Owners Say Franchisers Pass on More Costs

Some franchisees say they are being squeezed by franchisers to pay for a variety of expenses for the first time—making difficult economic times tougher.

McDonald's franchisees have to pay for a coffee bar upgrade. Corporate used to pay for such architectural and engineering work, but now will only pay 40%. Franchisees of Hollywood Tans are complaining about new service charges from their franchisers. KFC franchisee training has been cut and now franchisees must pay for training manuals.

And The UPS Store franchisees are upset over new costs:

"Soaring fuel prices are pinching UPS Store franchisees. Last month, parent United Parcel Service Inc. changed its policy on refunding shipping costs to customers under its money-back guarantee for packages not delivered on time. Now, UPS won't refund fuel surcharges added to those bills.

"For an overnight envelope, those surcharges could easily be several dollars. Franchisees say customers expect to be reimbursed the full amount, and may become upset and take their business elsewhere if they don't get it. As a result, many franchisees are digging into their own pockets to make up the difference.

"Confirming the refund reduction, UPS spokeswoman Karen Cole says the shipper's fuel costs are up 61% so far this year. "It's a huge expense," she says, "and we all have to adjust, unfortunately."