Highlights of The UPS Store’s Item 19 Financial Performance Representations (2013 FDD)
Explanatory Notes for The UPS Store’s Financial Performance Representations (Average Adjusted Gross Sales of All Centers, Top 5%, 10%, and 20% of Centers)
The UPS Store Centers Included in the Sample
This historical financial performance representation contains:
1. the actual, average, annual, adjusted gross sales during each of the 2012, 2011, and 2010 full calendar years of all The UPS Store Centers in the United States and Puerto Rico that:
- (i) were in operation during the entire 2012, 2011, or 2010 calendar years, and reported their gross sales during the entire year;
- (ii) were in operation as of January 1 of the 2012, 2011, or 2010 calendar years, and then operated until at least sometime in December of that calendar year, and reported their gross sales for the entire timeframe during which they operated; and
- (iii) opened sometime during January of the 2012, 2011, or 2010 calendar years, and then operated until at least sometime in December of that calendar year, and reported their gross sales for the entire timeframe during which they operated.
2. as a component of that system-wide adjusted gross sales information, the actual, average, annual, adjusted gross sales during each of the 2012, 2011, and 2010 full calendar years of the top-performing (in terms of adjusted gross sales) 5%, 10%, and 20% of the franchised The UPS Store Centers in the United States and Puerto Rico that:
- i) were in operation during the entire 2012, 2011, or 2010 calendar years, and reported their gross sales during the entire year;
- (ii) were in operation as of January 1 of the 2012, 2011, or 2010 calendar years, and then operated until at least sometime in December of that calendar year, and reported their gross sales for the entire timeframe during which they operated; and
- (iii) opened sometime during January of the 2012, 2011, or 2010 calendar years, and then operated until at least sometime in December of that calendar year, and reported their gross sales for the entire timeframe during which they operated.
3. A The UPS Store Center’s adjusted gross sales in a particular year are included in the calculation of the system-wide average adjusted gross sales during the 2012, 2011, or 2010 calendar years (subject to the qualifiers above) even if:
- (i) that Center’s ownership changed during the calendar year; or
- (ii) the Center did not operate during one or both of the other calendar years represented in this historical financial performance representation.
4. All current The UPS Store Centers that first opened for business before approximately March 2003 originally operated under the Mail Boxes Etc. brand and then were re-branded to The UPS Store trademark beginning after approximately March 2003. All The UPS Store Center franchises granted since approximately March 2003 have operated under the The UPS Store trademark since inception.
5. The UPS Store Centers whose annual average adjusted gross sales are included in the calculation reported below are located at both “Traditional” and “Non-Traditional” sites.
Traditional sites are highly visible locations in strip shopping centers or high foot-traffic downtown areas in urban, suburban, and rural markets. Non-Traditional sites are colleges, universities, hotels, convention centers, airports, resorts, military bases, self-storage facilities, inside other retailers (“store-within-store”), office buildings, regional or outlet malls, bus or train stations, and other similar facilities in urban, suburban, and rural markets.
Of the 4,256 total The UPS Store Centers counted for the 2012 calendar Year, 4,123 were at “Traditional” sites and 133 were at “Non-Traditional” sites.
6. The UPS Store has not independently audited the financial information reported by franchisees.
Definition of Terms
1. “Adjusted Gross Sales” are defined as a franchisee’s total gross sales (not including sales taxes collected from customers), plus “gross commissions earned” less certain permitted “exclusions”.
2. “Gross Commissions” is the total amount of all commissions actually earned by a franchisee during the franchise term on account of those transactions occurring at the Center in which the franchisee acts as agent for certain vendors or service providers specified in the Manuals, for example, UPS Drop-Off Program compensation.
3. Examples of permitted “exclusions” are Counter Manifest System Processing Fees and deposits toward products to be sold or services to be rendered.
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As a current UPS Store owner for the last 9 years ( who is thinking about selling and getting out of the business), I Can tell you that this business is very hit or miss. To really succeed in this business: You either have to purchase a higher end store- that is in the top 20-40 percent in sale or posses great sale skills. If you decide to purchase either an existing store or a new store,you can still succeed, but it will take daunting work and incredible sale skills. If you are the type of person who is great at selling your franchise to others, and are not afraid to go out and pursue businesses you can be successful.
However, the business model is very flawed as you have heard. The biggest problem is that any time you have high end customers for shipping, you can sure bet UPS will eventually “snatch” them away from you, by giving them lower discounts through a their own 6 digit shipping number. This means it is very hard to hold onto your top shippers. I have lost so many over the 9 years, I cannot remember. Plus a good 70 percent of all packages ( if not more) will be prepaid returns. Mostly from many sources: Amazon, Zappos, Comcast, private accounts.. to name just a few.
You really need to spend a good half a million for a good store or be a superb sales person. Also you really need to specialize in a special “niche”; such as complex printing or something like crating.
UPS just installed a new program. Customers can now order packages off Amazon and other places and have them shipped to your store. They do not even need to buy a mailbox for this option. You only get $1.00 per shipment received. This shows you that UPS – does not have your interest at heart. Still consider buying a store but be cautious. Also, make sure the store does very well in Mailboxes before you buy it.
Very well said. I agree with your assessment. Looks like things haven’t changed all that much since I sold my store 8+ years ago. Thank you for sharing!
I am applying for an SBA loan and wonder how much in the underwriting for loans on a UPS Store has changed. I think the entire lending enviroment has changed . I am sure they keep track of failures overall in the franchise industry however I wonder if they have drill down data on particualr franchises like UPS? At one time it used to be less than 16% compared to other industries.
I saw the same 16% rate from a 2013 article. I don’t think the rate would have changed that much since then.