Discount Retail Store Services Says Pending Case Highlights a Key Pitfall for Franchisees

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UPS faced allegations of making false statements and concealing facts after purchase of Mail Box Etc, United States Court of Appeals for the Ninth Circuit, Case No. 10-55433. An independent non-franchise mailbox business developer discusses ramifications for franchises in the mailbox industry, DRSS reports.

The United Parcel Service (UPS) is one of the largest private postal and shipping franchises in the world. In 2001 they purchased Mail Box Etc. (MBE) a smaller franchise mailbox store which did not specialize in shipping, but instead used various shipment companies as needed, including UPS, FedEx, USPS, DLS and others. Details of the lawsuit thus far have been covered in The Business Journals and The Atlanta Journal-Constitution. The franchise and business site, Blue MauMau, contains additional information on the case which has not been independently confirmed outside of that source. United States Court of Appeals for the Ninth Circuit, Case No. 10-55433

A central complaint allegedly is described as marketing encouraging former MBE franchisees to sign on to the UPS Gold Shield agreement which eliminated the use of shippers other than UPS. Other factors mentioned include allegations of a lack of franchise support and UPS Store competing with UPS Store owners directly through a direct-ship program which encourages businesses to ship from their location without the need to visit a UPS Store according to and United States Court of Appeals for the Ninth Circuit, Case No. 10-55433

According to The Mail Box Stores, which is North America’s fastest growing developer of mail box stores, this is one of the inherent risks of a franchise. “The franchise has more control than the owner in many instances... In this instance the franchise actually has a product that competes directly with their franchises, their self-shipping program... We think that it’s essential a mailbox store is able to adapt, set prices, and most important, use different shipping companies... We believe the most successful model for a mailbox store is a non-franchise which uses a business development company for the setup and ongoing support. With this model owners are free to use whichever shipping company they like and run their business as they like without the rules of a franchise. At the same time they can receive franchise-like ongoing support when they need it or want it.”

Discount Retail Store Services is a business development company helping entrepreneurs start a business by covering all of the core tasks including site location, lease negotiation, financing, build-out, business training, new store oversight, and ongoing wholesale support and marketing support. Opening nearly 3000 independently owned stores to-date, they specialize in six business models including dollar stores, clothing stores, teen stores, party stores, mail box stores, and fitness centers. Find out about upcoming news on Facebook.

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Bob Kelliher
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