The Board of Directors of the Association
have written a letter to Scott Davis, Chief Financial
Officer of UPS, refuting his statements that all is well
with the stores. The letter included financial data that
supports the argument that over 60% of the stores in the
network are below breakeven and therefore losing money.
Obviously the store owners are not happy as claimed by Mr.
Davis. Please take the time to review the letter
below:
To download the Adobe PDF version, click
here.
Tuesday, July 25, 2005
Via UPS Next Day
Mr. Scott Davis
United Parcel Service
Chief Financial Officer
UPS Corporate Headquarters
55 Glenlake Parkway NE
Atlanta, GA 30328
RE: Your recent Media interviews and
remarks concerning the UPS Store Network
Dear Mr. Davis:
We have listened to your recent
interviews relative to the financial state of UPS and have
noted with interest your description of the solidity of the
parent company of our UPS Stores.
Unfortunately, it appears that you may
have been seriously misinformed about the condition of the
UPS Store Network. All is not well with the majority of the
stores in the network.
It is the purpose of this letter to
refute whatever sources might have stated to you that “the
majority of the stores in the network are happy and that
those that are not are a small group of disgruntled MBE
store owners”.
As you are, by now, aware, The Brown
Board Owner’s Association was formed in order to provide a
unified voice for the store owners of the network. We have
designed a Web site and a Forum wherein any owner can voice
their issues and concerns. More than 1700 stores
have thus far posted their serious concerns, and that
number is growing daily.
A significant sampling of the stores
indicates that
. many stores have had to close their doors or have
been put up for sale, requiring in some cases that these
owners file bankruptcy after losing their life
savings. Initially and in good faith, the store owners had
made their decisions based on forward-looking statements
made by Mr. Mike Eskew, as well as other UPS/MBE
representatives, concerning the future growth potential of
The UPS Store model, mainly The Gold Shield Program.
. over 60% of the network stores
are losing money. This situation is in stark contrast
to what is being stated by MBE and the Area Franchisees.
Much of the financial data concerning
the performance of the Stores is extracted from the actual
data as reported by over 1,000 stores in MBE’s
Financial Planner. Additional information comes from said
Stores’ monthly Royalty Reports.
Since the Gold Shield model follows the
PACE Economic Guideposts, actual data is compared with the
PACE guidelines. Some very important and—we
believe—dubious assumptions are contained in these
guidelines. For example: Debt Service, Salaries and
Owner’s compensation are all (misleadingly?) understated in
the PACE model.
The average level of Revenue for
the entire network (henceforth referred to as STR) is
approximately $300,000 annually. Our analysis will
demonstrate that at this level, approximately 60% of the
stores in the network are below break-even and are
therefore losing money. We are confident that our
analysis is correct and believe, therefore, that you will
understand why we take issue with your statement that the
majority of the network is happy.
A detailed Financial Analysis
follows and is available on the Member’s Forum. After
The Financial analysis the letter
continues_________________________________
The above Table concludes our analysis
and indicates that break-even is at an STR
above $300,000. Since the National average
for STR is approximately $300,000 the above supports our
conclusion that the Majority (60%) of the stores are losing
money and that their owners are definitely not happy.
As the representatives of the UPS Store
owners, we expect to be given the opportunity to sit down
with the UPS executive committee to discuss remedies as
outlined in our letter dated July 18th and
addressed to Mr. Mike Eskew.
It is significant that FAC has lost all
credibility with the membership in terms of their being able
to affect change. The perception is that the findings and
recommendations of FAC are either ignored by MBE or
suppressed.
We are convinced that the statements
made by you during your interview relative to the state of
the Network were made in good faith, and as the result of
inaccurate information passed on by MBE.
We do not wish in any way to impact
negatively the excellent reputation of our parent company,
but you must realize that we are dealing with hundreds of
unhappy store owners who must place their own personal
interest above all others. It is imperative that we open
a dialogue between us, as soon as possible, in order to seek
a solution to the Network’s financial woes.
The Board of Directors
The Brown Board Owner’s Association
