If you’re evaluating franchise a businesses, you could do worse than looking at a company with a track record of performance for more than 100 years. The United Parcel Service or UPS has been operating since 1907 and is known as one of the top package delivery companies in the United States and around the world. The thing most consumers don’t realize about UPS is that they are also a Fortune 500 company.
How much does it cost to open a UPS Store? To qualify as a franchisee, you’ll need a liquid capital of between $75,000 – $125,000. The total investment to open a traditional UPS store is $247,523 to $474,193 depending on location and size. The cost of the franchise fee is $29,950.
Want to learn more about the business model of a UPS franchise? This guide takes an in-depth look a the company’s revenue, profit-margin you can expect per store, advantages and challenges. Take this 7-minute franchise business quiz to find out if UPS is the right franchise option for you.
- Financial Requirements and Fees
- Average Sales / Revenue per Year
- UPS Store Franchise Facts
- How Much Does UPS Store Make in Profit?
- Advantages of a UPS Store Franchise
- Challenges of a UPS Store Franchise
- Is the UPS Store Franchise Right For You?
Financial Requirements and Fees
These are the financial requirements and fees to expect when you apply to franchise a UPS Store:
|Fees / Expenses||Financial Amount|
|Liquid Capital||$75,000 to $125,000|
|Total Investment||$247,523 to $474,193 (traditional)|
A UPS Store investment varies depending on the type of store you decide to franchise:
- Traditional Locations – $247,523 to $474,193
- Rural Locations – $163,139 to $274,722
- Store-in-Store Locations – $120,929 to $250,540
Rural locations are lower in cost than traditional locations since they’re not as populated as big cities and don’t require as much square footage to operate. This means that real estate prices and utilities are less expensive too. Rest assured that having a rural location doesn’t mean it’s not suitable for running a UPS Store. In fact, UPS says a rural location provides franchisees a better return and a chance to form relationships a local community.
Other fees include The UPS Store’s 5% royalty fees and 3.5% ad and marketing royalty fees that cover local and national territories. They also offer a veteran’s incentive that’s $10,000 off the franchise fee and a 50% discount on the initial application fee. The term of the agreement to run a UPS Store is 10 years.
Average Sales / Revenue per Year
UPS earns billions of dollars in revenue annually. The total revenue for the year 2020 is recorded to be $84.62 billion. The pandemic helped boost UPS’s revenue growth by 14.2%. This also allowed them to climb to number 35 in Fortune 500’s list for the same year.
Of course, you need to keep in mind that all this revenue isn’t generated exclusively from UPS Stores that you can franchise. UPS is a global company with an estimated 540,000+ employees. For example UPS generates revenue from supply chain and freight deliveries. Internationally the company growing as well recording 26% growth in revenue across Asia and Europe of Q4 of 2020.
UPS Store Franchise Facts
|Total Units||Over 4,800|
|Incorporated Name||The UPS Store Inc.|
|Industry||Mail, Package, and Freight Delivery|
UPS, also known as the United Parcel Service can be traced back to 1907. A the time the shipping giant was called the American Messenger Company was started in Seattle by two teenagers Jim Casey and Claude Ryan with a $100 loan. In 1919, the name was officially changed to UPS at the same time they expanded to Oakland, California.
Fast forward to 2001, UPS bought Mail Boxes Etc., Inc. which was a well-known franchisor of retail services that included postal, shipping, and business service centers. They re-branded into what we know today as The UPS Store which offers professional printing services, direct mail services, and mailbox services at a lower UPS-direct shipping rate.
At present, The UPS Store offers these services at all their locations:
- Pack and Ship Guarantee Program
- Domestic Shipping
- International Shipping
- Luggage Logistics
- Moving Supplies
- Freight Services
As for a non-traditional UPS Store, they offer the following services:
- Packing and Shipping
- Mailbox Services
- Moving Supplies
- Packaging Materials
- Digital Printing and Document Services
- Faxing, Notary and Computer Services
- Custom Crating and Freight Shipping
- Alternative Delivery Services
UPS is has won many awards and is recognized globally for their service. UPS is recognized as one of the 50 Most Valuable Brands in the World. Brand Finance’s Logistics 25 2021 rated UPS as the Most Valuable Logistics Brand for the 7th year in a row. They are currently ranked number 3 in Entrepreneur’s Franchise 500.
But out of all the awards, it is being known as the “number 1 best franchise opportunity that can be started for less than $150,000” that makes The UPS Store stand out. Their affordable fees are probably the reason why franchisees sign up with them and why they have more than 4,800 locations and still show continuous growth. They can be found in the United States, Canada, and Puerto Rico. They are every small business’s go-to brand for the services offered.
To franchise a UPS Store, they encourage you to attend their weekly webinars or contact their franchise development team. This team can be reached by calling (877) 623-7253 from Mondays to Fridays. You can also fill up the form on their website. Once you have an invitation and have sent in your application, you’ll undergo an interview / approval process, sign their franchise disclosure document, submit financials, and go through an executive interview process.
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Once you go through the first half of the approval process, you’ll be asked to sign a Letter of Intent. They’ll also collect an initial application fee. The last part of the franchising process makes sure your financing is secured, your future UPS Store site is approved and the lease to the location is signed. You’ll then undergo a 5-week training program to help you run your UPS Store. You’ll also be asked to sign their franchise agreement.
UPS is currently headed by Carol B. Tomé. She’s recognized as the 12th CEO and the first female CEO of UPS in all their 113 years of operations. The company headquarters is located in San Diego, California.
How Much Does a UPS Store Make in Profit?
It is reported that in 2020, UPS’s profit amounted to $1.4 billion. Though the numbers are huge, this is considered a decline since the pandemic shifted UPS’s business to residential parcels than the usual commercial parcels. This took down their profits by over 70%.
More recently, however, UPS announced they will raise rates, especially for rural pickup and deliveries. These rate increases will help improve the companies profitability overall assuming they can be passed onto the consumer.
How much do UPS store owners make on average?
As for a UPS Store, there is no known data as to how much do they make on average. But according to reports, UPS Store franchisees get $1.00 for every drop-off package. UPS Store sales also depend on the location and the type of store (whether traditional, rural, or store-in-store locations) they own.
Advantages of a UPS Store Franchise
What are the benefits of franchising a UPS Store? Here are some you can expect when you sign up to become a franchisee:
The UPS brand is globally recognized. They’re right up there with the other big names in logistic companies like FedEx and DHL. They’re also recognized by The Business Journals’ American Brand Excellence Awards.
Doing business with a company that has a well-known brand dating back to 1907 can be a big advantage among other competitors because this means your services are excellent and trusted by many.
The UPS Store has a dedicated training program to help franchisees run their locations with ease. The training program comes in 4 phases:
- Phase 1 – Web Based Training: You will be receiving 40 to 50 hours of online training that helps you learn and understand the store’s operations and its foundations. This training will also prepare you for In-Store Experience I.
- Phase 2 – In-Store Experience I: You’ll spend 5 days of training or approximately 45 hours at the local UPS Store Certified Training Center learning about The UPS Store’s technical systems.
- Phase 3 – University Business Course and Print Services Training: You will be undergoing a 10-day interactive workshop that includes marketing, sales, human resources, operations, and financial management. A hands-on training on print services along with using their equipment and software is included. Production and how to manage and grow print services is also taught.
- Phase 4 – In-Store Experience II: The last phase includes 5 days of training on reviewing print services, store operations, and technical systems.
With this kind of training, you can feel confident when the time comes for you to run your UPS Store, you’ll be ready.
There is a never-ending growth when it comes to The UPS Store’s expansion. They’ve already reached more than 4,800 locations nationwide and yet they are still adding more branches. It was recently announced that a UPS Store is going to open in downtown Woodbridge, New Jersey. The company is also opening a store in Big Rapids, Michigan.
News of a brand’s expansion means that the company is doing well so you don’t have to be worried about The UPS Store heading to a decline.
Challenges of a UPS Store Franchise
Running a delivery franchise has its challenges. As for The UPS Store, here is what you can expect to face.
Lack of Global Presence
UPS is a brand known throughout the globe but The UPS Store is mostly found in the United States. They may have locations in Canada and Puerto Rico but it’s still very limited.
Branching to more countries will strengthen The UPS Store’s branding and can increase their revenue over time. According to earnings reports from the company the work to expand globally is already underway.
The UPS Store has “questionable profitability”. They reported that “about 60% of all US stores do not break-even”. And for franchise owners to make $35,000 a year as income, they’d have to make $365,000 in annual gross sales. You’ll need to investigate the location you plan to open to make sure there’s sufficient demand.
Ultimately, to make your UPS Store profitable, you’d need to have the right location and check the competition within the area. These factors vary from store to store so not all profit numbers will be the same.
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There have been mixed reviews from franchisees when it comes to running a UPS Store. One franchise owner in Lakewood Ranch, Florida says that they “can’t count on” The UPS Store franchise office in Florida to provide them any assistance. Another franchise owner claims that profit is less than they expected. Reviews like this are worth looking at before signing a franchise agreement. Another person says the company is constantly requiring updates / upgrades in equipment that must be paid for by the franchise owner. It’s good to get a sense of the broad perspective of concerns from existing operators.
Is a UPS Store Franchise Right For You?
The UPS Store is a good business to franchise if you the right location and a passion for processing shipments. The franchise fees also have affordable rates so it’s more attainable for you to own a location. But there have been questions whether or not the company can deliver profits for the typical franchise owner.
What is an alternative UPS Store franchise?
One logistics brand you can franchise is Pak Mail. They’ve been in business for 30 years in the mail business and freight shipping. They have 200 locations in 34 states in America and they also have locations in Japan and Mexico.
The initial investment to franchise Pak Mail is $167,800 to $247,850. This includes the startup costs, franchise fee, and more.
We hope this guide was able to help you in deciding whether or not The UPS Store is the right business for you.