UPS Store dispute escalating

Three hundred of The UPS Store owners plan to sue United Parcel Service Inc. and its subsidiary, Mail Boxes Etc, for undercutting their profits. Hundreds of other UPS Store owners could follow suit, the culmination of a long-festering feud between many store owners and their franchiser. Store owners’ chief complaint is that Atlanta-based UPS which sets the rates that more than 4,100 UPS Stores in the United States can charge customers for shipping, offers cheaper rates to its direct-pickup customers and imposes requirements burdensome on the store owners. UPS acquired San Diego-based Mail Boxes Etc Inc in 2001, and in 2003, the vast majority of Mail Boxes stores changed their names to The UPS Store, while the UPS subsidiary that oversees the stores retains the Mail Boxes Etc name. All new US franchisees after 2003 were branded The UPS Store.
UPS responds that UPS Store owners signed a contract allowing UPS and Mailboxes Etc. to set shipping rates when owners agreed in 2003 to rebrand stores from Mail Boxes Etc. to The UPS Store.

In addition, new franchisees agree to charge no more for shipping than the maximum retail price set by the agreement.

A group of store owners calling themselves the Brown Shield Association Inc. said they will file a lawsuit in March in California seeking a return of their initial investment — on average between $200,000 and $250,000 per store, as well as damages.

UPS and Mail Boxes Etc. already are engaged in a similar lawsuit with a group of current and former Mail Boxes Etc. franchisees.

The Brown Shield Association in January broke away from the Brown Board Owners Association — another owners group seeking changes from the parent company — when the factions differed over pursuing litigation, said Brown Board Chairman and CEO Michael Rodriguez, a UPS Store owner in Lilburn, which is northeast of Atlanta.

UPS and Mail Boxes Etc. have refused to recognize either the Brown Shield Association or the Brown Board Owners Association, saying franchisees should express their concern through an existing owner-elected advisory council sanctioned by Mail Boxes.

Brown Shield organizer and Alabama store owner Larry Bowdoin said owners were spurred to litigate because a three-year window of opportunity to sue, which began when the stores were rebranded in 2003 to UPS Stores from Mail Boxes Etc. stores, may be ending soon.

While the 400 or so owners in the Brown Board Association do not have immediate plans to bring a lawsuit, Rodriguez said his organization has not ruled out litigation should UPS continue to refuse to negotiate with his group.

Rodriguez, a retired DeVry University dean, said his store is “doing OK” although he hasn’t made any “real profits.”