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UPS Store Franchise Cost Too High? (2022)

Written by: Patrick Findaro
Last Updated: April 21, 2022
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This article is based on a video originally recorded on Vetted Biz Youtube Channel

Top 20 Most Popular Franchises: UPS Store

Vetted Biz is the leading platform for accessible and analytical data on franchises and businesses available in the U.S. Our research team has reviewed over 1,900 franchises and knows the key facts and data that signal a successful franchise system. Upon extensive review using a number of internet research tools, our team was able to compile a shortlist of the “Top 20 Most Popular Franchises in the United States.” In the article below, we review the business model proposed by one of these TOP 20’s: The UPS Store Franchise. As well as the requirements that encompass its franchise application process.

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About The UPS Store Franchise

The UPS Store started off as “Mailboxes Etc” back in 1980. It functioned as an alternative service to the U.S. post office. Following a rapid growth within that same year, its founders Gerald Aul, Pat Senn, and Robert Diaz soon after, sold their first franchise that later opened in San Diego, California. From there, the business continued to grow exponentially, until 21 years later they acquired UPS. Today, The UPS Store has over 5.000 stores across Canada, Puerto Rico, and the United States. Additionally, it is currently headquartered in San Diego, California, and is led by its President, Tim Davis. He has been serving the company since early 2002.

How Much Does A UPS Store Franchise Cost?

UPS Store Franchise 

The first factor to consider when interested in investing in a UPS Store franchisee is the financial requirements accompanying this investment opportunity. The total investment amount to establish a UPS Store franchise ranges from $133,470-$566,585. This includes the company’s franchise fee that ranges from $9,950-$29,950 and excluding any land or lease costs. Once the store has been built and operations begin, franchisees are then expected to pay the parent company a royalty fee of 5% on gross sales, a National Advertising Fee of 2.5%, and an additional marketing fee of 1% in exchange for the marketing services provided by the franchisor. The franchisor is particularly looking for experienced candidates who are truly driven to own a UPS Store franchisee. Additionally, the minimum net worth required to own a UPS Store franchise is $150,000. And the applicant must have liquid assets totaling at least $60,000.

The UPS Store in Numbers

Initial Franchise Fee:  $29,950

Initial Marketing Plan Fee:  $7,500

You must pay the then-current Initial Marketing Plan Fee when you sign your Franchise Agreement (applicable for newly-constructed Centers and conversions; not applicable to renewing franchises; optional for purchasers of existing franchised Centers).

You must pay the Initial Marketing Plan Fee for re-opened Centers. Unless the franchisor waives this requirement.

Design Fee:  $1,075

You must pay the franchisor’s then-current Design Fee to prepare a general Center design.

Center Development Fee:  $5,000

The franchisor, an Area Franchisee, or a third party the franchisor designates (“Center Development Coordinator”) must provide and manage a general contractor to construct your new Center. And provide site selection and lease negotiation assistance.

You must pay the Center Development Coordinator the Center Development Fee.

Initial Training Fees:  $6,000 to $6,800

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Travel and Living Expenses While Training:  $3,000 to $4,000 per person

You will incur expenses associated with The UPS Store University Training programs. Including transportation, lodging, and food. The cost will depend on the distance the trainee must travel and the type of accommodations you choose. And will increase if you send more than one trainee.

However, the franchisor may substitute virtual learning and “e-learning” training modules (through video and/or other electronic means). For any training you, your designated Primary Operator, or supervisory employee otherwise would attend in person at the company’s Headquarters. Which, if the franchisor does so, will lower your training costs.

Site Rent and Security Deposit:  $4,500 to $18,000

A typical new Center generally occupies 800 to 1,800 square feet of interior space in vanilla shell condition. This includes finished ceiling, electrical panel, storefront, prepped demised walls, HVAC, lighting fixtures and electrical outlets. Also telephone wiring/panel installed for the Center.

The cost per square foot of leasing commercial space varies considerably from region to region. Depending on the location and market conditions affecting the commercial property.

The figures represent the cost of the first 3 months’ rent for most Centers ($1,500 to $6,000 per month). And the cost of a security deposit equal to one month’s rent ($1,500 to $6,000). Some landlords require a security deposit equal to 2 or more months’ rent.

Some urban markets – especially Manhattan Borough, NY – can have Center rents of $5,000 to $11,000 per month for a smaller than usual site. Rural markets can have Center rents less than the “low” figure listed on this line item.

These numbers represent a typical landlord/tenant relationship. There is considerable variance, from market to market, regarding whether real estate taxes, insurance, and common area maintenance (CAM) are charged to the Center via “net lease” or included in rent via a “gross lease.”

Ups Store Franchise

Leasehold Improvements, Construction Costs, Signage, Furniture, and Decor Items:  $13,650 to $280,634 (average of $101,158, as highest cost project included $147,452 vanilla shell preparation).

  • You will need to install modular fixtures and make other Leasehold Improvements.
  • Construction costs in some areas of the country may exceed these estimates.
  • All construction work done in a Center build-out must be performed by a franchisor-approved state trade licensed and bonded company in the required area, e.g., fixtures, installations, exterior signage, electrical, etc.
  • If local law requires your Center’s design drawings to receive an architectural seal before submitting them for permitting, your general contractor must hire an architect for you who meets local certification or similar requirements.

 Although most new Centers do not require architectural services, those that do incur fees ranging from approximately $600 to $9,750, and such fees will typically appear on your construction bid.

Computer Hardware/Installation/Freight:  $6,243 to $10,847

You must purchase POS System hardware, back-office machine, The UPS Store Business Station, and PIN Pad devices solely from the franchisor (except for a PIN Pad device for the Microsoft Dynamics 365 Modern POS (MPOS), which you must obtain from the franchisor’s approved vendor). There is an ongoing monthly maintenance fee of $15 per PIN Pad payable to the approved vendor.

A one-time technology installation fee ranging from $1,140 to $2,440 is payable to the franchisor. This fee covers in-center networking and the set-up and networking of the POS System, back-office machine, and The UPS Store Business Station.

You must use only the franchisor-approved vendor for all technical installations.

Additional computers will be set up and networked for an additional $362 per system.

Annual Technology Development and Support Fee:  $1,800

This fee must be paid each year, including when your Franchise Agreement begins.

Software:  $3,420 to $5,420
Printers:  $1,282 to $87,102
Other Equipment:  $6,349 to $21,302.

UPS Store Franchise

 You must purchase or lease certain items of equipment. The franchisor offers to finance for equipment and fixtures. The estimates in the chart are for a lease (3 months) of equipment.

Because the franchisor is in the process of exploring a possible major enhancement to the print services offered by The UPS Store Centers, it reserves the right during your franchise term to convert these recommended specifications to minimum mandatory specifications and to require you to then come into compliance by paying for, installing, and using such upgraded equipment.

Start-Up Supplies:  $6,180 to $9,155

The franchisor estimates that the range given will be sufficient to cover the initial supplies of running your business for 3 months following the opening of the franchise business.

Utility Deposits:  $900 to $3,000

The franchisor estimates that you will need to provide deposits for utilities. Deposits depend on the practices of the utility company.

You must also register your business with the local county, along with fictitious names and other requirements of your local or state government. These entities may charge a fee for such registration.

You also may be required to pay state sales tax and a refundable UPS deposit.

Insurance:  $1,000 to $5,000

The figures in the chart are expenses calculated on a yearly, per Center basis for a small business-owners package policy (property and liability) premium.

Insurance costs vary based on many factors such as coverages and limits selected, insurance company chosen, and your Center’s building construction, fire protection, and other individual risk characteristics.

Also, there is considerable variance of insurance costs from market to market.

Your costs will increase if you purchase other lines of insurance, which may possibly be required by your state’s law or real estate lease requirements.

Subtotal:  $97,849 to $496,585

Additional Funds – 3 Months:  $40,000 to $70,000

This estimates the funds needed to cover your initial expenses for the first 3 months of operation (other than the items identified separately in the table). It includes payroll costs but not any draw, salary, or living expenses for you.

However, this is only an estimate, and it is possible that you will need additional working capital during the first 3 months you operate your Center and for a longer time period after that. New businesses often generate a negative cash flow.

High-cost markets such as Manhattan, NY might be double the amount estimated here.

This 3-month period is not intended, and should not be interpreted, to identify a point at which your Center will “break even.” The franchisor cannot guarantee when or if your Center will break even.

Total:  $137,849 to $566,585

Director of Operations at LSO quotes

Current Director of Operations at LSO. Expert oversees all shipping experts in their region. Expert reports directly to the COO and is very familiar with current logistics technology used in the industry. Expert is a customer of Bringg and can speak to day-to-day use cases with the solution. Expert was not involved with the decision to bring on the solution but has been heavily involved with implementing the solution into the company’s practices.

Let me run you through real quick. So it’s been 15 years at FedEx Ground. I was the senior manager there for 7 or 8 years and then left. Then 2.5 years at a third-party logistics company that did high-end appliance deliveries for Ferguson Enterprises. After that, spending a year at the company that did third-party logistics for Lowe’s. And then left for about 1.5 years and did third-party logistics for Staples.

“We’re paying them or charging them like $24 a week. Let me do some quick math. Let’s say, we had $24, we probably have, I don’t know, only 400 users at this stage, so maybe $10,000 a week. And I know that’s not covering all of the cost. So I don’t know, ballpark, maybe $10,000 to $15,000 a week”

we’re delivering like 50,000 packages a day right now, give or take, on average.

“I would expect that with COVID and e-commerce growth, that eventually every regional shipper is going to hit the point where we’re at, where you can’t bring the ZIP code down anymore, we’ve got to use some sort of upstream optimization.”

UPS Franchise Review

Investing in a UPS Store franchise is an attractive opportunity, especially for individuals who carry a business background and have former work experience. The Mailing and Shipping Services industry is always a safe investment as there’s always room for expansion, especially seeing their ultimate goal is to merge and make cities, countries, and families closer to each other! That said, if you are an individual with previous business management experience and are willing to invest an amount ranging from $133,470-$566,585 or more, UPS Store is the right franchise for you!

CTA Franchise Specialist 2

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