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(FranchisePick.Com) The cautionary franchise tale of the Mail Boxes Etc. franchise and The UPS Store franchise continues. The UPS Store franchisee group Platinum Shield Association’s lawsuit against parent company UPS has been certified as a class-action lawsuit by a California court. A separate The UPS Store franchisee association, the Brown Shield Association, was filed against UPS last year.
The suit is being brought by former Mail Boxes Etc. franchisees who claim that UPS misled them into believing that the UPS Store model would be more profitable.
UPS bought Mail Boxes Etc. in 2001, and allegedly convinced the majority of Mail Boxes store owners to change their store names from Mail Boxes Etc. to The UPS Store. All new U.S. franchisees after 2003 were opened under The UPS Store brand name.
In the lawsuit, the former MBE franchise owners allege lawsuit claims that UPS withheld key information and documents (including results from tests that UPS conducted regarding the new UPS Store business model), from the franchisees in order to persuade them to convert the UPS Store concept. The suit alleges that those documents were withheld to prevent MBE franchise owners from to making an informed decision about the conversion of their stores.
The UPS Store franchise owners also allege that UPS, which sets the shipping rates for its stores, unfairly competes with its own franchise stores for business by offering cheaper rates to its direct-pickup customers.
The suit seeks rescission of the conversion to the UPS store model and unspecified monetary damages, the release said.
Source: Business First of Louisville
More:
August 23rd, 2007 Franchise Owners Say Opening a UPS Store Franchise is a “Bad Financial Decision”
June 13th, 2007 UPS Store Franchise Dream Ends in a Florida Trailer Park
June 12th, 2007 The UPS Store PLUS The eBay Drop-Off Store Equals…?
May 14th, 2007 Is UPS Cheating its Customers, Franchisees… and YOU?
March 21st, 2007 Owners call the UPS Store Franchise “Indentured Servitude,” and “A Nightmare”
February 2nd, 2007 Is The UPS Store a Good Franchise Opportunity?
I hired the BEST CPA in the Land who investigated an existing supposedly successful UPS Store with sales of over $300,000.00. We gave careful Due Dilligence and learned there was money being pumped into the business from the owner’s personal bank account to keep the business afloat. There is NO Money to be made in owning a UPS Store. I Promise you!! Watch out for UPS Store Franchise Owners as they will try to hide in their Quick Books showing they are succesful. Don’t Trust it……… They will tell you there is money to be made in printing and other services and that is all a BIG, HUGE, FAT PIPE DREAM!!! I have been an Executive of Retail Businesses for over 25 years and this is ALARMING!!!! There are large companies out there in every city that do printing and other services. They have sales people that call on businesses too…. So, get rid of the PIPE DREAM….. UPS charges FAT Franchise Fees and other Fees, and Fees, and Fees, and Fees. YOU CAN’T MAKE ANY MONEY WITH A UPS STORE!! That is PURE TRUTH!! You will have some Store Owners tell you that you can make money but they are saying it so they can sell their business and not have any bad info out there on the street. So Remember that……
The problem is (well one of many), that many of us did our research based on the Mailboxes Etc. model before The UPS Store conversion was shoved down our throats. In essence, it didn’t matter how much research you did, or whether the books looked good on an existing store, the business model changed – and for the worse. We are basically staffed drop boxes now. Stay away from this franchise.
Sorry I did not include changes in the business model. I am not totally up to speed on UPS. The fact is the Pirtek business model does not work, and never has in the USA. Your detailed knowledge of how the UPS business model changed might help others in the future, so please post early and often. The bottom line is sometimes not the bottom line. Every business has critical success factors. A detailed evaluation should expose the warts, but not always. Sometimes waiting a year between evaluations is wise. The facts are that buying a franchise is risky. Very risky. My advice…Stay away from UPS AND Pirtek. Good luck.
Looks like UPS stores and Pirtek have franchise problems. No matter, do your research first. Ask questions, and get answers in writing. As an example, always get ownership history. If you are interested in buying a company store get the books. Then verify the information. If you are interested in a new location get phone numbers and names of current owners and previous franchisees. All franchisors stack the information they give you in their favor. You need to be very skeptical. Pirtek, for example, has had more failures, closed locations or terminations than they have had successes. The statistics don’t lie, the numbers don’t lie, people do. So make sure you do your homework. Make sure you understand why you think you can do better than the guy that just failed? Lastly, understand we are talking about degrees of risk. All entries into business ownership have risk. You need to let the numbers define that risk. Ask yourself if your home and bankruptcy are worth it. Most franchisees have bought themselves a low paying high risk job. Be careful. Odds are you will end up regretting it.
New update: This franchise hasn’t changed a bit except for the amount of prepaid packages increasing vs. the amount of paying customers decreasing. Do not spend your time or money on the UPS Store franchise. It will suck the life right out of you. Your only options left when you can’t take it anymore is to file bankruptcy, go independent, close or sell to some poor slob for pennies on the dollar and hope you can rationalize passing it on to someone who might have a family or be using his or her life savings for this Ponzi scheme. BTW, I’m on my ninth year as a store owner. I have about one year before I go independent. Whatever you do, don’t lose ten years of a happy life for these people.
I appreciate all the posts, both good and bad concerning BMI and Pirtek. It is very important to voice concerns and I think it is paramount to try and be accurate. When I post about Pirtek I mean PirtekUSA. My focus is PirtekUSA. Morgan Arundel, owner of PirtekUSA is an unsavory businessman. More PirtekUSA locations have been abandoned, Terminated or gone Bankrupt than have ever been successful. I am an expert concerning PirtekUSA. I received the “Rising Star Award” as well as franchisee of the year nomination and was awarded “Most Enthusiastic Franchisee”. My First Year sales eclipsed all sales records for all franchisees. I know the so called Pirtek “system” perfectly. I was Terminated( three years later) because I pointed out the flaws in the “system” and later key PirtekUSA emoplyees came to work for me. I also initiated a large scale Arbitration against PirtekUSA concerning high prices for product, as Morgan Arundel and others made false statements against me. I regularly consult with prospective franchisees as well as hydraulic hose professionals across America. There is no margin as a franchisee in the American “system”. PirtekUSA charges fees for shipping, for computer use, for set-up’s as well as territory fees, advertising fees, 4.5% of gross sales on both labor and product. All this on top of product prices that are marked up as much as six times to the franchisee. The best you can hope for in this country when you buy a Poortek is a Low paying high risk job. This is not my idea of success. The record speaks for itself. 16 of 35 Franchisees went to Arbitration with PirtekUSA, yes we lost but you have to ask why almost half the “system” filed Arbitration. More locations have closed than have ever been successful. Recent Poortek Financial statements show that all Company owned Poortek’s lose money. PirtekUSA lost money in 2009 and is scheduled to lose more in 2010. The PirtekUSA Master Franchise Agreement is up in about 8 years. PirtekUSA has not sold a new franchise in years, there are numerous reasons why this is the way it is. The major reason is poor management. The record speaks for itself. Poortek has been franchising in this country since 1996. They have ~ 30 open locations~, that equates to roughly TWO franchisees per year. Yet they have closed, Terminated or taken back as many as ~33 locations~. If you want a copy of the consolidated financial statements(audited) or copies of the Bankruptcy reports for various locations just contact me at fixxme@aol.com, or call 813-318-1258. No matter what remember that the truth never gets in Pirtek’s way. The numbers do not lie people do. Business is about the numbers, so no matter what get the facts and figures and verify them. Don’t get Poortek’d. Thanks, and have a nice day. Kiwi ,are we having fun yet?
@ Scott BMI is doing great.
I worked For Pirtek for 2 and 1/2 years before I came here and I can honestly say I now enjoy my job,
This was never the case at pirtek, We have now been running a year in Perth and going from strenghth to strenghth.
Michael Domingue | Date: August 29, 2008 | Time: 5:27 pm
I have owned a couple of small businesses in my life. I briefly looked into Pirtek in an effort to diversify. I found Pirtek to be too risky for me. I currently do between 2 million and 3 million dollars per year. For me money was not really a problem. I went another way and based on the fact that some Pirteks have closed I think I made the right decision. Make sure you ask all the questions you can and talk to every franchisee. I agree with Scott Layer, you might want to stay clear of Pirtek. You can contact me at the e-mail above. Thanks, Mike.
Scott, I totally agree with your posts, Pirtek are corrupt to the core but sadly they seem to get away with ruining peoples lives time after time. I have been digging to find court records in relation to any Pirtek reported cases, the limited companies and there Directors that ran Pirtek centers throughout Europe but to date have had no success.
Any information you may have would be greatly appreciated to assist me in my campaign against these Bullys.
UPS to finally face the jury! Trial begins April 26, 2010. After a 7 year wait, Mail Boxes Etc franchisees will get their day in court. To show your support, please re-post this video to youtube, facebook and share with your friends. Become a facebook fan of Platinum Shield Association.
http://www.youtube.com/watch?v=f5-lejGfcjU
It is also important to investigate contributors like Carol Cross to determine for yourself if her rants have merit. From what homework I have done it appears Carol has been banned from many web sites. It is clear from her rants that she and/or her family failed as franchise owners and she has been left bitter and twisted by the experience.
Unfortunately, some franchise owners choose to fail because they do not follow the franchise program. Some, like Carol become so obsessed by their own failure they feel the need to justify it on web sites like this.
Failures like this tend to gravitate to each other and from what I can tell Scott Layer is another failure. It seems where you find Carol posting you can find Scott posting. He is an even more interesting character and while investigating this gentleman (just Google the email address he posts in his various comments littering the web) I found he likes to advertise himself as woman on a very adult web site. Be warned it is a very adult web site!
The fact is some people like Carol and Scott, have too much time on their hands and fail in life because they do not use it constructively.
It is also important to investigate contributors like me. My research indicates that I have no business experience, I allegedly am responsible for the suicide of a fellow worker due to bullying and I have now been discharged for embezzlement. I am an example of a pathetic angry person that thinks their comments have merit because what is in my brain sounds good but what ends up in print is just mindless personal comments that have nothing to do with business, just like this comment. I am broke because I am a coward and I like to remain anonymous because I know what I say has no merit. The fact is I have too much time on my hands which allows me to cruise adult websites and eat Bon Bons and get even fatter than I am now. As soon as my unemployment check comes in I am out to the Booby-barn. I can’t afford the strip clubs anymore because I am Broke.
BMI in the UK was quoted above, but let me tell you if you bought a franchise from this company you would need your head testing. Look at Max Hydraulics accounts on companies house, one of the first franchises sold in the North East, showing for 2008 a deficiit in shareholders funds of £38K in the red, BMI Reading Mr Simon Moxham is a Director as he is in Bristol, Newcastle, North London and Perth so wtf is that all about, there appear to be no genuine franchises and certainly none earning any money.
Also the web site says they have 19 centres, bloody joke, they forget to say Plymouth CLOSED, Basildon CLOSED, Northampton CLOSED, Winchester CLOSED, Worcester CLOSED, Coatbridge CLOSED, Blaydon CLOSED
Simon Moxham the CEO is all spin, smoke and mirrors DO NOT BUY A FRANCHISE UNLESS YOU CAN LOOK AT SALES FIGURES AND PROFIT AND LOSS FOR ALL BRANCHES, YOU WILL NOT BE ABLE TO MAKE ANY MONEY, YOU WILL LOSE MONEY !!
Pirtek need to be stopped on September 5th, 2009 12:50 pm
Pirtk UK are just the same Scott, ask about Slough, Cambridge, Bridgewater, Poole & more
Not only terminated, CCTV ripped off walls whilst they STEAL everything to stop you trading. Do some digging a get court records for the Ltd companies that ran the above centres in the UK over the last 10 years.
All on record, this is not just any franchise, it is corrupt to the core & we have full records to prove it.
“Let me reply to Mr. Layer’s email. I am a Pirtek franchisee located in
Detroit. I am in the worst economy in the U.S. The Pirtek System is one of
the best franchises around. In fact, as I see a number of other restaurants
and other franchisees fail, I am really glad to be part of the Pirtek
System. While I keep reading about a lot of other businesses sales go down
in the past year, in fact, my sales are up over 20% over last year and I
just set an all time record! The Pirtek System works for those that follow
the Pirtek System. Is it possible to fail? Absolutely, just like in any
business. But, I will tell you that I have now opened my second Center
which is doing great and I have signed on for my third. The Pirtek System
is a system that works and gives you a great chance to make some real money.
But, you have to follow the Pirtek System.”
Thanks, Eli.
Update..I am sad to report Pirtek has moved UP the franchise 500 list, its now in the 330′s, up from the 440′s. To me this is strange because they have not had any growth and many locations are for sale. I am not sure of all the different criteria by which franchises are judged on the list, but it appears they did move up.
However, please look up BMI Hose in the UK. Its a relatively new UK based franchise that is headed by ex-Pirtek officers. Be aware that in BMI’s own posts and advertisements BMI claims that “The ownership of Pirtek had changed in 1996 to private equity to fund expansion into Europe, and the business then had a secondary private equity purchase. It was his(founder of BMI) view that this led to an emphasis on the cash generation and profitability of the franchisor, possibly to the detriment of the quality of product and franchisee profitability” This statement is dead on, Pirtek focuses on cash generation for the franchisor, and many Pirtek franchisees are and have been affected by no or low profits. As we all have suspected, here is an ex-Pirtek V.P. telling the truth, that “the franchisor, to the detriment of the Franchisee” has focused on its cash.
By the by, this same company,BMI, has opened on average, one new location per month. They provide Bridgestone hose coupled to Intertraco fittings, which are superior to the Pirtek product made by Perelli.
If you are in the process of selecting a franchise I would be very careful, and avoid Pirtek as a candidate. Please read all you can on BMI, if you still have questions or comments please contact me @ [Deletion]. Remember, No business is better than bad business. Thanks, Scott Layer
I find it very interesting that Pirtek and only two or three other franchisees attack me. Little old me! I talked to this franchisee maybe two or three times.This franchisee does not mention that he was given confidential customer lists of a fellow franchisee. In fact he continues to write letters to a competitor in his area complaining about too much competition. If this franchisee is doing so well why does’nt he open his books so we can see how successful his business is. This Pirtek Plano location is struggling, and has been struggling for years. ( he even admits it in his Blog). I say if this business is so great why not show us some books. More than half the Pirtek “system” has sales below $500K/year, a few centers much less, and a few, a very few more. Pirtek ranks 449 of 500 on the Franchise 500 list, consistantly moving lower every year. Plain and simple, more Pirtek locations have gone Bankrupt, closed down, or been terminated than have been successful. Open your books! You know what they say ” Money talks and BS walks” Thanks, Scott
I am very happy to be a Pirtek Franchise owner in Plano, TX for the last 3 years. I have struggled a little bit in this economy, like everyone else, but I am proud to report that my business has increased significantly over the last 12 months while I have watched several businesses close. Pirtek has over 300 Centers in operation around the world and is number 1 in the world and number 1 in the U.S. in mobile hose replacement.
In several of Scott Layer’s erroneous blogs, that he has scattered across the web, he mentions the arbitration in which he was instrumental in bringing against Pirtek USA. What he fails to mention is that the result of that arbitration found that Pirtek charged fair and reasonable prices. In fact, the Centers that brought the arbitration ended up paying all of Pirtek’s legal bills because Pirtek won the arbitration. In January 2006 Scott called me (before the arbitration) and he tried to inject fear and uncertainty and he tried to convince me that the Pirtek system did not work. Scott seemed to want to stir up trouble and do harm to the Pirtek system. Eventually he gave up on recruiting me into his campaign. The bottom line is that Scott failed and I believe he wants everyone else to fail just like he did.
The Pirtek System is not for everyone. It requires hard work and diligence, just like any business. However, if you follow the Pirtek System and grow your business like 300 other franchisees around the world have, the rewards can be very big! That’s why 6 of the Pirtek owners in the United States own more than 1 Center and some have signed on for a third Center. I am glad to be a Pirtek Center owner and have already signed on for another one too! -David Johnson, Owner Pirtek Plano
Everyone should know this by now..but David Johnson filed Bankruptcy about 9 months after he posted this comment. It seems like ” thinking” you are doing well at Poortek and ” actually” doing well are mutually exclusive. Many Pirtek franchisees’ of the year awards have been handed out, but most of those are now defunct. Poortek.. Its a dirty, low margin, expensive franchise. There are better ways to invest your time and money..stay away from Poortek.
I see some complaints and serious concerns about UPS stores from a franchisee perspective. What about other franchises in other business sectors with less dramatic but still serious short comings like Pirtek? Pirtek has closed or terminated and refranchised numerous stores and had a high percentage of failures. Litigation seems to be on going and many franchisees are not happy.
If your thinking about opening a UPS Store. Don’t. I was with them for over ten years. I would never open another one. I’m a independant now and loving it. They just keep on ripping you off more and more each year.
1588 days ago
[...] CENTERS, JAN-PRO , INSTANT IMPRINTS , , KID TO KID , LADY OF AMERICA , LIBERTY TAX SERVICE , MAILBOXES ETC. , MASSAGE ENVY , MAUI WOWI , PIRTEK USA , PLANET BEACH FRANCHISING CORPORATION , PLAY N TRADE , [...]
1588 days ago
[...] CENTERS, JAN-PRO , INSTANT IMPRINTS , , KID TO KID , LADY OF AMERICA , LIBERTY TAX SERVICE , MAILBOXES ETC. , MASSAGE ENVY , MAUI WOWI , PIRTEK USA , PLANET BEACH FRANCHISING CORPORATION , PLAY N TRADE , [...]