UPS franchisees unhappy with parent company

Improvements suggested
On July 18, the Brown Board sent UPS chairman and CEO Michael Eskew a letter proposing several ways to address its gripes. Higginson's letter was UPS' response to these requests.

The Brown Board's letter suggests that in the near term, UPS let store owners keep 70 percent of the profits on shipping services, the staple of the business, up from about 50 percent currently.

It also asks UPS to reduce the royalties it collects from franchisees to as little as 2 percent, or zero for stores with less than $25,000 in monthly revenue.

In addition, the Brown Board wants more money for processing packages dropped off at its stores (as opposed to those prepared inside them) and the ability to buy goods from outside vendors.

The group wants UPS to phase out Mail Boxes Etc.'s involvement with the stores altogether, an action it says will save its members $100 million.

"UPS has the capability of doing the support and training themselves," said Bowdoin, of the Brown Board.

The group also wants UPS to buy out stores in over-saturated areas, restructure the regional franchising system, and generally provide more on-the-ground support.

The Brown Board letter says that analysts "predict that based on present performance, the entire UPS Store network will probably collapse within 1-2 years."

Franchisees convention
Rodriguez said the Brown Board wants to avoid legal action, but it is in the process of retaining Miles Scully, managing partner of San Francisco-based law firm Gordon & Rees LLP, who litigated two cases against UPS that were settled for sizable amounts in favor of store owners.

Some members also plan to attend the UPS Store convention on Aug. 18 in Orlando, Fla., at which Eskew will speak.

Vallance, who owns the Floyds Knobs store, said she is hopeful that UPS will announce changes to the current UPS Store business model at the convention.

"I think we'd all like to see some changes, but we realize that it's David against Goliath," Vallance said. "What's really frustrating is that we (at the Floyds Knobs store) believe that UPS is on the ball, but they are very deliberate and they move so slow to make decisions. We're entrepreneurs. We don't like to move slow."

Some franchisees reluctant
Susan Kezios, president of the American Franchisee Association in Chicago, said UPS needs to be more receptive.

"In a tough economy, often the corporation will help out if they want to keep a strong, viable network," Kezios said. "But telling them to go to the FAC (Franchise Advisory Council, one of the owner-elected committees) is a total cop-out. The FAC typically rubber-stamps the wishes of the corporation. ... UPS can afford to give a little."

UPS posted second-quarter net income of $986 million, up more than 20 percent from a year ago, on revenue of $10.2 billion. The company does not break out UPS Store performance in its financial statements.

Not all UPS Store owners are up in arms, however. Sheryl King, who owns a store in Norcross, Ga., said she never considered joining the Brown Board because she feels its approach is too confrontational.

And in Louisville, those interviewed by Business First were familiar with the efforts of the Brown Board. But some were hesitant to speak about concerns they have with the future of the UPS Store brand.

Phil Jones, who owns two stores in Louisville -- on Frankfort Avenue and Old Brownsboro Road -- declined to comment, directing questions to Melva Moore, coordinator of co-op advertising for the Louisville market.

Moore, who owns The UPS Store on Brownsboro Road in Springhurst Shopping Center, also was reserved in her assessment of the situation. She said she is not a member of the Brown Board, and she questioned its approach.

"I'm focusing my attention on the convention next week," Moore said. "I plan on taking my concerns directly to the company rather than going through the Brown Board."

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