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Owning a UPS Store Franchise: Pros & Cons

Do you value freedom and flexibility over being supervised?  Is the thought of being your own boss appealing to you?  Would you like to run your own business without having to start a brand from scratch?  Do you like the idea of managing the day-to-day operations of your business with the support of a successful brand?

If you answered yes to these questions, then buying a franchise may be the ideal career path for you.  The advantages of owning a United Parcel Service franchise, better known as “UPS”, is that you get to be your own boss while enjoying the support system of a well-established brand.

UPS was founded in 1907 and has grown into a multi-billion dollar company.  The UPS store offers package delivery to several countries and a variety of transportation and logistics services.  It is one of the largest package delivery companies and with the demand for convenient delivery services across the globe, it is expected that this company will continue to grow in the coming years.

UPS Store Background and Benefits

The UPS Store is the global leader in its marketplace, with over 6,000 locations in more than 75 countries.  The UPS Store franchisees are entitled to numerous products and services such as shipping and packing, mailbox and postal services, copying, finishing and printing, packaging and moving supplies, and business services including fax, notary and office supplies.

The growth and size of UPS can be promising for franchisees.  Because The UPS Store brand is a globally respected market leader and has a good track record in the industry, customers are already well-aware of the brand and the services it provides.

Franchisees will have the support of local field representatives along with HQ’s valuable corporate staff.  National, regional and local marketing campaigns have been developed to increase UPS Store brand awareness that serves to drive customers into the store.  Proven floor plans and established fixture systems can be adjusted to suit any chosen site.  The UPS Store franchise team will implement standardized design applications to keep the franchise consistent with UPS Stores brand.

The UPS Store leverages corporate relationships to grow businesses at the local level. The HQ team works with major UPS customers and other national brands to bring shipping and printing business to the franchise locations.

There is no doubt that franchisees will benefit from the public trust and established familiarity of a nationally recognized brand.  However, before you invest in a UPS franchise, you should consider its cost analysis and, more importantly, you should be able to weigh its pros and cons.

How Much Does the UPS Store Franchise Cost?

Potential UPS franchisees must have a minimum of $60,000 of liquid capital in cash, savings, stocks, bonds, mutual funds, retirement accounts, gifts from family members or friends, or any other non-borrowed sources. This amount is based upon the franchisee's area of interest and, depending on market conditions, it could go as high as $100,000.  The net worth requirement is $150,000.

The investment ranges from $167,825 - $353,580.  The initial franchise fee is $29,950.  This includes a two-week in-store training session and a two-week course at the corporate campus in San Diego, CA.

The UPS Store brand franchise also offers a lease program, for qualified franchisees, that provides financing.  This program includes SBA lenders and assists with the purchase of fixtures and equipment.

For more details - The UPS Store Franchise Review

Pros

When you decide to become a UPS Store franchisee, you can expect to enjoy the following pros:

  • The most advanced technology - The UPS Store franchising network utilizes one of the advanced and highly developed digital information systems in the world. This technology enables UPS franchisees to deliver more than 13 million documents, pieces of mail, and packages every day. The cost for this sustained development is reportedly more than $1 billion annually and comes with an unequaled tracking and distribution capability.
  • Number 1 in its category - Regardless of the niche and target market of your business, expect that you will always have competition. Several companies are opening every day, making the business arena stiffer by the minute. Fortunately, you don’t have to fret about how you can secure the top spot in the industry because UPS has already done this for years. UPS has been voted the #1 franchise in its category for 19 consecutive years by Entrepreneur Magazine's Franchise 500.
  • High Ranking Overall – It’s not uncommon to hear stories about how someone was scammed to go into business.  In this case, the franchisor, who is the scammer, would require the franchisee to make a financial investment, then once the franchisee pays the money, the franchisor will disappear.  The franchisee will be left with nothing.  You should steer away from this type of situation by entrusting your money to a well-known franchise such as The UPS Store.  Entrepreneur Magazine lists The UPS Store as # 17 over in its ranking of the Top 500 Franchises.  This makes The UPS Store one of the most trustworthy and reputable names in the industry.
  • Popularity - The UPS Store is the #1 most popular franchise with veterans in IFA's Vet-Fran program.  After deciding the franchise business to invest in, you will need to come up with the most effective and unique marketing campaign, so your potential customers will know that you exist.  The UPS Store franchise will not require too much of your marketing efforts, as this company has been around for decades.
  • Advertising and Marketing Support - The UPS Store advertising and marketing communications span multiple levels, including National advertising, co-op communications, and local store marketing to build and maintain a prominent level of brand awareness and drive traffic into the centers and on the websites, creating a loyal customer base.

Cons

Although The UPS Store can provide several opportunities, it also comes with some setbacks such as:

  • Questionable Profitability - Although The UPS Store promises a lot of things, its profitability remains questionable. According to reliable sources, it takes about $365,000 in annual gross sales to produce a modest $35,000/year income for the owner.  About 60% of all US stores do not break even.  In other words, you will not see any profit until your UPS Store does over $30,000/month in sales consecutively every month.  If you don’t have any experience in this industry, reaching these numbers can be challenging.  One option is to own more than one center.  Approximately 52 percent of UPS Store franchisees have multiple locations.  The UPS Store offers franchisees the opportunity to open non-traditional locations in other businesses like hotels, grocery stores and storage facilities.  Qualified franchisees may be offered reduced franchise fees and receive specialized training to help you expand to multiple locations.
  • A lot of pressure – It is easier to purchase a franchise business than to start one on your own. A franchise will provide people to mentor you.  However, you will still face a lot of challenges setting up this type of business.  You will need to make drastic adjustments with your daily schedule and routine.  Because a UPS store franchise will require a large amount of investment money, you will need to work twice as much to earn a profit. You will need to double, or even triple your efforts in order to sell.  This is one of the most common complaints UPS Store franchisees have.  Because of the requirements of the franchise, many UPS Store franchisees end up unsuccessful in the business or in debt.
  • Knowledge Is Power - Running a business is not easy. After making the financial investment, you’ll need to make an effort in monitoring the operations of your business. This will require time management and decision-making skills, to name a few.  To come up with the best decision when it comes to franchising, it is important to do your research and learn as much as you can with UPS. The more information you have about The UPS Store, the easier it will be for you to be prepared.

Which Type of UPS Store Franchise Should you Buy - New or Existing?

When buying a franchise, consider the pros and cons of choosing a new or existing business.

Once you have decided to buy a UPS Store franchise, the question is which type of franchise location should you buy – new or existing?  Opening a new franchise business and assuming ownership of an existing location both have pros and cons.  You may already have an idea of which path you’d like to take, however it is important to research the advantages and disadvantages of each option before locking yourself in.  Here are some considerations to keep in mind to make sure you are getting the best possible deal and potential return on investment.

Buying an Existing Franchise

One of the biggest advantages of buying a franchise is the name brand recognition you get from the moment you open your doors.  This can go a long way in getting a head start on a loyal customer base.  Purchasing an existing franchise location takes that a step further, as you will be buying a fully operational business complete with an established cash flow and trained staff.

This approach allows you to bypass all of the headaches of finding a site, negotiating a lease, building out the property, creating vendor relationships and securing inventory.  Aside from any changes that you want to make, the business is already up and running, saving you time and possibly money.  If you purchase an existing business directly from a franchisee, rather than the franchisor, it can provide more leeway to negotiate price, fee structure and terms.

You should keep in mind that you must still perform due diligence and thoroughly research before you buy a franchise to ensure that it is a profitable business with a track record of success. Having a good customer base and a solid bottom line are essential.

Do not assume that a struggling franchise is a business that you can turn around. There are many things that can cause the business to be struggling.  A downturn in the industry, competition, a less than good location, or a host of other possible issues beyond your control could be the cause. A business with a tarnished reputation is another uphill battle.  Ownership always has its own challenges.  Struggling from the beginning is not the best path forward to achieving success.

Research why the current franchisee is looking to move on.  Find out how many franchisees have owned the location that you are considering.  If there is a constant revolving door of owners, this could be a red flag.

Starting a New Franchise

Opening a brand new franchise business does carry some risk, but it could also lead to bigger profits and greater rewards.  You will be responsible for obtaining financing, finding a location, purchasing equipment, hiring employees, and implementing a marketing strategy.  Even with the recognized brand name, it will take time to cultivate a loyal customer base.  This will involve a lot of hard work at the beginning but will allow you to start your business with a clean slate free of any negative impressions created by a former owner that could deter customers and make earning a profit more difficult.

Existing franchise costs can be more flexible, whereas buying a new franchise may turn out to be less expensive.  An existing successful business can come at a higher price because of the value of the existing cash flow and customer base.  A new franchise business location will require more work upfront, however the money you may save and the opportunity to build your business yourself from the start could be worth it.

With an existing franchise location, you may have to buy the store as-is and you may not be able to make improvements to it for a while.  In some industries, it is imperative to the success of the business to have state-of-the-art, highly efficient equipment.  When buying a new franchise location, there’s a greater probability of being able to secure new or at least newer equipment and facilities.

The Right Fit for You 

Buying a franchise is a big investment.  It requires a significant amount of research to ensure you are selecting not only a profitable franchise, but the right choice for you. Your personality, preferences and business goals will help to determine whether to buy a new or existing franchise business.  If you feel like it is important to start a business from the beginning and you have a higher risk tolerance, a new franchise location may be the best option for you. If you are looking for an established location where you can keep an already good thing going, an existing franchise could be the best fit for you.  The correct choice depends on you – there is no right or wrong answer.

For more information - The UPS Store

 

 

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