Franchisees Protest at UPS Shareholders Meeting
UPS Chairman Answers Franchisee Questions
Wilmington, Del. (Blue MauMau) - Fifty franchisees gathered from around the country to carry signs, banners and a message to the UPS shareholders' meeting in Delaware's Hotel DuPont last Thursday, May 10. The franchisees were members of various independent franchisee associations of UPS Store owners - Platinum Shield Association (PSA), Brown Shield Association, Brown Board Owners Association, and IAMCO.
Their message? The UPS Store and associated Mail Boxes Etc. owners want change.
When asked why demonstrate, Mr. Howard Spanier, a PSA board member, explained, "We protest to send a message that if UPS does not resolve PSA and other franchisee groups’ complaints and litigation, they risk doing irreparable damage to the UPS brand image. We protest the deceptive way the company conducted and reported profitability results to Mail Boxes Etc. franchisees in order to induce these franchisees to convert to the UPS Store brand."
During the question and answer session for shareholders, Mr. Joe Wightman, a New York franchisee and UPS shareholder, had an opportunity to ask questions. He pressed United Parcel Service's CEO Mike Eskew on why UPS stores with their high failure rates were ignored in the annual report and the presentation to shareholders.
According to Mr. Wightman's account, Eskew replied that he "had checked the source for 'my report' that 60% of the UPS network is unprofitable and stated that my information was not accurate. However, he did not say what his ‘source’ was." "He did not respond as to why the UPS franchise network is not mentioned in UPS reports or presentations."
Mr. Glenn Sturgis, PSA board member and UPS shareholder, then elucidated, "the 60% figure comes from UPS’ Franchise Advisory Council in its written report, which includes UPS/MBE management."
UPS' CEO mentioned that some franchisees can be blamed for the predicament they find themselves in.
Mr. Wightman replied, "For the record, I have been in business for 14 years and was Franchisee of the Year in 2002."
"Mr. Eskew did try to sow the seed of doubt in the minds of the audience by implying that not all franchisees are good at what they do, and thus could be the blame for their poor performance," he observed.
PSA expects to have its first jury trial in California Superior Court, Los Angeles, next year. Another UPS group of franchisees, the Brown Shield Association, recently filed a class action complaint in a California federal court. And all UPS franchisees are potential plaintiffs in a recently filed federal class action suit on the issue of UPS charging franchisees more for packages through corporate’s laser audit system, in which package dimensions and weight are checked a second time after they leave franchisee stores.
The meeting in Wilmington
The meeting in Wilmington was great. For pictures go to talkbrown.com
Deviation from norm
True, as with any franchise system. However, the number of discontented franchisees is far above what one would expect, particularly given that UPS generally has a decent corporate reputation.
Whether the problem is perceptual is another matter; I would suggest that there are significant problems with the underlying business model and that this is not simply a matter of franchisee perception.
UPS Store Protestors Seen On Times Square
BREAKING: A press release of the combined effort of various franchisees (IAMCO, BSA AND PSA) protesting to UPS's shareholders made it on the big screen at Times Square, NYC. The screen went up four times on Monday. The photo below it is the same one as in our news story (above).
Wilmington Photos
Can't get in. You have to be a member and login in order to get into the talkbrown.com site.
The UPS Store University Diviation from the truth!
Knowing that the President of UPS would have to have some response to the very vocal complainants standing before the Board, he had to say something to defend the UPS position in this matter.
What else could he say and who else could he or would he blamed, other than the franchisees, for the failure of The UPS Stores and the significant and worrying unprofitability of so many of the stores that are still standing in and out of court.
The UPS Store University was introduced in 2003
It would be interesting to learn how many of the graduates of The UPS Store University are still standing and whether or not they are standing in profits or lots of brown stuff-f-f-f!
Is not partially the duty of
Is not partially the duty of any franchisor to also take a true look at
an applicant's history? See if the applicant appears to have a possiblity
of being a successful independent business person? The current go-no go
on being approved as a franchisee is, "MONEY". If they have the money, they
get a franchise.
Don't Miss the Business Week Franchise Court uner Web Links
UPS Store is one of the franchises in court in this Business Week Web Link.
From Mr. Blue Mau Mau's coverage of the Board Meeting, it appears that UPS is just ignoring the problems of their franchised units in which they have no capital investment.
They do have an investment in their reputation and, hopefully, they will do something to make their franchised units profitable for those little business people who stand to lose everything if their UPS store fails.
It is disheartening to read that the President of UPS wants to blame the failure and the unprofitability on the individual franchisees. Is this because UPS intends to try to force these failing and already failed franchisees to approach the courts as individuals and not as a class?
The UPS Store University is Accredited by the Univ. of Phoenix
The UPS Store University is Accredited by the University of Phoenix and the International Franchise Association (IFA).
This must be the perfect "con" of the century ----buy a franchisor who ia about to go bankrupt? -----set them up to increase your gross shipping by eliminating competition from other carriers ---- use the capital and labor of middle class people who will pay to go to your University and who will finance and build these stores to bear your brand name.----Replace those that have failed or are failing through the process of "churning" and be named the most competetive retailer by Kanaby Research. And, then, completely ignore The UPS Store problems at UPS Board meetings because The UPS Store is just a vehicle to produce profits for UPS who could care less about the profits of the franchisees who wear their brand name.
ESKEW BROWN BULLDINKIE
Why doesnt ups let their bean counter do the numbers with the industrial engineer that calculated the 2004 pace numbers which were supplied by mbe. Eskew is correct in his answer that 60% of the network is not failing. In 2007 it is closer to 75% failure rate since cost of doing business is up 20% from the 2004 caculations. Eskew brown diarrea answers were all he could say since he knows only to well what ups under his leadership has done to the network. Sounds like it was planned doesnt it or was it well it works for us (ups).
Sometimes franchisors have poor qualification procedures
Avoid those franchises.
Brown turns Brown to Green for UPS
Franchisees go to The UPS University and pay to go but the President of MBE and the President of UPS are probably graduates of The Ayn Rand Institute and believe in her philosophy that is the "concept of man as a heroic being with his own happiness as the moral purpose of his life with productive achievement as his noblest activity, and reason as his only absolute."
The smarter defenders of those borderline predators who will steal from the naive for their companies and their stock holders always use this philosphy in defense of brutal and exploitive capitalistic practices that are often legalized under the law.
They reason and rationalize that "exploitation" is necessary to feed capitalism and that someone has to feed the big fish and they know the moral purpose of some people's life is happiness that is interpreted by them as "money" and all that it can buy.
Greed is good and if UPS bought MBE to exploit the The UPS Store franchisees to make money and increase the visibility of The UPS Brand and their gross sales, they indeed have turned Brown to Green for UPS but have abandoned The UPS Store franchisees to unprofitable brown stuff in which many The UPS Store franchises have already drowned.
Accreditation
Accreditation is a bit complicated, and there are several bodies which are recognized sources of accreditation. Suffice it to say that a University cannot grant accreditation to another university, nor is the IFA a body recognized by the US Department of Education.
As to the University of Phoenix, although it is accredited, you would be ill-advised to spend money to get a degree from that institution. Rightly or wrongly, that institution is regarded as a "diploma mill" and I know of people in hiring positions who will automatically discard a resume which has Univ. of Phoenix listed. That may not be fair, but that's the way it is.
Even if an institution is "accredited", this does not mean that it is accredited to grant any degree, nor that every course offered at that institution will be accepted as transfer credits to another institution. It is true that the IFA spoke of getting Congress to let servicemembers use education monies to go to franchisor "schools", but to date I believe that Congress has not fallen for this hare-brained scheme.
Poor Qualifications to be a Franchisee! Sure!
Sure, blame it on the franchisee who invests his/her time and labor to buy a job and the truth that it is their "piggy banks" that qualify them to purchase the "proven business model"! Apparently, the UPS Store University that is a prerequisite to purchasing The UPS Store Franchise hasn't earned its accreditation from The University of Phoenix and The IFA. The President of UPS blames the lack of profitability and the trouble of the stores on the franchisees.
Franchisors are experts at designing franchise agreements that indemnify them for the franchisee's failure for almost any reason.
And, of course, in getting the subsidy from government in the form of UFOC's and a FTC Rule that permits them to sell you a franchise without revealing the true failure rate of the plan they are selling or any earnings figures concerning the plan, they reduce their investment risk and their risk of being sued.
Let's Hope Not--Accreditation was just PR and Con for UPS
Just PR for UPS and the University of Phoenix and part of the UPS-MBE "con" job to sell their "pig-in-a-poke" franchises to the public. That famous brand was sure used as a shill to sell a lousy. unproven, defective, and flawed business plan to the American Public ---to the benefit of United Parcel Services.
Now! UPS wants to blame it all on the individual franchisees, and they will spend millions to defeat class action status in the courts and to keep their franchisees divided and impotent by making them address the courts as individuals in ADR. ADR, of course, favors the franchisor and is mandated under contract.
Now, there is even another lawsuit by a big and famous class -action law firm that may diverts attention away from UPS's really substantial misdeeds in the exploitation of and the selling of a "pig in a poke" to the American public to obtain a financial advantage for UPS.
Sometimes, it seems as if the rules of our "free markets" and the "free to choose" golden rule of capitalism and democracy are realized in our courts, as well, because the letter of the law in contract law protects the interests of those who have the greater influence on the contract. I read every day and am trying to learn but, of course, I approach all of this with no education in the law and a great respect for Our Constitution and democratic principles.
Read the post correctly...Tomfool
It's the franchisor that has poor qualification procedures not the prospective franchisee. Your vitriol has consumed you completely.
Tomfool guest you failed...
Stop blaming everyone else and take some responsibilty. UPS/MBE has successful franchisees you simply were not one of them.
Judicial bias? No.
No, No, for the umteenth time, No.
The law protects the expectations of the parties as set forth in the contract. If you agree to a bad deal, the court will not excuse you from the consequences of your bad decision.
By the way, in some cases courts will protect the interests of the party with the lesser influence on the contract. There is case law involving adhesory contracts (esp. out of California), the doctrine of "contra proferentum," and of course much of consumer law. In all those cases one finds instances of the law protecting the party with less influence.
Fifth Rule: Scrivener
FranSynergy Franchise Service Package Subscribers, receive a book titled "The Law and Your Franchise" written exclusively for FranSynergy Clients by Kevin Johnson, J.D. Chapter 3: The Franchise Agreement and Contract Law Section 3 How a Contract is Interpreted provides 7 Rules, Rule 5 may provide further explanation to Paul's point.
Fifth Rule. The meaning of vague or unclear language in a contract, regardless of the reason for the vague or unclear meaning, will be held against the party that drafted the contract. The person who drafts a contract is referred to as a scrivener (whether they wrote it or had it written by their attorney). If language in the contract is vague, courts presume it is the fault of the scrivener. After all, it is the scrivener who decides what language to include or to exclude. Therefore, vague language or meanings are the fault of the scrivener. When the parties to the contract offer different interpretations for the meaning of vague language, the court will adopt the interpretation offered by the party who is not the scrivener (provided, however, that this party’s offered interpretation is reasonable).
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
Good to Know -----No Judicial Bias
Thanks, Paul!
It is always difficult for lay people to understand that the Justice System and our justices protect the rule of law as applied to the parties and to which the parties agreed to under contract law ---if they believe there was misrepresentation of the contract.
Because I am always looking at the law subjectively, I get into trouble. But, I do believe, personally, from my own research that public policy has been developed to favor franchisors for all of the reasons that have been discussed on Blue Mau Mau.
I understand, however, that it is not the duty or the mission of the courts to make public policy and to only interpret the laws made by the Congress and the Legislatures to insure that they are true to The Constitution and that contracts are enforced fairly and equitably under the terms of the contract signed by both parties.
Thanks, Paul Steinberg, you have given me a new term to research and new understanding of the law of franchising.
Thanks for the Fifth Rule, FranSynergy!
Thanks, Dale, for this further education. Knowledge is power and it is certainly true that all prospective franchisees need to empower themselves with knowledge by hiring a knowledgeable advisor before and after they buy a franchised business plan of any kind.
Your posts have been especially mellow and pleasing this AM and I know you are having a Good Day!
Y-TYVM & a good day to you!
You are correct: Knowledge is Power!
Thank you for the kind words. Yes, it is a 'Blessed Day' here in N.W. Alabama. 72 degrees, Sunshine & Blue Skies! I hope you have a Beautiful & Blessed Day --wherever you may be. Nothing but Blue Skies, and Green Lights.
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
Thanks
Thank you Dale and Paul! It is a pleasure to swim with you in Mr Blue MauMau's school today.
Public Policy and the Courts
Does The Supreme Court, in effect, affirm public policy when their decisions become law?
That is, when The Supreme Court hears cases and then either affirms or strikes down the decision of the Federal Appeals Courts in the case at hand, hasn't The Supreme Court then declared and affirmed the matter of public policy in the law in the final sense.
I know, in my reading, that The Ninth Circuit Court of Appeals is often attacked and even reversed sometimes for their decisions and that California is the leader in "consumer protection laws" for their citizens and they appear to consider franchise prospects as consumers to be protected under many of their laws.
California is a very diversified and democratic state that tries to solve its problems in a constitutional manner with their Republican Governor who is married to a admirable femenist Icon from a great American family who is a good Mother, a good Catholic, and a good Democrat. California often leads the way in "thought" and in "innovation" and in the law, it seems. ( Maybe this partnership
of Arnold and Maria is a good working example of how an elected President of one Party and the Runner Up in the opposing party might serve the people by serving as President and Vice President of the people instead of merely serving their respective political parties and their agendas.)
Illinois also seems to be a state with an Attorney General who wants to protect the cosumer through new rules that will more closely monitor franchising opportunities. But, even the Attorney Generals are bound by the public policy that promulgates the rules and the laws as administered by the Executive Branch, and Attorney Generals can't change the laws all by themselves.
As Richard Solomon says, the rules of the game of franchising are rough and tough (and dirty, perhaps) but they are the rules under which the game is played.
We unfortunates who didn't read the rule book and who lost the game need to speak out for those "suckers" who will become "suckers in the hole" in the future and we thank Mr. Blue Mau Mau for allowing us to post on his site and to listen and learn.
MY FIRST LESSON -----NO PRIVATE RIGHT OF ACTION
One of the first lessons I learned on this site, given by Michael Webster, I believe, is that government regulation, the FTC Rule, and the UFOC, has no teeth because there is no private right of action.
I really didn't understand fully what the implications were until I moved ahead in my lessons and reading.
This "lack of teeth" is again, in my opinion, part of the public policy concerning franchising. Franchisors who break the rules can get back in the game more easily and cheaply if their hands are only slapped and they cure their violations of the government rules.
If there is a privste right of action, these violations could cost them real money when their franchisees took them to court.
Understand the reason for No Private Right of Action
If this is public policy, it is because the Government doesn't want to destroy these franchise networks if they are contributing to the economy through the production of jobs and pay checks and revenue for government.
They want them to follow the rules and to stop their bad practices and to continue to contribute to the economy.
A private right of action could destroy some networks and put them out of business and this would inhibit franchising and franchisors.
I do feel, however, since there is no private right of action for those who have been injured that the government owes prospective franchisees a truly effective disclosure of the risks involved in purchasing the franchised business plan.
I think you misunderstood Michael Webster
While there may be no private cause of action under 15 USC 41 et seq, you can individually, or even collectively, sue the franchisor for violations under both state and federal law, just not under the above stated laws. However, your case may become problematic if your cause of action is predicated in whole or in part by something controlled by 15 USC 41 et seq.
It is true that the FTC lacks any substantive teeth, although they do like to randomly flex what muscles they do have, seemingly in bulk when they stockpile enough complaints.
I'm confused, Bubba!
I'm confused! Run that by me again!
Clarification
There is no explicit private cause of action under the FTC Act or the FTC Rule, although you may have state laws that permit a cause of action (largely dependent upon the states, i.e. California is quite liberal with its consumer protection laws). This is only to say that under the FTC Act or FTC Rule, you may not necessarily have a private cause of action should the franchisor not comply with said Act or Rule and the FTC is not exactly known for being pro-active of about compliance issues, although it has been rattling the saber recently.