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UPS Store Franchise Cost Worth 2023 Profit Potential?
Written by:
Last Updated by
Rocio Somoza: March 3, 2023
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Before we start talking about UPS store franchise cost, let’s take a look at its origins. The UPS Store was originally founded as Mail Boxes Etc. – which is still around today as a completely separate entity – in 1980 by Gerald Aul, Pat Senn, and Robert Diaz in Carlsbad, California. Aul, Senn, and Diaz started Mail Boxes Etc. to provide consumers with an alternative to the U.S. Post Office. Over the next few decades, Mail Boxes Etc. continued to grow and in 2001, UPS acquired Mail Boxes Etc., Inc.
In 2003, UPS rebranded around 3,000 Mail Boxes Etc. stores. Over the next year, UPS sold more than 500 new The UPS Store franchise locations in the United States. Today, The UPS Store has become the world’s largest franchisor of retail shipping, postal, printing, and business service centers. There are UPS Store locations all across the United States, Canada, and Puerto Rico.
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UPS Store Franchise Cost
The first factor to consider when interested in investing in a UPS Store franchise are the financial requirements. Accompanying this investment opportunity.
The total investment amount to establish a UPS Store franchise ranges from $133,470-$566,585. Including 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 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 franchise. Additionally, the minimum net worth required to own a UPS Store franchise is of $150,000. And the applicant must have liquid assets totaling at least $60,000.
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 Fee: $6,000 to $6,800
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 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 that you, your designated Primary Operator, or your 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. Which includes finished ceiling, electrical panel, storefront, prepped demised walls, HVAC, lighting fixtures, electrical outlets, and telephone wiring/panel installed for the Center.
Cost per square foot of leasing commercial space varies considerably from region to region. Depending on the location and market conditions affecting commercial property.
The figures on this line item 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.”
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 technology 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
You must purchase or lease certain items of equipment. The franchisor offers financing for equipment and fixtures. The estimates in the chart are for 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 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 name 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 a 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
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!
Learn more about the UPS store franchise by visiting our profile or detailed article on this opportunity.
