AAFD Gives UPS Store Franchise Agreement Poor Grade

Franchisor’s Interests Dominate over Franchisees

SAN DIEGO (Blue MauMau) - According to Robert Purvin, chairman of the American Association of Franchisees and Dealers, the UPS Franchise Agreement is sadly among the poorest scoring agreements when compared to the AAFD Standards. And he reports, “. . .across the entire agreement the franchisor’s interests dominate over the franchisees. The goal of the standards is to promote balanced franchise agreements that respect the interests of both the franchisor and the franchisees.” The Brown Board Owners Association, an independent franchisee association which represents UPS Store and Mail Boxes Etc. owners, commissioned the AAFD to do a comparison of UPS’s 2004 franchise agreement with the AAFD’s Fair Franchising Standards, which are intended to respect the needs of both franchisors and franchisees.

AAFD offers accreditation in the form of their Fair Franchising Seal to companies that recognize independent franchise associations that substantially comply with its standards. “It is the AAFD’s purpose to place Fair Franchising Seal recipients on a pedestal in the franchising marketplace,” Purvin explains.

Although he found certain aspects of the agreement admirable, he said there were significant deficiencies. The agreement’s overall score of about 59% conformity to AAFD Standards is among the lowest grades recorded. One factor listed was that the company does not show recognition of franchisee organizations to discuss and negotiate system standards that would dramatically improve the agreement. Others include poor market protection for franchisees and termination provisions that seem unduly harsh. But given the importance of the Internet to the business, and the unlimited commitment to upgrades and enhancement, Purvin notes the lack of collaboration regarding Internet technology is a significant concern.

UPS/MBE Turns Its Back to Associations

Mike Rodriguez, Ph.D, chairman and CEO of the BBOA, said his group wanted the AAFD Report for franchisees and prospects looking to purchase a franchise. Currently, BBOA represent 300 members, although it was twice that number in 2006, prior to a break-away group forming under The Brown Shield Association (BSA). Rodriguez said that out of the four independent associations under the UPS Stores and Mail Boxes Etc. systems, the BBOA was the only one seeking resolution to problems outside of litigation. “We prefer to sit down with company official and discuss our differences.” But when asked how that was working for them, he said, “It’s not.” The franchisor refuses to recognize BBOA, just as it does the Brown Shield Association, the Independent Association of Mailbox Center Owners and the Platinum Shield Association. UPS and Mail Boxes Etc. continue to state that franchisees should express their concerns through an existing owner-elected Franchisee Advisory Council sanctioned by the franchisor.