Start a UPS Store Franchise | Costs and Requirements

Ready to jump into the franchising business? Franchise opportunities are growing year after year.

In fact, the “Franchise Market” Insights 2023 projects a CAGR increase of 9.73% in the franchise market, with an estimated increase from 100,797.4 million in 2021 to 175,955 million by 2027. 

Want to add to that growth? If you’re considering a UPS Store franchise, keep reading to discover the most critical information you should know before you begin your journey.

Reasons To Franchise with UPS

As an established business, becoming a franchise owner of a UPS Store has many potential benefits. 

1. Stable and innovative business model
2. Outstanding customer service reputation
3. Known as a leader in the industry
4. Established operations system with 40 years of franchising experience
5. Training and ongoing support
6. Recognized brand with 5000 franchise locations and counting
7. Ranked on Entrepreneur’s Franchise 500 list for 30 consecutive years

The History of UPS

When researching a franchise business, knowing it’s historyis always good. 

In a classic from-the-ground-up story, UPS began in 1907 in a basement with two teenagers, $100, and a dream. 

Claude Ryan and Jim Casey founded what was then called the American Messenger Company. 12 years later, after they decided to expand shipping services outside of Seattle and into California, they changed the name to United Parcel Service. 

During this rebrand, they also chose their modern iconic brown palette.

Over the next several decades, UPS expanded across the country, moved its headquarters to New York City, and began serving commercial and residential shippers. By 1953, UPS could offer air service and two-day delivery to major cities on the east and west coasts. 

By 1975, UPS was the first package delivery service to serve every address in the continental United States. Within the next decade, it expanded its service and introduced Next Day Air to Canada, Hawaii, Puerto Rico, and Europe. 

Today, UPS is a public company, it owns its own fleet of airplanes, continues to acquire new businesses under its name, focuses on greener energy options, and boasts the first female CEO in company history. 

Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.

How To Open a UPS Franchise

If you’re interested in becoming a part of the history of UPS, then opening a franchise storefront could be the right move for you. Take a look below at the step-by-step process. 

1. Financial Research

This should always be your first step, no matter what business you’re looking into in the franchise industry. A financial deep-dive is one of the most significant pieces of research you’ll need to complete. 

Cost of opening a UPS Store franchise based on Franchise Disclosure Document (FDD):

• Traditional Locations: $240,959 - $508,472
• Rural Locations: $206,423 - $459,136
• Store-in-Store Locations: $80,357 - $216,148+

Financial requirements of the franchisee:

• Liquid capital: $75,000-$125,000
• Initial franchise fee: $29,950
• Initial investment: $185,000 - $508,000
• Royalty fee: 5%
• Ad Royalty fee: 2.5%

Curious about financing assistance? Keep reading — this article will get into that a little later. 

2. Find Your Market

UPS has stores and business service centers all over the country. Its store locator makes finding a business opportunity and location easy. 

UPS is a household name, but you’ll still need to research the brand and your market to see if it fits your community. Does it have the necessary zoning? Is there real estate inventory to make it possible? Is the location easily accessible to customers? Consider the needs of your area.

Another aspect you’ll need to consider is the competition in the area. There’s generally no need to shy away from a little friendly competition, but you do need to make sure there is room for the growth of your UPS Store.

3. Application Process

UPS has a four-stage application process to vet its prospective franchisees. 

1. Inquiry: Attend a webinar and complete the application
2. Apply: Initial interview, complete franchise disclosure, background check, submit financials, executive interview
3. Funding: Letter of intent, initial application fee, approval letter
4. Booking: Secure financing, approve site and sign lease, 5-week training, sign franchise agreement

4. Select a Site and Lock Down the Lease

UPS has a Franchise Development team to guide small business owners through this process, including helping with negotiations, designing the store, and everything else that comes with starting a business. 

Related: The 10 Commandments of Franchise Ownership

When negotiating your lease, your UPS franchise consultant can help you with the following:

• Evaluate the length of the lease
• Research comparable prices
• Identify hidden costs
• Ask for beneficial modifications
• Understand your termination clause

5. Secure Financing

When getting into the financing, your options vary with different franchisors. When working with UPS, they provide options through their partner, Guidant Financial. Those options include:

• 401(k) business funding
• Small Business Association (SBA) loans
• Portfolio loans
• Unsecured loans
• Veteran incentive: $10,000 off the franchise fee, 50% off the initial application fee
• Minority incentive: $15,000 off franchise fee

Note that you do not have to work with UPS’ financial partner, but they are there to help if you need it.

Related: What is an SBA Loan? Everything You Need to Know

6. Training

One of the most significant benefits of UPS store franchise opportunities is that you do not have to create your own system of operations for everything. UPS is a well-oiled machine with proven success. As a future store owner, you’ll go through training to prepare you for everything you’ll need to know. 

UPS has a four-step comprehensive training program, which includes:

1. Web-Based Training: 45 modules include 40-45 hours of initial training on store operations and foundational business acumen 
2. In-Store Experience I: In-person five-day training at a local UPS store focused on store operations, technical systems, and more lessons in business services
3. University Business Course and Print Services Training: 10-day interactive workshop in San Diego, CA, to learn marketing, operations, sales, financial management, and print services 
4. In-Store Experience II: In-person five-day training at a local UPS store focused on reviewing store operations, technical systems, and print services

7. Open Your UPS Store

After 225 hours of extensive training, you’ll be ready to open your own UPS store center. UPS has a dedicated and reliable support system for you, so use your franchisee benefits and lean on them as you continue to learn and grow. 

8. Grow Your Network

UPS prides itself on building community, so it’s worth it to take advantage of the professional opportunities they offer, including:

• Area meetings
• Regional conferences
• National convention

UPS aims to keep its franchisees up-to-date on the hottest industry trends, the most innovative tools, and helpful resources, all while growing relationships within the network.

9. Continuous Management

Even though the most grueling part of the franchise process might be over, the work never ceases. UPS prides itself in supporting its franchise store owners with the following:

• Public relations support
• Advertising and marketing
• Product development

This is the final step of the journey. Now that you know what it looks like take a look below to find answers for some frequently asked questions. 

Related: 7 Things You Need to Know Before Becoming a Franchise Owner

UPS Franchising FAQs

UPS’s nine-step process is comprehensive, but that doesn’t mean you won’t have some questions.  

How Does Investing With The UPS Store, Inc. Compare to Other Brands?

UPS is what’s called a high-end franchise. So how does it compare to other high-end franchises? 

Entrepreneur’s 2023 Franchise 500 Ranking includes UPS at #4:

1. Taco Bell
2. Popeyes Louisiana Kitchen
3. Jersey Mike’s Subs
4. The UPS Store
5. Dunkin’

Are There Any Other Royalty Fees To Know About?

UPS will take 8.5 percent of its franchise owners’ adjusted monthly gross sales. That percentage breaks down to:

• Royalties: 5 percent 
• Advertising fee: 3.5 percent  

Do You Get To Pick Your Location?

One thing you’ll need to be prepared for as a new franchise owner is that the corporation will always have the final say. This goes for UPS Store locations, as well. The UPS Store, Inc. allows you to explore the community, location, and site and provides as much flexibility as possible for your choice. 

They will consider the following:

• Your preferences
• Available markets
• Company’s franchise system 
• Expansion goals
• Business strategy
• Site selection criteria

You will also be able to work with a local UPS representative to find the right fit for your new business. 

Conclusion

UPS is a popular option when it comes to companies to work with. As a prospective franchise owner, UPS advertises safe, structured, and supportive hands when you choose to franchise a store with them. 

Looking for more franchise-related resources? Explore Entrepreneur’s Franchise Center here.