FDD Talk 2016: The UPS Store Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2016 post, you’ll learn the following:

• Section I – Background information on The UPS Store franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a UPS Store franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of The UPS Store’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• 2015, 2014, and 2013 average adjusted gross sales for the top 5%, top 10%, top 20%, and all UPS Store Centers in the United States and Puerto Rico that were in operation during the entire 2015, 2014, or 2013 calendar years, and reported their gross sales during the entire year

• 2015, 2014, and 2013 average adjusted gross sales from the Corporate Retail Solutions Program

Section I – Background Information

From Mail Boxes Etc. to The UPS Store

The UPS Store began its life as Mail Boxes Etc., before being acquired by United Parcel Service (UPS) in 2001. Mail Boxes Etc. was introduced in 1980 as an alternative to the United States Postal Service. Gerald Aul, Pat Senn and Robert Diaz opened the first Mail Boxes Etc. store in Carlsbad, California. Over time, Mail Boxes Etc. grew to become the world’s largest franchisor of retail shipping, postal, and business service centers.

In 2003, after the acquisition by UPS, approximately 3,000 Mail Boxes Etc. locations in the U.S. were rebranded as The UPS Store. The rebranded stores began immediately offering lower UPS direct shipping rates (around 20% lower). In 2012, Mail Boxes Etc., Inc. became The UPS Store, Inc.

Today, The UPS Store has over 4,500 locations throughout the U.S. and internationally.

The UPS Store Offers New 3-D Printing Services

In early 2016, The UPS Store announced that it would expand its 3-D printing services to more of its U.S. locations. The company is aiming to create an on-demand manufacturing network, which it began implementing over the summer. The UPS Store is partnering with SAP SE, Europe’s largest software company, to help manufacturers get products to market more quickly and at a lower cost.

Currently, The UPS Store offers 3-D printing services at a few of its U.S. locations. With the new system, customers will be able to upload their digital designs to First Radius, a company specializing in 3-D printing in which UPS holds a minority stake. The part will be printed at the customer’s nearest UPS Store location for delivery.

Supporting Small Businesses

In May 2016, The UPS Store celebrated Small Business Week with its Small Biz Salute campaign. The campaign was a month-long initiative providing entrepreneurs in several of the nation’s top small business cities special opportunities to make meaningful connections in their communities and gain valuable marketing advice from business experts.

Attendees of the Small Biz Salute events had the opportunity to gain valuable business advice from experts like Marcus Lemonis of CNBC’s The Profit television show. Lemonis was the keynote speaker at the Phoenix and Minneapolis events.

In addition to the Small Biz Salute events, The UPS Store launched a national ad campaign aiming to help small business owners run their businesses successfully. The ads launched in August 2016 and showed what happens when a small business does not do a good job of marketing to customers. The ads aimed to highlight how The UPS Store can help small business owners with all of their marketing needs, from packaging, to shipping, printing, and mailboxes.

Recently in October, The UPS Store launched a YouTube mini-series where 9 small business owners were put in an elevator with Marcus Lemonis and asked to pitch their businesses. The title of the series is The UPS Store Elevator Pitch.

In each episode, 3 small business owners took an elevator ride with Lemonis to pitch their idea. They only had 24 floors to talk with Lemonis about their businesses. The winner of each episode received a cash prize of $10,000 and a Small Business Toolkit from The UPS Store.

Expanding Passport Photo Services

The demand for passport services has been on the rise. Last year, The UPS Store announced that it would help alleviate the hassle of applying for and renewing passports by allowing people to skip lines and schedule an appointment for passport photos online.

Initially, the online scheduling was only available at 1,000 UPS Store locations. Earlier this year, the company announced that it would expand this service to every U.S. location. According to The UPS Store, it is the only company that allows customers to schedule their passport photo sessions.

Top of Their Category on Entrepreneur’s Franchise 500

For the 26th year in a row, The UPS Store has been ranked No. 1 in the Postal and Business Centers category of Entrepreneur’s Franchise 500. In addition to being the top franchise in their category, The UPS Store consistently ranks in the top 50 of Entrepreneur’s overall list.

For 2016, The UPS Store ranked at No. 17. This is up from last year’s spot at No. 21. The company’s highest rank on Entrepreneur’s list was in 2006 at No. 4. Their lowest spot was at No. 46 in 2011.

Section II – Estimated Costs

• Please click here for detailed estimates of The UPS Store franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis