Are you interested in starting your own UPS Store franchise, but have no idea how much a UPS Store franchise Costs? How do you even go about starting your own UPS Store franchise? This quick guide will help answer most of your franchising questions and set you on the right path to a UPS Store franchise ownership.
UPS Store Franchise and the Market
The UPS Store concept was initially introduced in 1980 as Mail Boxes Etc. In 2001, UPS acquired Mail Boxes Etc. and, in 2003, all stores were rebranded to the “UPS Store.” The shipping centers offer a variety of packing, freight, postal, printing and business services, with convenient locations and world-class service. The UPS Store has quickly become the world’s largest franchisor of retail shipping, postal, printing and business service centers. Today, there are more than 5,000 independently owned The UPS Store locations in the U.S., Puerto Rico, and Canada.
Nonetheless, The UPS Store franchisees are not without competition. Three years after UPS announced its acquisition of Mail Boxes Etc., UPS’s chief rival in private shipping, Federal Express (FedEx), acquired the printing and business services giant, Kinkos. Initially launched as Fedex/Kinkos, Fedex ultimately rebranded the locations as simply “FedEx Office.”
While The UPS Store franchisees may face competition from FedEx Office locations, other competition is scant. As the two private shipping giants dominate the industry, it is near impossible for a mom-and-pop business to enter the market. Both The UPS Store and FedEx Office can leverage their private shipping and logistics networks to enhance in-store convenience. An unaffiliated business does not have the same resources at its disposal.
In light of its size and benefits, The UPS Store is consistently recognized a leading franchise opportunity. This year, The UPS Store ranked #1 in Entrepreneur magazine’s annual “Franchise 500,” “Postal, business, printing and communications services” category. The UPS Store has done so for the 30 consecutive years. The brand also ranked #5 in Entrepreneur magazine’s annual “Franchise 500″ overall. The UPS Store has consistently ranked in the top 10 for four years in a row.
So how do you tap into the low competition, UPS’ vast networks, and the parcel carrier’s well-established name? And how much does it actually cost? Let’s break it down.
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How Much Does a UPS Store Franchise Cost?
The initial investment cost to launch a UPS Store franchise will set you back between $138,433 and $470,031. Relative to other service sector franchises The UPS Store remains very competitive. The brand’s initial franchise fee is reasonable and only moderate expenditures are required.
The below table provides a complete breakdown of all initial investment costs.
Initial Cost Breakdown
Expenditure
Low
High
Initial Fee
$9,950
$29,950
Initial Marketing Plan Fee
$4,000
$7,500
Design Fee
$1,075
$1,075
Center Development Fee
$5,000
$5,000
Initial Training Fees
$4,650
$6,550
Travel and Living Expenses While Training (per person)
$3,000
$4,000
Site Rent and Security Deposit
$1,000
$18,000
Leasehold Improvements; Construction Costs; Signage; Furniture and Decor Items
$38,429
$166,252
Computer Hardware/Installation/Freight
$6,881
$12,455
Annual Technology Development and Support Fee
$1,440
$1,548
Software
$5,357
$6,207
Printers
$1,346
$96,399
Other Equipment
$8,925
$27,940
Start-Up Supplies
$6,180
$9,155
Utility Deposits
$200
$3,000
Insurance
$1,000
$5,000
Additional Funds – 3 months
$40,000
$70,000
ESTIMATED TOTAL
$138,433
$470,031
Ongoing Cost Breakdown
In addition to the above initial investment costs, it’s important to know what else will ultimately play into a UPS Store franchise cost. Perhaps most significantly, you’ll be required to pay The UPS Store a weekly royalty fee equal to 5% amounts “subject to royalty” (or STR). This is The UPS Store’s way of saying Gross Sales plus Gross Commissions from your Center, less Allowable Exclusions. You’ll also be responsible to contribute up tp 2.5% of STR to support The UPS Store’s national advertising and 1% for general marketing.
In addition, two dozen or so contingent fees may, at some point, be required. The below table breaks down and explains all of The UPS Store’s ongoing fees.
Fees
Type of Fee
Amount
Royalty
5% of STR (STR includes all Gross Sales plus Gross Commissions from the Center, less Allowable Exclusions).
“The UPS Store” Marketing Fee’
1% of STR.
National Advertising Fee (NAF)
2.5% of STR.
Advertising Co-op Dues
Varies from Co-op to Co-op. Range is $100-$500.
Annual Technology Development and Support Fee
$1,548 (new Center franchise and transfers); $1,440 (Rural Center); $1,440 per Center if franchisees are purchasing their 2nd or greater franchise.
Transfer Fee
The current Transfer Fee is $5,000 (The franchisor may periodically increase this fee).
Processing Fee
The current Processing Fee is $4,000 if no Finder’s Fee is paid to the franchisor; $1,000 if a Finder’s Fee is paid. (The franchisor may periodically increase this fee).
Sales Fee
25% of then current initial franchise fee.
Insurance
Amount of unpaid premiums.
Audit
Cost of audit ($475 minimum) plus 18% interest or the highest rate allowed by law on underpayment. In addition, the franchisee must pay a late fee of $25 per week.
Audit Non-Prepared Fee
$500 per type of document (as specified in Operations Manual) not supplied upon auditor’s request but in no event greater than $2,500 per occurrence, and cost of audit (including reasonable expenses incurred by auditor) if rescheduled.
Non-Transfer Ownership Change Fee
$500
Incorporation Fee
$500
Family Transfer Fee
$1,750
Entity Name Change Fee
$500
Indemnification
Will vary under circumstances.
Interest on Financing Offered by Franchisor
Financing of initial equipment: prime rate plus 4%. Financing for the purchase of a second center: prime rate plus 2%. Financing for the TUPSS 2000 remodel of the Center: prime rate plus 1%.
Late Payment Fee
$35 per month or 10%, whichever is greater.
Equipment or Equipment Lease and Computer Hardware/Software Maintenance
Varies.
iShip Processing Fee
$0.22 per transaction.
Upgrade Review Fee
$500
Finder’s Fee
The greater of $11,980 or 10% of the Center’s sales price.
Finance Charges
Highest annual rate allowed under applicable law.
Design Fee
$660 or $1,075 (plus $250 in the event of a change).
Non-Compliance Fee
Currently $250, but the franchisor may charge up to $1,000.
Tax Reimbursement
Out-of-pocket cost reimbursement.
Customer Concern Reimbursement
Out-of-pocket cost reimbursement.
How Do I Start a UPS Store Franchise?
The first step in The UPS Store’s franchising process is to submit an application through its website. After doing so you will be connected with a UPS Store representative and will be required to complete a full application and due diligence. The UPS Store does not disclose what criteria it considers in assessing an applicant’s viability.
