If a Franchisor Loses Interest in Franchising

Many years ago I heard a story, which I believe is accurate, the then McDonald's CEO Ray Kroc spoke at Harvard Business School and confounded the students and faculty by asking what business McDonald's is in.After many answers that failed to satisfy him, he advised the attendees that while definitely in the fast food hamburger business, McDonald's is in many ways a real estate company, as they control many of the best street locations in the United States.

Basically, he was telling them location, location, location.

At the time that UPS bought Mail Boxes Etc. from US Office Products, I was thrilled that MBE would be affiliated with a strong and at the time very respected brand which would tie into shipping, which was one of our main profit centers. I wrote to then UPS CEO Jim Kelly that I was a UPS shareholder and MBE franchisee. I told him how happy I was about the affiliation and that I would do anything in my power to assist. I absolutely believed in UPS as a competent, well run (dare I say ethical) company that had built its reputation on good customer service. My only experience had been with their terrific drivers and not with the corporate bureaucrats in Sandy Springs, GA. Sadly, I soon discovered that UPS has no real interest in franchising but rather only in location, location, location and that its customer/franchisee was merely a means to an end of shaving its costs.

The immediate negative impact on the unsuspecting MBE franchisees that blindly switched to the UPS Store business model was a drop in mail box rental since the consumer market did not associate mail box rental with the UPS brand and could not see the Mail Boxes Etc. brand as being part of UPS. Next, the franchisee saw a dramatic increase in the drop off of prepaid UPS parcels and concurrent decrease in paid shipping via Fed Ex, DHL, USPS and UPS. Indeed, since at least 2008 prepaid drop off volume exceeds franchise paid shipping and continues to grow. Needless to say franchisee profitability took a body blow. A real franchise company would be concerned by the downturn in gross sales and franchisee profitability. Not UPS. They are as happy as could be. Why? They got 4,000 retail locations for drop offs, got rid of 4,000 locations for Fed Ex sales and acquired 4,000 indentured servants to bear all of the costs and liabilities. As icing on the cake they get paid royalties from whatever sales the franchisees make. What could be better than franchisees that pay for the pleasure of being UPS property?

Why stop there?

When I first got into the MBE network there was occasional comment by UPS reps about how they would love for MBEs to become Alternate Delivery Locations (ADL) so that they could direct residential parcel recipients to our stores for package pick up. This would save UPS millions in not having to return up to three times to complete a delivery. The only problem is that we were independent business owners and would have to be fairly compensated for this service. Of course the other issue would be security and liability for lost or damaged parcels. It never got off the ground until now the in eighth year of UPS dominance over its franchisees.

Recently, UPS with much fanfare and adulatory puff piece "news" stories on CNN and MSNBC rolled out a program called "MY CHOICE". Basically, a parcel recipient can, for a fee, redirect a parcel to the nearest UPS Store. Oh Goody! The problem is that the franchisee servant is on the hook with inadequate compensation and increased exposure to liability stemming from receipt and storage of UPS customer packages. For example a high value item the nature of which the franchisee is not informed about gets scanned by UPS as delivered to the UPS Store and then gets misplaced or given to the wrong customer. Who is on the hook for that value? Does the franchisee know that it needs special handling or security? What about contraband? What about pornography? When an empty box shows up because someone is running a scam who is going to take the wrath and suspicion of the UPS customer? Will it be the poor franchisee or UPS? Take a wild guess. In the mind of the customer the UPS Store is UPS. The fact that the franchisee is "independent" of UPS will only come into play when UPS wants to pass the buck to the franchisee.

Worse of course is that this program eliminates the main rationale for mail box rental. Our sales pitch for our main profit center has always been "rent a mail box so that you can insure safe delivery for parcels from UPS, Fed Ex, DHL etc. who cannot deliver to a US Postal mail box." That pitch is dead since for $40.00 a year a consumer can re direct as many parcels as they want to the UPS Store which is mandated to accept all UPS products. In many large cities the going rate for mail box rent is $50.00 per month. So, yet again UPS is competing with its own franchisees. "Let them eat brown cake."

Where are the franchisee associations in this travesty? I seem to think they are missing in action.

Why? Could it be that they like the rest of the American public are just not informed about this because our corporate media won't touch this story for fear of offending a great advertiser like UPS? Stranger accusations have been made about our pretend free press.

Isn't it reasonable to ask what the UPS Store franchisee indentured servants are doing to fight this corporate abuse? Are they basically sitting on their hands and hoping that the Mail Boxes Etc. franchisees prevail in their litigation against UPS? Well, that is not enough. I suggest that every UPS Store franchisee contact their state attorney general and deluge them with letters.

Why not complain to your state attorney general?

This link will get you to a list of all state Attorneys General: http://www.naag.org. Take action now.

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