You know, it might not be a bad thing having a UPS distribution center around the corner. Here’s why: from what I understand, these distribution centers charge the same rate as the UPS Store (except their insurance is at cost of 40 cents/$100 while most UPS Stores charge $1/$100). Given this, if you provide superior service at the same price, you should be able to win customers over to you (and I know distribution centers in our region have actually recommended that customers go to UPS Stores, especially at Christmas). I’m not 100% sure on all of this so I’d recommend looking into it if you decide to continue research.

    You would probably have lower shipping prices than Print, Pack, & Post (business models of these types of stores is usually high cost/low volume). This should give you an advantage.

    Also, I don’t want to discount the folks who don’t like the franchise (even if they are a little belligerent towards me). If there is a Staples/Office Depot nearby, this will hurt you. Location and service is paramount!

    I don’t plan on starting or buying another store unless I find the perfect location. I am really fortunate to be in a rapidly growing area, and I have a decent territory.

20. Chris or others, I just saw a packing servicing company called “Goin’ Postal” Can you tell me how it rates with FedEx/Kincos and other such franchises? I appreciate the words on UPS above. Glad I have ruled that one out.
    Michael Reynolds
    michaelreynolds@prodigy.net

21. Well let me say this about that. I am a store owner of just over a year and was I duped into this ponzi scheme. I was the first in my county to purchase a store and did all the supposeably right things. We have a local TV station which I advertised on. Used all my business contacts with real estae companies and the chamber ofcourse and visited title companies. hotels etc.

    Oh yeah I heard we’re not putting a store anywhere near you and the million dollar a year yarn prior to inking the contract. Well I wasn’t open 4 months and got a phone call from the salesman wanting $3750.00 to protect my area for one year. Well after a few words that was nixed real fast.

    Almost a year to the day there’s a nice UPS Store franchise sign nine minutes from my store and being just over a year old we haven’t began to break even yet. Now business that I get from that area is fixing to all go away and guess what? I did all their homework for them at my expense.

    Well I was warned by previous store owners as well as current ones it was just a matter of time before this would happen that they let you do all the leg work at your expense and all of a sudden there’s a new franchise down the street going in.

    I have immediately put this albatross on the market and had one potential buyer come inquire. Well guess what? When they saw the sign down the street that another franchise was going in that was all it took for them to walk.

    If I can just get my money out of this I will gladly sacrifice the year plus time I have in it. Will I ever recommend a UPS Store to anyone. Not even on a bad bet and I am rooting for the Store owner lawyers on this one.
    Mike

22. the end

23. Got me to thinking about getting one.

24. I’ve often heard about encroachment issues with franchises, as it appears to be happening with many other franchises, especially Dunkin Donuts & Quiznos (ie. there’s one on every block)! I’m wondering if the territory can be specifically defined ‘prior’ to signing the contract?

    Anyways, in regards to some posts about internet shipping cutting into store profits (which affects all franchises; MBE, UPS Store, Goin Postal, etc.). I’ve seen a few independent TUPSS websites on the internet which are pushing the benefits of their ‘house account’ vs using accounts directly w/carriers (ie. Longer net billing cycles, professionally packed, better insurance, etc.). Check out the websites for yourself, but through these store websites you can view the services offered, electronically submit requests for copies to the store, etc.

    However, in terms of profit for TUPSS, the question I have is whether each TUPSS can create their own website (this part is possible) but more specifically to allow shipping on these independent store websites. I’m not talking about an elaborate system like the one on the UPS home website, but a simple system that electronically sends orders from the independent store website to the owner’s email (at their store), for that store owner to fufill by picking up the customer packages (service already provided by some TUPSS), packing them if necessary, and billing their house account upon completion. Could add some home-based business internet shippers to the franchise owners? It’s like my account with 1-800-DryClean??

    Just an idea…

25. Well it’s been an interesting forum and I wish you all well. We are having to walk away after 2 years of building a much stronger customer base and pouring in all our personal finances. UPS suspended us not 5 min. after we told them we were having financial issues in trying to meet their weekly EFT payments. They did this at the end of the day without letting us inform our customers that we could not ship so we had packages left in our store by the driver based on UPS Corp direction. Once the word got out that we were going to have full media coverage and all our 200+ mailbox holders in front of the store on Sat. and that we can no longer keep the store open due to heavy competition from UPS our parent co. Well then the phone wouldn’t stop ringing, they re-instated our shipping and now have an offer for our store, where were they all the other times we called for some help/assistance? Yes please be very careful as they are just waiting for you to fail so they can grab your store for a song and a dance, they didn’t even give us a reasonable offer. We did have a very successful store and for the broker to insinuate the failings were due to us will soon be discredited as we have quite a following of returning customers and some quite influential in the Greater Orlando Area. We may be losing everything we ever worked for but will not be suckered in by the powers of UPS. We just hope we can prevent others from making this decision that will alter their lives for a long time. Location you would think is vital yes, and our location is prime but did UPS every consider the 6800 in rent, they just set us up to fail. But life goes on and you can only hope one day that justice will prevail. If they weren’t so paranoid why do they make you sign a release that you cannot sue them if you transfer or sell.

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