John Kennedy Jr. and Carolyn Bessette? Yesterday's news. The latest power couple emerges from the franchising community: U.S. Office Products Co., a $3.5 billion supplier of office materials and services, has plunked down $267 million to purchase Mail Boxes Etc. (MBE) Inc., the world's largest franchisor of business communication and postal service centers. Industry insiders are optimistic about the partnership's prospects, as MBE's 3,300 worldwide retail locations join forces with U.S. Office's massive purchasing power.
With MBE catering to the Small Office/Home Office market (businesses with up to 25 employees) and U.S. Office traditionally serving 25- to 500-employee companies, "what we're doing is putting our marketing strengths together to move toward capturing the small-business market," says Tony DeSio, founder and CEO of San Diego-based MBE. "With new business formations and small businesses proliferating across the country, this gives us an opportunity to access each other's customer bases."
"This is a home-run deal for MBE, its stockholders, its franchisees and its employees," says Jon Ledecky, chairman and CEO of Washington, DC-based U.S. Office. "Our company benefits because it leverages our distribution capability into a different channel. And because we can purchase products at much cheaper prices than MBE ever could, we can bring to the stores, and the franchisees, a greater selection of business products and services at lower prices, which will attract more customers, increase profits to the franchisees and, in turn, increase the royalties to the [franchisor]."
DeSio expects full cooperation from franchisees. "No change will be apparent to the franchisees except that they will be getting more competitive pricing on products," he says. "We've communicated with our networks since the announcement, and everybody seems to be elated about the merger."
Though Ledecky points out it won't be mandatory for MBE franchisees to partake of U.S. Office Products' goods and services, he subscribes to the "if you build it, they will come" theory. "If you build a better situation and opportunity," he reasons, "then people [will] take advantage of it."-Janean Chun