This post was updated on November 27, 2016 to reflect information from The UPS Store’s 2016 FDD (Item 7).
Detailed Estimates of The UPS Store Franchise Costs Based on Item 7 (Estimated Initial Investment) of The UPS Store’s 2016 Franchise Disclosure Document
For Traditional Center Not Operating Under “Rural Program”
1. Initial Franchise Fee: $29,950
2. Initial Marketing Plan Fee: $7,500
- You must pay the franchisor’s then current Initial Marketing Plan Fee when you sign your Franchise Agreement (applicable for newly constructed and conversion of Traditional Centers; not applicable to renewing franchisees; optional for purchasers of existing franchised Centers).
- You must pay the Initial Marketing Plan Fee for re-opened Centers unless the franchisor waives this requirement.
3. Design Fee: $1,050
- You must pay the franchisor’s then current Design Fee to prepare a general Center design.
4. Center Development Fee: $5,000
- The franchisor, an Area Franchisee, or a third party the franchisor designates (“Center Development Coordinator”) must provide and manage a general contractor to construct your new Center and provide site selection and lease negotiation assistance.
- You must pay the Center Development Coordinator the Center Development Fee.
5. Initial Training Fees: $5,700
6. Travel and Living Expenses While Training: $3,000 to $4,000 per person
- You will incur expenses associated with The UPS Store University Training programs, including transportation, lodging and food. The cost will depend on the distance the trainee must travel and type of accommodations you choose and will increase if you send more than one trainee.
7. Site Rent and Security Deposit: $4,500 to $18,000
- A typical new Center generally occupies 800 to 1,800 square feet of interior space in vanilla shell condition, which includes finished ceiling, electrical panel, storefront, prepped demised walls, HVAC, lighting fixtures, electrical outlets, and telephone wiring/panel installed for the Center.
- Cost per square foot of leasing commercial space varies considerably from region to region depending on the location and market conditions affecting commercial property.
- The figures on this line item represent the cost of the first 3 months’ rent for most Centers ($1,500 to $6,000 per month) and the cost of a security deposit equal to one month’s rent ($1,500 to $6,000). Some landlords require a security deposit equal to 2 or more months’ rent.
- Some urban markets – especially Manhattan Borough, NY – can have Center rents of $5,000 to $11,000 per month for a smaller than usual site. Some rural markets can have Center rents less than the “low” figure listed on this line item.
- These numbers represent a typical landlord/tenant relationship. There is considerable variance, from market to market, regarding whether real estate taxes, insurance, and common area maintenance (CAM) are charged to the Center via “net lease” or included in rent via a “gross lease.”
8. Leasehold Improvements, Construction Costs, Signage, Furniture, and Decor Items: $28,240 to $207,558 (average of $94,714, as highest cost project included $118,850 vanilla shell preparation)
- You will need to install modular fixtures and make other Leasehold Improvements.
- Construction costs in some areas of the country may exceed these estimates.
- All construction work done in a Center build-out must be performed by a franchisor-approved state trade licensed and bonded company in the required area, e.g., fixtures, installations, exterior signage, electrical, etc.
- If local law requires your Center’s design drawings to receive an architectural seal before submitting them for permitting, your general contractor must hire an architect for you who meets local certification or similar requirements.
- Although most new Centers do not require architectural services, those that do incur fees ranging from approximately $500 to $6,300, and such fees will typically appear on your construction bid.
9. Computer Hardware/Installation/Freight: $8,483 to $11,200
- You must purchase POS System hardware, back office machine, The UPS Store Business Station, and PinPad devices solely from the franchisor.
- A one-time technology installation fee ranging from $1,140 to $2,640 is payable to the franchisor. This fee covers in-center networking and the set-up and networking of the POS System, back office machine, and The UPS Store Business Station.
- You must use only the franchisor-approved vendor for all technology installations.
- Additional computers will be set up and networked for an additional $300 per system.
- Freight shipping costs for your opening order of computers is $640 to $1,066 plus taxes where applicable.
10. Annual Technology Development and Support Fee: $1,150
- This fee must be paid each year, including when your Franchise Agreement begins.
11. Software: $4,864 to $6,864
12. Printers: $2,052 to $33,091
13. Other Equipment: $9,655 to $16,303
- You must purchase or lease certain items of equipment. The franchisor offers financing for equipment and fixtures. The estimates in the chart are for lease (3 months) of equipment.
- Because the franchisor is in the process of exploring a possible major enhancement to the print services offered by The UPS Store Centers, it reserves the right during your franchise term to convert these recommended specifications to minimum mandatory specifications and to require you to then come into compliance by paying for, installing, and using such upgraded equipment.
14. Start-Up Supplies: $6,180 to $9,155
- The franchisor estimates that the range given will be sufficient to cover initial supplies of running your business for 3 months following the opening of the franchise business.
15. Utility Deposits: $900 to $3,000
- The franchisor estimates that you will need to provide deposits for utilities. Deposits depend on the practices of the utility company.
- You must also register your business with the local county, along with fictitious name and other requirements of your local or state government. These entities may charge a fee for such registration.
- You also may be required to pay state sales tax and a refundable UPS deposit.
16. Insurance: $1,000 to $5,000
- The figures in the chart are expenses calculated on a yearly, per Center basis for a small business-owners package policy (property and liability) premium.
- Insurance costs vary based on many factors such as coverages and limits selected, insurance company chosen, and your Center’s building construction, fire protection, and other individual risk characteristics.
- Also, there is a considerable variance of insurance costs from market to market.
- Your costs will increase if you purchase other lines of insurance, which may possibly be required by your state’s law.
17. Subtotal: $119,224 to $364,521
18. Additional Funds – 3 Months: $40,000 to $70,000
- This estimates the funds needed to cover your initial expenses for the first 3 months of operation (other than the items identified separately in the table). It includes payroll costs but not any draw, salary, or living expenses for you.
- However, this is only an estimate, and it is possible that you will need additional working capital during the first 3 months you operate your Center and for a longer time period after that. New businesses often generate a negative cash flow.
- High cost markets such as Manhattan, NY might be double the amount estimated here.
- This 3-month period is not intended, and should not be interpreted, to identify a point at which your Center will “break even.” The franchisor cannot guarantee when or if your Center will break even.
19. Total: $159,224 to $434,521