Franchisees See Red After Brown Takes Over

Startup Journal:

When United Parcel Service Inc. announced it was acquiring the Mail Boxes Etc. shipping chain five years ago, franchisee Dana Houser thought his entrepreneurial dreams were finally coming true.

UPS was one of the biggest names in the business, known for prompt, reliable service. Mr. Houser figured the company’s reputation would send customers surging into his Mail Boxes Etc. store in Lincoln, Neb.

UPS, he recalls, told him that outlets would see so much more volume they could easily hit $1 million in annual revenue, about four times what he was pulling in then. “They were going to make us the premiere shipping channel,” he says.But today Mr. Houser is wondering how much longer he can keep the doors open at his shop, now doing business as the UPS Store. His anticipated volume increase never arrived, while profit margins vanished as UPS cut the fees he got for handling packages. And the company opened another store nearby, which siphoned customers, the 34-year-old franchisee says.

Mr. Houser says that when he sees UPS ads that ask “What can Brown do for you?” his response is: “Stop competing with me.”

Brown and Blue

The frustration in his flip remark is shared by scores of UPS franchisees across the country. They say the acquisition that held such promise hasn’t improved their business — and that, in fact, things have gone downhill for many since UPS took over.

UPS, they say, laid down policies that squeezed their revenue and profit margins, while saddling them with big costs for converting their outlets to the UPS Store model. At the same time, the franchisees lost the ability to deal with other shipping companies, such as FedEx Corp., which they say hurt them competitively.