UPS Store for sale - Give us $15K and we'll show you the numbers

[LeeH]

I was looking through a web site that lists businesses for sale when I saw that the UPS store down the street from me is on the market. Hmmmm. The store's been there for 10 years. The owner is there, but seemingly only part time - not round the clock like some of these places.

I decide to request more info just to see what's what. I got a call from a sales guy at their corporate office who tells me that they don't work like other businesses. Because they are so good at what they do, I have to apply, interview, be approved, pay them $15K, and at that point I will be able to start "shopping" for a store. The one close to me may or may not be available. If it is available, then I can see the stores financials AFTER I've paid the money. If I don't buy a store they will give me half of my money back and keep the balance for their time and trouble.

He actually seemed a little shocked and offended when I politely declined. Staying polite was a challenge on my part. Do people really sign up for this? He asked if I had been in the military. Since I have, I qualify for a $3600 "application fee" instead of $15K. "You're only risking $1800!" I was told. Ummm. No I'm not.

[Rick Lee]

Yup, that's how they roll. I discussed this with the owner of the UPS store by my old house at I-17 and Carefree Hwy. He said it was $7k just to talk about opening that place. He did it because the next closest one in Anthem had recently been sold to a real jerk who was driving customers away. So the guy opened the one by my place, which is actually a better location. Then the one in Anthem changed hands again and this time someone with some business smarts and customer service skills bought it, pulling the Anthem folks back from the guy by my house. I don't know how he's doing now, but it seems it's always him or family working there.

[Rick Lee]

I know it's a bit of a drive for you, but I'm sure he'd talk to you about it, since you'd not be competing for his customers at all and he's been through the whole thing. I think he's former military too. I've been to the one on Ray Rd. closer to you and the lady there seemed very helpful and willing to discuss. But then you'd be competing with her.

[cashflyer]

I have a friend who owned a Mail Boxes Etc store for years. Then UPS bought out MBE.
My friend was out of business less than a year later, and when I asked why he said that UPS management / interference was the death of his store. He didn't elaborate, and I didn't press - but if a UPS store is in your sights, I suggest a lot of due diligence on your part.

[krystar]

$15k-$3600 = $1800?
or $3600 * magic = $1800?

he musta been one of those high school dropouts that the Army's been recruiting.

[Eric Coffey]

Originally Posted by LeeH

Do people really sign up for this/

Uh, not in my experience! Especially not the "forfeiture of your deposit" part. WTF? I can see losing your deposit if you executed a contract, were in escrow, then backed out (outside of your DD period). Must be a UPS/franchise-specific thing.

I've gotten financials from private/corporate/hedge fund/REIT sellers (of commercial RE) with little more than a polite request. At most, sellers will usually request "soft" proof-of-funds. Even those wanting an EMD prior to releasing financials will not make any portion non-refundable, IME.

[Eric Coffey]

Originally Posted by krystar

$15k-$3600 = $1800?
or $3600 * magic = $1800?

he musta been one of those high school dropouts that the Army's been recruiting.

No, I think he is saying that due to prior military, the total "earnest deposit" would be $3600, instead of $15k. So with the $15k, he would be losing $7500 (half) if he didn't perform. At $3600, it would only be $1800 at risk of being forfeited.

[LeeH]

Originally Posted by Eric Coffey

No, I think he is saying that due to prior military, the total "earnest deposit" would be $3600, instead of $15k. So with the $15k, he would be losing $7500 (half) if he didn't perform. At $3600, it would only be $1800 at risk of being forfeited.

We have a winner!

He told me that since UPS Stores are #1 in their category (mail box stores?) that it gave them the clout to do things their own way.

I told him that since I had a business degree, prior successful business ownership experience, a >800 credit score, and a fair amount of free capital, that I had my own clout and wouldn't be doing business "their way."

[rnln]

in his situation, military, he's paying $1800 to see the document. A normal person has to pay $7,500 before seeing it. Wow.

[M.D. Holloway]

UPS

Sales* 51.39 Bil
Income* 4.06 Bil
Sales Growth* +9.40%
Income Growth* +62.10%
Net Profit Margin 7.90%
Debt/Equity Ratio 0.17
Beta 0.82
EPS 4.05
Forward P/E 12.61
P/E 15.47
Market Cap 61.60 Bil
Shares Outstanding 980.79 Mil


I would give that stock a buy sign...

[legion]

That model won't last. Seems like they can just throw you into a ****ty location and there's nothing you can do about it. This type of arrangement stinks of corruption. I'd be willing to bet that people with the right connections get to see the numbers before paying a ridiculous fee.

Funny thing, I usually drive clear across town to the UPS-owned facility to do my shipping and avoid the UPS Store along the way. Why? Because our local UPS store refuses to ship the kinds of things I usually ship UPS (that have ORM-D on the side of the box).

I'd walk away with a clear conscience. They will call you if they are desperate. I could see using this kind of tactic to weed out non-serious buyers when the economy was taking off, but they need to update their rules for current economic conditions.

***

A few years ago my MIL used to work out at the local (to her) Curves gym. She was approached by the owner asking her if she wanted to buy it. A ballpark figure was thrown out and my MIL lined up some friends as investors. At their first formal meeting to go over the financials, my MIL was presented with one side of a piece of paper that showed the gym was "profitable". It omitted many expenses, like electricity and water, but did show the franchise fee and payroll. It also listed membership fees as a lump sum, but did not break down how many members there were or what fees they were paying (some presumably got discounts). It did not show any monthly or yearly history, it was just a current statement, as of that day, with omissions.

Now my MIL never went to college, but she's not dumb. She told the owner that she was insulted that she felt this was adequate documentation with which to do a deal. She told her that she wanted to see a statement with ALL expenses, a breakdown of memberships, and a history of all of these things going back at least two years. She never heard from the owner again.

[JavaBrewer]

I had a similar experience when I was looking into buying a liquor/deli store in Lakeside. This was in the early 90's. The financial "documentation" consisted of the last months total sales number (no breakouts) and expenses related to lease and utilities. Apparently they got the product and employee's for free cause my request for all monthly expenses related to the sales number were met with confused looks. LOL.

[LeeH]

Originally Posted by JavaBrewer

I had a similar experience when I was looking into buying a liquor/deli store in Lakeside. This was in the early 90's. The financial "documentation" consisted of the last months total sales number (no breakouts) and expenses related to lease and utilities. Apparently they got the product and employee's for free cause my request for all monthly expenses related to the sales number were met with confused looks. LOL.

I looked at quite a few businesses before buying the one I did in 1995. It seemed that each one had something to hide. Typically it was a net profit reported without accounting for the fact that half of the owner's family worked in the business for free, or a staff of 10, all of which were being paid as independent contractors.