Not everything Brown is Good UPS Attempts to Convert Mail Boxes, Etc. Lawsuit Brought by MBE Franchisees

Mail Boxes, Etc. franchisees have just announced their plan to bring a class action suit against United Parcel Service (UPS). UPS, having acquired Mail Boxes, Etc. (MBE) in 2001, is now planning to dissolve the MBE identity, at the expense of MBE franchisees.

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Not everything Brown is Good UPS Attempts to Convert Mail Boxes, Etc.
Lawsuit Brought by MBE Franchisees

DATELINE: SAN DIEGO, CA; BOSTON, MA AND ATLANTA, GA; FEBRUARY 18, 2003...Mail Boxes, Etc. franchisees have just announced their plan to bring a class action suit against United Parcel Service (UPS). UPS, having acquired Mail Boxes, Etc. (MBE) in 2001, is now planning to dissolve the MBE identity, at the expense of MBE franchisees.

The MBE class action lawsuit, brought by franchisees in order to protect their livelihood, was planned shortly after UPS announced their plan to convert 3,200 MBE franchises by March 21, 2003. The suit will be brought in Federal Court.

High Risk, Low Return
Among the list of concerns held by MBE franchisees are falling profits, loss of branding as well as loss of franchise territorial protection.

MBE typically caters to individuals and small business customers who do not produce enough volume to obtain a regular UPS account, but who need the competitive pricing and personal service.

Currently, MBE uses UPS, Federal Express and the United States Postal Service to ship packages. Under the UPS conversion plan, all packages would be shipped UPS at the mandated lower UPS Store" brand. MBE argues that the lower price does not ensure that volume will increase. The number of packages shipped within a given day will not offset the loss of MBEs FedEx and USPS business.

Regulating Rates
Another point of contention is the UPS price that Staples and Office Depot offer to their customers. The rate that large retailers charge their customers for UPS service is referred to as the demand rate". According to a UPS statement (Gold Shield National Rollout FAQ) issued to MBE franchisees, These retailers have current agreements in place with UPS. UPS cannot mandate what price these retailers charge to their customers.

While we are encouraging these retailers to move to the UPS Retail Rate, Staples and Office Depot may choose to continue to charge customers on the demand rate." Essentially, MBE would be mandated to sell the same service at a higher price without the benefit of being able to offer (customers) FedEx or USPS as an alternative.

This conversion does nothing to help MBE franchisees and everything to increase UPS profits at the expense of MBE. Under UPS conversion plan, MBE franchisees will be forced to sign an amendment to their franchise agreement. The conditions of the conversion plan are a material breach of their franchise agreement," said Andrew Palmer, PalmerSohmer, LLP, legal counsel to MBE franchisees.

Alec Sohmer adds, The franchisees that do become The UPS Store will most likely be out of business within 12-18 months after conversion. Bankruptcy may be their only option unless the franchisees are allowed to continue with the working MBE model." Both Palmer and Sohmer caution all franchisees against signing the proposed amendment to the franchise agreement absent suitable legal [counsel] or [representation].

Andrew Palmer has been practicing franchise law since 1987 and has consulted more than 40 successful franchises and over 400 other companies. Palmer was founder and managing partner of The Law Offices of Andrew Palmer, which has grown into PalmerSohmer, LLP led by Palmer and partner Alec Sohmer. He is a graduate of Babson College and Suffolk University Law School.

Alec Sohmer founded his law practice representing a wide range of clients in a variety of litigation and contractual matters specializing primarily in bankruptcy, business and civil litigation, Social Security Disability and Advanced Estate Planning. Together with Andrew Palmer, he represents numerous businesses in both start-up and liquidation phases, directly responsible for all contract negotiations and asset purchase agreements. PalmerSohmer, LLP has restructured several franchise and business ownerships stopping IRS and creditor shut downs. Alec Sohmer is a graduate of Clark University and Villanova University School of Law.

To learn more about Mail Boxes, Etc. (MBE) Class Action Suit against United Parcel Service (UPS), visit www.palmersohmer.com. For all other inquiries, contact Andrew Palmer or Alec Sohmer of PalmerSohmer, LLP by email at Franchiseerights@PalmerSohmer.com or by phone, Toll Free at 866-230-2695.

About MBE
Mail Boxes Etc. (MBE), headquartered in San Diego, CA, is the world's largest franchisor of retail shipping, postal and business services. Since 1980, MBE has grown to more than 4,000 independently owned locations around the world, with 3,200 locations within the U.S. MBE is a UPS company. MBE are independently owned and operated by Mail Boxes, Etc. franchisees (in the U.S.)

MBE is a global leader in its industry, providing convenient, value-added business services to individuals and the small business market. Entrepreneur magazine has ranked MBE #1 in the postal and business services category for 13 consecutive years. For more information, visit www.mbe.com.

About UPS
United Parcel Service, Inc. was founded in 1907 as a messenger company. UPS has since grown into a $30 billion corporation. UPS is a global company and the largest express carrier and package delivery company in the world, and the largest provider of specialized transportation, logistics, capital, and
e-commerce services. UPS is headquartered in Atlanta, GA. For more information, visit www.ups.com.