Merger of Mail/Shipping Giants How will UPS' purchase of Mail Boxes Etc. affect franchisees?

As franchisees gathered at the Mail Boxes Etc.'s area franchisee conference on March 2, representatives from the postal center franchise and shipper UPS were discussing a deal they had in the works. That afternoon, the news hit the nation's wires: UPS had, in fact, bought MBE.

To find out what changes are in store for MBE's domestic and international franchisees, Franchise Zone spoke with Jim Amos, president and CEO of the No. 2 franchise in Entrepreneur's 2001 Franchise 500®:

Franchise Zone: Has Mail Boxes Etc. always been interested in being purchased by a shipping company?

Jim Amos: We've always been open to the possibility that one or more of carriers would be interested in acquiring Mail Boxes. One of my personal goals when I first came here about 4 years ago was to strengthen and broaden the relationship between Mail Boxes and UPS, and I'd have to say this is the culmination of that goal in a very significant way.

FZ: What does UPS' acquisition of Mail Boxes Etc. mean for MBE franchisees? Will it mean changes to the franchise program at all?

Amos: It won't change the program, but it will certainly enhance the program. We're bringing two world-class brands together, UPS-which, for 15 years, has been the No. 1 logistics, packaging and transportation company-and MBE-which, for the last 11 years, has been the No. 1 packaging and shipping company in America. The synergy of these two companies has to ultimately have a positive impact on the unit economics of the system and the overall support for franchisees.

FZ: Will your current franchisees have to re-sign their agreements with the new company?

Amos: The contractual agreements, the franchise agreements, convey from one owner to the next. Nothing changes for our franchisees. It's essentially a seamless transaction, except they wake up the next morning and find out they're in a stronger financial structure. The moment the press release was released, the value of their business was enhanced through the acquisition. That's a very good thing.

Growth and Expansion Plans

FZ: What about expansion plans for the company? Will there be more or less growth nationally and internationally?

Amos: These are two companies very committed to international growth and expansion. We have about 1,000 stores internationally now, and UPS has been focused on its international business for a number of years, so the two brands will complement each other in the international market.

Domestically, if I'm an entrepreneur looking at the world of franchising and thinking about where to invest my money, the combination of the MBE/UPS platform is one that becomes top-of-mind for me. I want stability-UPS is a 100-year-old company, MBE is 20 years old. I want a proven track record-more than 4,300 centers around the world today have demonstrated the conceptual plan of MBE. I surely want a strong financial structure, and with a parent that has $28 billion in revenue and a market cap of $65 billion, that's about as strong a financial structure as you can get. MBE itself will do about $1.5 billion in system sales this year. We're going to see a dramatic expansion of the network in traditional locations, nontraditional locations, alternative distribution sites and perhaps even the branding of some independents that want to be part of the MBE/UPS platform.

FZ: What kind of ideas do you have for nontraditional stores/locations?

Amos: We already have locations in hotels and convention centers around the country, like the San Diego Convention Center and the Jacob K. Javits Convention Center in New York City. We have locations in airports, like Chicago's O'Hare, and on Navy bases and Air Force bases around the world. [MBE also has locations on college campuses nationwide.] Those types of express and business locations will be expanding.

Services, Markets and Management

FZ: How, if at all, does this affect the types of services offered at each store?

Amos: The three strategic objectives MBE has had for a number of years are growth, profitability and communication. Our overall strategic goal is customer intimacy, and I [expect] we'll enhance our ability to serve the customer in more meaningful ways-we'll leverage our existing profit centers and create new profit centers. We have the ability with a partner and a parent like UPS to stabilize our technology platforms and to improve the speed and stability of those platforms and the communication between centers to home office, home office to corporate accounts. I [foresee] a series of enhancements that not only protect and enhance the terrestrial business, but that also have a positive impact on our e-commerce business.

FZ: In the The New York Times, a UPS spokesperson was quoted as saying Mail Boxes Etc. stores will continue offering shipping from companies other than UPS, like FedEx and DHL, but that over time, UPS may get to the point where there's additional promotion of their company. What does that mean?

Amos: I think what he's saying is we've agreed to continue to offer a multiple-carrier platform, but because UPS is now our parent and our partner, one would expect it would take a greater prominence inside the [MBE] footprint, or that the incentives offered would be attractive to the customer or the franchisee to utilize [UPS] in a meaningful way.

FZ: Is anything about your target market changing? Are you still going after the small-business and homebased business markets?

Amos: Actually, nothing changes. Surely the largest, single, growing consumer segment in the world is still the SOHO market. It's a common target market for both UPS and MBE, and what MBE does is enhance UPS' ability to reach these folks at retail. This may broaden [our target market] a bit in that we would have a wider range of consumers, but certainly it wouldn't change it.

FZ: Will there be any changes to Mail Boxes Etc.'s management team?

Amos: No, we're going forward with the management team in place. One of the requirements for the acquisition, from UPS' perspective, was that the management team stayed in place. I'm looking forward to tapping into UPS' brainpower and extensive networks; they'll help us become a better company.

FZ: What should customers and prospective franchisees be looking for with this change?

Amos: We're bringing a very powerful packaging, distribution and logistics monolith to the market, and we look forward to not only continuing to serve the consumer, but offering the MBE opportunity with our new UPS partner to all entrepreneurs who want to do something significant in their local markets.