UPS franchisees to demonstrate outside annual shareholders meeting In Wilmington
Franchisees representing United Parcel Service franchise outlets across the United States under the Mail Boxes Etc. (MBE) and The UPS Store brands will demonstrate at Thursday's (May 10) meeting of UPS shareholders in Wilmington, Del. (Hotel DuPont, Eleventh & Market St., beginning at 7:30 a.m.).
"All of us in the franchisee organizations believe UPS shareholders should hear our concerns and understand UPS' total failure to live up to promises and projections made to us – and to UPS shareholders," said Joe Wightman, who operates a UPS (Mail Boxes Etc.) store in New York City. He is also an official in the Platinum Shield Association (PSA), which has some 131 members, many of whom will be in Wilmington Thursday.
"When my colleagues in Mail Boxes Etc. and I were asked to rebrand as The UPS Store in 2002, we were told that the MBE brand was broken and the profitability of the franchises was paramount in UPS's planning. Further, we were told that there would be 5,000 UPS Store franchises by the year 2007, up from the 3,289 stores in 2002," he added. "Instead, UPS has reduced the profitability of individual franchises and is having trouble selling this business model. By their own admission, they (UPS) have failed to reach the 5,000-store objective, with current data showing only 4,412 franchises – some 600 below their predictions. Of more concern for UPS shareholders, the April 2007 Franchise Offering Circular indicates that they gained only 29 additional franchise centers between 2005 and 2006. The 'broken' MBE brand traditionally opened more than 300 stores every year," Wightman said.
Wightman said an equally disturbing concern is profitability. "Last year at the shareholders meeting, we asked UPS CEO Mike Eskew what percentage of the franchises were profitable for the franchisee, and he professed not to know, despite the fact that UPS' own Franchise Advisory Council had informed management that 60% of the franchises were not profitable," he added. "As a UPS shareholder I believe management has issued misleading statements and needs to 'come clean' with all UPS shareholders."
Echoing Wightman's concerns over UPS' treatment of its franchisees are members of three other franchisee organizations, the Brown Shield Association, IAMCO and the Brown Board Owner's Association, whose members will also appear at the UPS shareholder meeting in Wilmington.
"As a franchisee and a shareholder, I find it difficult to equate UPS management's approach to me and my colleagues," Wightman noted, "especially if we recall what UPS founder Jim Casey said years ago – 'One measure of your success will be the degree to which you build up others who work with you. While building up others, you will build up yourselves.'"
Wightman said a measure of UPS' failure to take steps to improve the company's relations with its franchisees is the spate of lawsuits brought by his organization and others in recent months. "Just last week a class action was filed in San Francisco over UPS practices in weighing and measuring packages," he said, "and virtually every franchisee who will be in Wilmington this week is part of a lawsuit or arbitration against UPS."
In all, some 350 UPS franchisees across the U.S. have filed three actions, one in Federal court and two in California courts. In separate complaints, the franchisees accuse UPS of intentional misrepresentation, concealment and breach of contract, intentionally failing to disclose performance and financial data, in addition to multiple violations of franchisee laws, among other allegations.
"If any of the class actions are certified by the courts, UPS faces the prospect of the collapse of their franchise operations. UPS management should make its shareholders aware of this risk," Wightman said.
