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SAN DIEGO– Franchise owners of UPS Store and Mail Boxes Etc. now have two appeals in process in the California Court of Appeals. The latest was filed last month, again on behalf of members of the Platinum Shield Association (PSA), a non-profit group of past and present MBE franchisees which organized litigation in 2003 over UPS’s mandated conversion of the MBE brand to its own UPS Store. Howard Spanier, president of the association said, “We’re been fighting for seven years and I am confident that PSA will prevail against corporate greed and bring UPS to justice for destroying Mail Boxes Etc.”
Both appeals were filed by the law firm of Gordon & Rees LLP. The first appeal (pdf) deals with the decision by Superior Court trial judge William Highberger that MBE franchisees do not have a right in their franchise agreement to renew as Mail Boxes Etc. Spanier said, “Specifically, he ruled that franchisees can be forced to accept a new and vastly different franchise business model known as The UPS Store, just so long as it is offered equally to all franchisees.”
Spanier explained that the non-converting MBE franchisees had categorically rejected that reasoning in 2003 as undermining the contractual basis of business continuity which is at the heart of franchising. “The appeal will challenge that decision based on California case law. Further, the appeal will challenge the trial judge's rulings, to not allow testimony from MBE founder, Tony De Sio, as to what is meant by renewal in the franchise agreement,” Spanier said.
The second appeal addresses Judge Highberger’s reversal of his own decision last year in which he certified a class action on behalf of those MBE’s that did agree to the conversion to the UPS Store business model. At that time, UPS/MBE commented on the judge’s decision stating, "This ruling is a complete victory for MBE and UPS and concludes the class litigation brought by the franchisees who converted to the UPS Store," which was reported in the Atlanta Journal Constitution.
New York MBE store owner Joe Wightman said he responded to the news article, stating, “Why would anyone sign a franchise agreement that allows a franchisor the unilateral right to abandon the brand, change the business model, and tie it to the whims of a vendor thus destroying the equity built up in the first ten years of the franchise agreement? If this decision is allowed to stand it may lead to the end of franchising.”
The New York franchisee said when he did his due diligence prior to opening his store in 1993, he specifically rejected vendor specific systems as too limiting. “I also rejected a copy shop franchise as that was not of interest to me. Ironically, since United Parcel Service removed franchisee profitability from parcel shipping, they are now promoting copy shop services as way for desperate UPS Store franchisees to make a profit,” he said. Wightman said it’s a pathetic joke for the company to have the franchise named “The United Parcel Service Store” which promotes copies as the profit center. “I think the various Attorneys General need to look at this bait and switch,” he said.
Telephone calls to Gordon & Rees attorneys were not returned, as were those to Mark McDonald of Morrison & Forester, attorney for Mail Boxes Etc. Mail Boxes Etc. has not responded to email or phone calls to make comment on the latest appeal.