UPS is Wrong About Franchisees at Shareholder Meeting

UPS spokesman Norman Black's recitation of the events at this year's annual meeting is preposterous. However, based on our experience with their ongoing pattern of inaccuracy regarding the conversion of the Mail Boxes Etc. stores to the competing UPS Store brand his statements are what we have come to expect from UPS.

This is the third time that I have attended the UPS annual shareholders meeting. The first two years I received the annual report and proxy and I brought them with me. However, at the two previous meetings I completed the sign in form and I was never asked for anything beyond my driver's license and social security number. There was no barging in. I was treated with smiles and courtesy. I thought it was very strange that I did not receive any documents or SEC letters this year but I went anyway as I fully expected my admission to be handled in the same uneventful manner as the two previous years.

I knew things were different this year when I observed the very nervous demeanor of the woman at the sign in desk who needed to whisper my situation to the head security person with her hand covering her mouth. He then came back with a security detail and I immediately felt threatened with bodily harm. I then left.

Mr. Black is also wrong in asserting "that they then made it clear to them that next year they were going to follow the rules." He said they told them, "We want you to come and we want you to attend, but you have to show proof of stock ownership. That's all we ask. And then, lo and behold, they show up again this year not following the rules."

The truth of the matter is that there was absolutely no discussion of the admission process last year as there had been no problems with accepting my social security number as a way to show my status as a shareholder. Additionally, fellow PSA member Jim Humbert never made it to the meeting last year.

When I asked my question from the floor last year UPS CEO Mike Eskew called me by name and responded to the question I had asked the previous year! That question was, "What percent of the franchise system is profitable for the franchisee?" At that 2006 meeting neither he nor Scott Davis had an answer. I had thrown out the number that there were reports that 60% of the network was not profitable. At the 2007 meeting Mr. Eskew stated that number was inaccurate but never said what the accurate number was. When he came over to speak to me after the meeting ended he said that the problem with getting an answer was that franchisee self-reporting of profitability was not reliable. I responded, "Bingo." He said, "What?" I said "Bingo. If franchisee self reporting of profitability is not reliable now then it was not reliable in 2003 when UPS told franchisees that "Based on self reporting of profitability by MBE franchisees in the UPS Gold Shield test stores The UPS Store business model would be more profitable than MBE."

It should also be pointed out that franchisee litigation against UPS is over five years old. Furthermore, if as UPS claims, our cases are without merit, I suggest that UPS management release the details of the Howard Siegal NOHO arbitration to their Board of Directors and their shareholders. Someone might suggest that they avoid the appearance of stonewalling.

As to what is newsworthy the relevant question is why this company can't be forthright with its franchisees, its shareholders and the media. They have described their UPS Store locations as being good for "reverse logistics." That is UPS code for forcing their franchises, who are not unionized, into being staffed drop boxes for UPS parcels. They believe that it is perfectly acceptable to compete with their franchisees when it suits their purpose. They seem to feel that bare knuckled bully tactics against mom and pop franchisees who have their life savings on the line are totally appropriate. We will not go away. We will bring this cynical, uncaring, indifferent corporation to justice.