UPS franchisees call delivery giant their biggest rival
UPS Store owners all over the country are packing it in, including 10 in the Dallas-Fort Worth area in the last two years. And the numbers could grow, raising alarms about a possible franchise fiasco.
Mike Gorlano, 50, couldn’t get back half of what he paid for his UPS Store in Carrollton. He’s living off his savings while looking for a new career. Andy Weir, 43, faces thousands of dollars of debt after closing his UPS Store in Richardson. The problem stems from an unusual situation: The stores can’t compete with United Parcel Service Inc.’s Web site.
Many current and former franchisees accuse the package delivery giant of using the Internet to take away their customers.
Most of the franchisees that failed are mom-and-pop operations that sank all of their savings into their stores. The owners say UPS is destroying their livelihoods and retirement dreams.
In his nearly two years as a UPS Store franchisee, Mr. Davis never broke even. He invested $180,000 to get the franchise, cashing out his 401(k), selling stock and taking out a loan.
Atlanta-based UPS denies that it’s undercutting its franchisees.
The problem isn’t limited to the Dallas-Fort Worth market, which has 49 stores. UPS Stores in other cities are also losing money, and some are shutting their doors.
To fight back, a group of 220 current and former franchisees from around the country, including a few from the Dallas area, is suing UPS and its franchisor, Mail Boxes Etc., accusing them of breach of contract, fraud, unfair trade practices and other actions.
UPS has been encouraging its franchisees to put more emphasis on nonshipping services, particularly copying and faxing. It’s running television commercials with the tag line “The UPS Store … the place for document services and a whole lot more.”
Focusing on these services produced positive results in tests at some stores, Mr. Hallabrin said.
But even if the strategy works, it may be too late for many franchisees, who say document services account for only a tiny portion of their revenue. They also note that UPS Stores are not known for these services and don’t have the equipment and expertise of rivals like FedEx Kinko’s.
Read More