UPS Sued for Franchise Violations by Coalition of Mail Boxes Etc. Owners

Malibu, California-A national alliance of nearly 200 Mail Boxes Etc. stores, under the auspices of a nonprofit support and advocacy group called the Platinum Shield Association, are now locked in two California lawsuits in Los Angeles Superior Court with parent company United Parcel Service-Mail Boxes Etc.

In March 2001, UPS purchased The Mail Boxes Etc. Corp. for around $192 million. At that time, Mail Boxes Etc. was comprised of 3,400 independent franchise operations in the U.S. and about 1,000 others internationally, making it the largest consumer shipping and packaging network in the world. UPS launched The Gold Shield Program in early 2003 to convert Mail Boxes Etc. stores into UPS stores. The plaintiffs in the current lawsuit are a group of storeowners who refused to convert to UPS stores and contend that UPS used high-pressure and questionable sales tactics on storeowners to sign the Gold Shield Program contract. Plaintiffs also claim that UPS pressured thousands of Mail Boxes Etc. franchisees to become UPS stores under contracts that are in violation of franchise laws, because they lacked appropriate and adequate disclosure information. Additionally, violations of other franchise laws and individual franchise agreements by Mail Boxes Etc. are cited in the lawsuits.

Initially, 3,000 stores signed the UPS-MBE Gold Shield Program agreement. The new agreement requires a name change from Mail Boxes Etc. to The UPS Store. According to the UPS-MBE Gold Shield Program agreement, storeowners must allow UPS to control the retail and the wholesale pricing of all UPS shipments. The agreement also mandates that UPS Stores present the UPS shipping solution first to all customers under penalty of contract termination. A store is in violation of the UPS-MBE Gold Shield Program agreement if it can be documented by UPS that an individual store has first offered an alternative to UPS three times. UPS has a national network of mystery shoppers who monitor compliance of the new agreement at UPS Stores. UPS also requires franchisees to buy all shipping supplies exclusively from UPS approved vendors. Failure to do so also violates the UPS Gold Shield agreement. -Woloshin Communications Inc.