Before joining a franchise, compare start-up and ongoing costs. Then analyze the true value these costs bring to your business. Every dollar you invest during those critical early months of starting a business needs to stretch as far as it can.
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Franchise Fee |
2nd Store |
Initial Investment |
Royalty |
Ad Fee |
| The UPS Store |
29,950 |
19,950 |
170,766 to 276,375 |
5% |
4.5%***** |
| PostNet |
29,950 |
15,000 |
162,875 to 186,600 |
5% |
2% |
| Postal Annex |
29,950 |
14,975 |
125,500*** - 187,550 |
5% |
3%***** |
| Pak Mail |
29,950 |
** |
164,135 to 171,149 |
5-3%*** |
2% |
| Aim |
26,900 |
13,450 |
119,950 to 192,250 |
5% |
2% |
| Goin Postal |
22,500* |
22,500 |
46,000 to 157,800* |
$200/mo |
+ |
| Postal Connections |
23,900 |
12,900 |
137,900 to 157,900 |
4% |
0%++ |
| |
|
|
Source: 2007 UFOCs & Franchise Agreements |
* Franchise Fee is $15,000 plus $7,500 equipment & proprietary software paid up front with Fee.
Initial Investment range has two options—1) Turn-Key Package $131,000 to $157,800 as reported in current UFOC and 2) regular franchise store $46,700 to $127,300, where much of the build out & store installation is done by franchisee.
** Multiple store discount not shown in UFOC
*** This requires purchase of a smaller Express unit approved by franchisor
**** Royalties begin at 5% of sales and decrease to 3% when annual sales exceed $350,000
***** Includes additional 1% fee obligation to local advertising coop
+ No fee, but any merchandise, ad materials, internal signs, etc. using franchise trade marks must be purchased exclusively through franchisor.
++ Agreement includes 2% national advertising fee, but it has been waived with no plans to implement.
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Notes
- Some franchise agreements require early funding of fees paid up-front when the initial franchise fee is paid. This can range from $94,000 to $106,199 paid with the initial fee when the franchise agreement is signed. This is prior to identifying your store site and training. It can result in months of financing costs before your business opens.
- Several franchise agreements provide for the franchisor to exclusively sell services, equipment, supplies, and marketing items to their franchisees. Many franchisors report more than 20% of their total revenue coming from re-selling items to their franchisees. We believe this limits operational flexibility and opportunities to use the most efficient business solution. Postal Connections makes its revenue only from the initial franchise fee, new store installation management, and royalties.
- Many of the franchise agreements impound franchisee funds to support opening marketing activities ranging from $1,500 to $7,500. Postal Connections has arranged for vendor subsidies to grand opening activities and no impounds.
- Several franchise agreements require exclusive equipment leasing arrangements franchisees must accept. The franchisor then earns a referral or administrative fee paid by the vendor. Postal Connections has arranged low-cost equipment leases where no “finder fees” are paid instead incentives or wholesale rates are offered to the franchisee.
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Carefully compare all aspects of the business relationship before you choose.
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