UPS Store Owners Paid $40,000 Plus $220,000 To $600,000 To Build Out, Then UPS Took Over Their Pricing In 2003, And The Lawsuit Is Still Unresolved In 2026

Opening a UPS Store sounds like a safe way to be your own boss. The brand is on every corner, and everybody ships something. But a business expert says the real story is about who pays for the building and who gets to set the prices.

A row of assorted-color mailboxes standing for the shipping and mail store business.

Tom Ellsworth, host of the Case Studies series on @BetDavidConsulting, laid out the numbers. According to company documents he cites, it costs about $40,000 to open the franchise, and then the owner has to build out a location.

$40,000 To Get In, Then Up To $600,000 To Build, All On The Owner

The owner leases a box in a strip mall or builds a building, and Ellsworth says the build-out costs somewhere between $220,000 and $600,000. Spread across every location, he puts the total franchisees have put up at between $1.2 billion and $3.4 billion, and he believes it is closer to $3 billion.

He points out that the parent is a $90 billion company. In his view, that giant footprint was paid for by the people who own the stores. They own it, they hire the staff, they buy and sell supplies, and they keep a small cut of each shipping transaction.

The Chick-fil-A Comparison That Started The Whole Debate

The episode began with a question from a viewer who had heard about a lawsuit. A couple of weeks earlier, Ellsworth had covered Chick-fil-A, so the viewer asked how the two compare.

His answer was that they are two different models. With Chick-fil-A, he says you pay $10,000 after getting in a line he describes as 40,000 applications long. The company builds the restaurant to its specifications, and you operate it, close on Sundays, and earn about $200,000 a year.

The UPS Store is the opposite. You put up $40,000 and then the full build-out, so you own the location and everything in it. In his words, one is buying a job called a franchise, while the other is buying a location and paying every cent.

What A Typical Store Brings In, And What Comes Off The Top

Ellsworth shares the revenue figures the company reports. The bottom 10% of stores run about $345,000 a year, which he says is not a lot once costs come off. The average store makes about $724,000, and the top 10% reach $1.2 million, or roughly $100,000 a month.

The fees take a bite. Franchisees pay a 5% royalty, 1% for marketing and 2.5% for national advertising. For a store at the $724,000 average, he says that comes to roughly $65,000 a year.

A 9.2% Loan Charge-Off Rate And A Rival Nobody Wants To Copy

Many owners finance their stores with government-backed small business loans. Ellsworth walks through charge-off rates, which show how often those loans are written off. Great Clips sits at about 5.1% and Subway at 6.8%. The UPS Store is at 9.2%, with 2,287 of these loans outstanding.

The older Mail Boxes Etc. stores run higher, at 12.1%. The worst on his list is Quiznos, at 28%.

He contrasts all this with the way FedEx handled its own retail push. FedEx paid $2.4 billion in cash for Kinko’s in 2004 and got 1,200 company-owned locations. In 2008 it renamed them FedEx Office, and Ellsworth says it later wrote off almost a third of the purchase price over four years. Those stores are run by FedEx employees, with no franchisees.

2003 Is When The Owners Say They Lost Control Of Their Prices

UPS took a different path. It paid $191 million in March 2001 to acquire Mail Boxes Etc., which had 4,300 franchisees. Ellsworth does the math at about $44,000 per door. Those owners kept their locations and kept paying fees, and he says that is still the model today, with royalties from 5,487 stores adding up to about $340 million, compared with $90 billion in shipping revenue.

Before 2003, owners could set their own prices. They could add a markup on shipping or on notary services. Then, he says, UPS came in and told them how prices would be set and asked for operational control.

Many owners pushed back. Ellsworth explains their argument. Chick-fil-A owners effectively manage a store the company owns, so company control makes sense there. UPS Store owners pay $40,000, own the location and fund the build, so why does the company set the prices?

The Lawsuit Is Still Open In 2026

The franchisees filed a class action over the pricing and the level of control. UPS went to court asking for a dismissal. Ellsworth says the court answered with a simple “No.”

Now, in the third quarter of 2026, he says the case has not been resolved. He expects it will not break the bank and will probably end in some kind of settlement among the 5,487 franchisees. He also read that about 3,100 of them had signed an agreement allowing operational control and price setting by the company.

What To Ask Before You Sign Any Franchise Agreement

Ellsworth closes with a warning that not all franchises are created equal, and he urges anyone thinking about entrepreneurship on a franchise path to do their research. Some general questions are worth asking any franchisor.

Who sets the prices, you or the company?
What are the total fees, including royalties and advertising, as a percent of sales?
What did the build-out really cost for existing owners?
What share of franchisees are in loan trouble?
Is there any lawsuit pending against the franchisor?

A famous name on the sign is not the same as a guaranteed paycheck. Read the manual, talk to current owners, and decide whether you want to own a business or buy a job.

Willow and Hearth