From its starting point as a telegram company, UPS has grown into one of the world’s largest couriers and providers of shipping services. While The UPS Store is best known for packing and shipping into this well-developed transport network, these stores also provide a wide range of business services, such as mailboxes, copying and printing, shredding, and notary services, which are invaluable for small business owners and people working from home.
How much does a UPS Store franchise cost?
The estimated initial costs to set up a business with The UPS Store vary depending upon the circumstances of the store. For the most straightforward option, a new or relocated store not operating under the company’s rural program, the estimated costs are between $247,523 and $474,193 using the company’s Blue Horizon design.
A new store using the TUPSS 2000 design can be slightly less expensive, in the range of $185,306 to $442,208. Remodeling an existing center provides a cheaper option, at $128,119 to $209,702, and the rural program also offers slightly cheaper options on each of these possibilities (Item 7, FDD 2021).
All of these cost estimates include expenses such as franchise fees, rent, improving the property, staff training, and starting supplies.
What is the UPS Store franchise fee?
The initial franchise fee for a UPS Store is $29,950. This is reduced to $9,950 for rural centers. There are also discounts for veterans and as part of the company’s “diversity ownership program” (Item 5, FDD 2021).
Once a store is up and running, the franchisee pays 5% of their earnings to the company in royalties and 1% in marketing fees (Item 6, FDD 2021). These are calculated based on gross sales and gross commissions, less certain allowable expenses. They are paid monthly.
How much does a UPS Store franchise make?
According to the company, the average adjusted gross sales for a UPS Store in 2020 were $607,750 (Item 19, FDD 2021). To work out how much a franchisee earns, you need to deduct all the store’s expenses from this figure, including rent, cost of goods, labor, royalties, etc. to reach a net profit figure.
Comparing metrics with other franchises in the same category can give you a rough estimate of what the profits might be, or of whether this is likely to be one of the more profitable franchises in your area. Franchise Chatter subscribers have access to a range of tools for such comparisons, as well as a detailed review to give you more context and information.
One frequently quoted figure for The UPS Store states that you need to make about $365,000 in gross sales to earn $35,000 per year. If this is true, then the average store will exceed this target, giving you an income somewhere above that modest figure.
However, the same source states that only 40% of UPS Stores make a profit at all, and if this is the case then, to reach a $607,750 gross sales average, some of those 40% of stores must be earning significantly above average. If the report is correct, then UPS Stores are a huge gamble. But though this figure is often quoted, its original source isn’t clear, and so comparisons with other franchises may provide more reliable insight into a UPS Store’s performance.
How do you franchise a UPS Store?
The UPS Store has a four-step process for approving new franchisees.
First, you need to inquire with the company about opportunities. Initial details about available markets can be found on their website. An inquiry leads to an invitation to attend a national webinar, where you can learn more.
After this comes the application process. The application form is followed by a first interview. If you pass, then you’ll move on to disclosure, validation, and due diligence, as the company checks your background and qualifications. You’ll have to submit financial evidence, to show that you can afford to set up a UPS Store franchise. Assuming that you meet the criteria, you’ll be invited to a second interview.
Following a successful application, there’s a funding process. In this, you sign a letter of intent and pay initial fees. Your place in a UPS Store franchise is now agreed in principle, but not arranged in practice.
Step four is booking, the practical steps to get the franchise set up. This includes securing financing, approving and leasing a site, and undertaking a five-week training course. Once all of this is done, the franchise agreement is signed and the store is ready to go.
Is The UPS Store for you?
There are some very negative reports floating around about the profitability and experience of running a UPS Store. However, evidence for these is sketchy, and doesn’t match well with the company’s stated average gross sales per store.
Running these stores undoubtedly involves a lot of hard work, but the services they provide can be vital for local businesses and make you a central part of your community, as well as a business owner. If that appeals to you, then The UPS Store may be worth the risk.
Given the uncertainties and the challenges of finding the right businesses to compare The UPS Store with, it’s important to use reliable franchise comparison tools before investing in a UPS Store. Franchise Chatter’s comparison tools and in-depth reviews can help you to gain better insight and a solid perspective on whether this is the franchise for you.
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