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PostNet Polemics

Has anyone any comments about this franchise concept, the business model, the support team, the management team and franchisor? 

Any happy franchisees out there willing to share their views, financial performance data, etc?

Any dissatisfied franchisees that may want to raise some issues I should clear up before getting into it?

Would love to hear the good, the bad, and the ugly to obtain a better perspective and broader view on it before diving into it...

Thanks

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No bargain..

Having been a Postnet location for 8 years, I finally can testify that while it's been a lot of fun and all, it's been terrifying to say the least. Postnet moved its Headquarters location from Henderson Nevada to Denver about 5 years ago. They lost most of their corporate and experienced employees in that move with few following the bosses to Denver. The rebuild has been from that has been ...a bit of a disaster. The franchisee support company wide (very important) was very good before the move. Since then not so much..in fact damn pathetic in some cases. The 2008-10 recession didnt help things either. It quickly killed off many newer stores who were just getting under way. Having said that, whats it all worth? Sorry, no wealth and riches to be made here. Good retirement business I guess but don't set it up in a high tax state that's traditionally unfriendly to small business. I mean SMALL business. By the time you pay all your taxes and royalties you'll go home to beans and franks again for dinner. If you do jump in, don't just sell shipping or copies at a dime a piece. You'll be dead in no time. Full service and lots of services are what gets your customers in the door. If you dont feel you have the social skills to maintain a frozen smile and pleasant attitude day after day, then skip it. No one wants to buy from an angry owner.

postnet is not a good buy

Dont do it!!!..this company gives you unrealistic projections; check out loss ratio regarding the number franchises sold each year vs those still in business 3 years later

Postnet

Please send me what you know

postnet is not a good buy

Dont do it!!!..this company gives you unrealistic projections; check out loss ratio regarding the number franchises sold each year vs those still in business 3 years later

Watch Out

Buying a Franchise maybe a good idea when your partner consists of experienced people, a strong system and a functioning business concept in a trendy sector. In my opinion, a couple people do not effectively support hundreds of franchisees, and a team of inexperienced youngsters working from the books are not equipped to handle day to day business issues and advise those operating a store in the real world.

Do they even operate a company store or is that too risky these days in that industry?

Postnet Owner feedback

We did a survey with the franchisees of Postnet asking them questions about their satisfaction with the franchise, you can check out the Summary of the information at www.franchisebusinessreview.com and you can get in touch with the Corporate office to ask for the full report, including individual reviews if you like what you see. 

I have worked with the corporate team for a couple of years now and they are very dedicated to the success of their franchisees.

Read about UPS and consider again

The stories of UPS should give you enought thoughts for careful reconsideration...

If only I had not followed Nike's advice...

...I may still do a dumb job, but that dumb job at least made me some money, some savings at the end of the month, and certainly kept me fulfilled at work and gave some spare time for family, play with kids, and activities I used to enjoy that are now part of the past.

We lost it all, the savings, the home, club memberships, the vacations, the quality times, the comfort of peace of mind, and more. I am stuck with assets that are worthless, a store location and lease I was molded into, merchandise that does not sell at the prescribed rates, and a support program I bought into that does not exist.

Well, life will be good again once I sold this franchise or its pieces. Just not sure whether it is worth trying to sue. As many indicate here around, the franchisor is always right and the agreement is against the franchisees, no matter whether the franchisor lives up to it or not. I am sure, at one point a class action may come about here too, but daily pains of being involved in it are not worth the wait for us. But I am curious, how does one evaluate the potential of and build up a franchise network wide case against a franchisor?

PostNet

 Remember that you will be competing with FexEx Kinko and The UPS store when you enter this business  -------and according to a recent article on Blue Mau Mau concerning a Fortune Magazine Article,  FexEx is going to heighten its competition with The UPS Stores.  

Will the market be saturated and how can you protect your location?   

FranSynergy's picture

Packing It In ... with PostNet

Here is an article from The Columbus Dispatch of a happy PostNet Franchisee, which I thought you might want to add to your evaluation file regarding this particular opportunity.

 PACKING IT INPostNet franchise owner finds second career rewardingTracy Turner - The Columbus Dispatch

After 30 years of working in corporate America, John Cummings one day found himself and 500 of his co-workers out of a job as the result of a corporate buyout.  

But instead of viewing the downsizing as the end of his career, Cummings, 58, decided that it was just the beginning.  

With the money he received from a buyout offered by his former New York-based employer, Cummings and his wife, Sue, decided to move back to central Ohio and open a franchise.  

Cummings, who worked as the director of sales planning and promotion for Bristol-Myers Squibb, wanted to choose a company that dealt with sales and that also would allow him to work with his wife.

Read More

Believe & Succeed,
FranSynergy
Synergizing Franchising 1 Franchisee at a time!
www.fransynergy.com

Paul Steinberg's picture

Network-wide case

Guest wrote:But I am curious, how does one evaluate the potential of and build up a franchise network wide case against a franchisor?

See previous comment .

To bring any suit, you need a legally-cognizable "Cause of Action"-- that is to say, a specific law, regulation, or common-law principle that a court will recognize. Just because each and every f'zee lost money does not necessarily mean you will get past a Motion to Dismiss. To bring a "network wide" (class action) suit requires several additional elements as discussed in the "previous comment"

Also, you may be barred entirely from bringing a lawsuit. You may be required to arbitrate any dispute, and your arbitration clause in the Franchise Agreement may bar class actions.

The legality of such common franchisor practice is disputed, but most courts will find in favor of the f'zor. You may have better success in state court than federal, and better success in some states such as California.

You really need to consult an attorney, try getting a referral from the AAFD or AFA; some firms that do this type of case are in Minneapolis, Miami, and New Jersey.

Paul Steinberg's picture

Post Net / Terry Hill on success rate

Another favorable Post Net article . Note that four months after opening the zee is doing "60 percent" of the volume needed to "break even" and became a franchisee with the expectation of making $100K plus and hiring staff so that he could spend less time working. As with the previous Columbus OH story, this is another zee who left a regular corporate job.

Also of interest is Terry Hill (IFA spokesman) quote.

Objective testimonial for Postnet???

I don't think so! If you want to run an ad or market the Postnet franchise concept so be it, but let's not pretend that the business review link for Postnet is empirically reliable. I am pro-franchise on this site, but this is crap.

Never Focus on the Franchisors List Exclusively

I guess there only a few of those ethically strong and committed who make a list of those favorably outspoken franchisees public for franchise prospects to contact.

How much worth is that feedback?

Those doing a fair amount of due diligence prior to making a franchise purchase committment should certainy consider what is being said by the franchisors list of references. At the same time they should hold a good list of questions to test key criteria, validate what is said by those outspoken franchisees, and dig deep into the following:

How well did the training prepare the franchisee to start the business, effectively run it, and efficiently work towards the break even goal?
How much contribution did the franchisor provide towards securing a good retail site? Lease negotiation?
How qualified was the support staff?
How well was the financial and businesss plan supported by the franchisor? Were timelines including break-even path developed by the franchisor?
Were financial goals regularly reviewed and discussed to further support the franchisees efforts?
How much pre-opening marketing support did the franchisor provide?
How much post-opening marketing support did the franchisor offer and provide?
How was the quality of the marketing material? Are samples offered to get a perspective on the fanchisors commitment to marketing?
How large and qualified is the franchisors support department? Can you get background information of the individuals who are supposingly there to support your business venture? Do their qualifications appear reasonable to you?
What are you paying an initial franchise fee for? (Value for money)
What are you paying royalties for? (Value for money)
Based on what the franchisees say assess if you were happy if you were in their shoes? Also consider what your goals and targets are and how they would be met based on what you just heard.

The due diligence process should not stop at the time the list is contacted. The more critical list of contacts is the one that is not provided by the franchisor. One way to obtain a different sort of contact list comes together when one compares the franchisee list in the UFOC of last year and the year before. In most franchise organization there will be a difference due to new franchisee additions (key to get start up information) and franchisees who are no longer on the list. The ones who have dropped off the list is key for you to obtain details about what went wrong. This is also the list who will not be tied to a contract with the franchisor anymore and therefore more open to share information about the franchisors shortcomings.

Unreal...

you posted the same post on Franchise-Chat

Good that FedEx comes along

.... at that point you will be able to look at somebody who does possible something right, knows about marketing, and understands customer service....surely these guys don't.

Paul Steinberg's picture

PostNet / PrintWear

Press release states founder to be next IFA chair. Given the philosophy necessary to be selected for such a position, this may be relevant to those considering purchase of this franchise.

Reply to If only . . . Nike

Guest,

You said, “ If only I had not followed Nike’s advice.”

What advice is that? Nike is not a franchisor, so what does that have to do with your present bad situation with your franchise business? Could you elaborate and enlighten us?

Bob Frankman's picture

Terry Hill Quote

Thanks Paul. Here's Terry Hill's quote from the PostNet franchisee success story:

"We believe the success rate of a franchise is greater than an independent small business, but statistically we can't prove it," Hill said. "You just don't close up and walk away from a franchise business; you're not buying the business per se but you're buying the license to operate that business for X period of time. ...

"We caution prospective investors to spend a lot of time and whatever resources you need to investigate a franchise before you buy it," he added. "It's just like any other business; it's subject to the whims, the changes, the trends in the marketplace. It has advantages that an independent small business does not, but it's still not risk-free, and it takes a lot of time and effort and capital to get these things up and running."

Here's the two points he is making as I see it and my two cents worth:

  1. Mom and Pops rarely are sold so there isn't a return on investment like an exiting franchisee. (Not sure that is true.)
  2. No reliable proof to show that franchisors have better success rates than independents. (It can be shown. It is just a matter of will. But good for him in not quoting bogus rates.)

Good for you glass

It is good to see that even though one can have a distinct bias towards one end of the franchising spectrum does not necessarily mean that one will necessarily swallow the crap that others at that end of the spectrum regurgitate. How's that for a visual.

FranSynergy's picture

Franchise Surveys? Glass...Anyone?

Glass:

I would be interested in hearing why and how you (or any one else here at bluemaumau) have formulated the opinion you have regarding Franchise Review and their surveys.

Obviously, you do not think much of them.  Do you have the same disdain for FranSurvey and a few of the others who 'appear' to be offering similiar 'Survey Type Services'.  Is their a difference in the approaches?  I've done very little research on their service offerings, however I do have an interest in learning more about their approaches.  What insight do you (or others) have and might be willing to share?

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising 1 Franchisee at a time!

PostNet Competition UPS and Fed-Ex Kinko

If they have to go into this sector, certainly PostNet franchisees look like they would have a better chance than The UPS Store Franchisees and the FedEx Kinko franchisees.
Maybe the PostNet franchisees could buy out some of the failing and terminating The UPS Stores or would this NOT BE ALLOWED under the franchise agreements under the terms of "termination" and the terms of the "non compete" clauses and the other terms that permit the franchisor to acquire the assets of the failing franchisees for almost nothing.
Maybe PostNet would publish their success rate or their failure rate on Blue Mau Mau and that would work in their favor.
Interesting that their founder is going to be the next IFA Chair --- is this an Omen?

Nice Talk about your own ASSet!

Enthusiastic franchisees are always happy to give glowing testimonials about their own asset, from which they hope to make $100K plus and hire staff, etc...
This Zee has only been open 4 months? Let's home that he returns to talk to the PRESS when his hopes become reality and he is fat and comfortable and sitting on his asset on "easy street"!

UPS ---FEDEX and POST NET Competition and others

Inteesting that Post Net/PrintWear founder is to be the next IFA Chair. Pretty obvious that the franchisees of all of these competetors in the mail-package-shipping industry will be coughing up capital so that these franchisors can compete with each other without the sector.
Wonder what "In the Glass" would say about the sector, as a whole, and walk prospective buyers of any of these franchisees through the IFA "philosophy" of these "Chairs" who always seem to make money for themselves, if not for their franchisees.

Franchisee Validation & Satisfaction

I was not promoting our services to any franchisors, was trying to help give additional information to someone that is looking to do their research before buying.  I am not surprised at the reactions of people about any topics on the forum, but it seems strange to be in a forum and not be willing to share information- that is the point, correct?

I would encourage anyone looking to make such a large purchase to talk to as many people in the system before deciding.  When we collect information we invite every active franchisee to respond.  Yes, the franchisor decides if it is information they want to make public- but it's all or nothing. They can't pick and choose who we invite, nor can they remove any of the feedback.  I think it speaks more about those companies NOT sharing information like this than those on there.  All candidates should ask for this type of information (public or not) to understand where things stand.

Just Do It !

And Nike did you!

It's just not the way quality franchisors act...

And it amazes me someone would be so foolish to think no one would notice.

No Return on Mom and Pops in Franchising

If the truth were known, there is generally not much return to the franchisee on many franchised retail operations that are sold at the end of the franchise term.
But, there aren't any statistics either so franchisors and those who push franchising can say anything they want to about the franchise as an asset that can be sold for profit at the end of the franchise term. The tangible assets are still controlled by the terms of the Franchise Agreement and thus controlled by the Franchisor at the end of the term.
And there is no reliable proof to show that franchisors have better success rates than independents, to my knowledge. If there were, I'm sure the franchisors would advertise it more than they do.

It's Monrowan's pretext post...

And not the satisfaction surveys. I don't know if they are worthwhile or not.

fedex kinkos are NOT franchises

Fedex bought Kinkos outright.  Kinkos was never a franchise either. Read about the success of this venture and you will find that the purchase of Kinko's has not proven to be profitable for FedEx.  Last I read they project another 2 years before the Kinko's locations become profitable- if the print & copy market doesn't continue to shrink.

Conversly, UPS has profited greatly on the backs of the UPS/MBE franchisees.   The immediate effect was for UPS to gain market share and for franchisees to lose profitability.  UPS did not buy one brick, they bought only the right to operate and run a franchise system.  Unfortunately for the franchisees, UPS then began to act as if they owned the stores.  They created program after program that benefited UPS at the expense of the franchisee.  Essentially, they used the franchisees capital to develop a network for UPS to use, with no regard to the profitability of the franchisees.  Did UPS know that the new UPS Store franchise model would not work?  The owners would say YES.  You see, UPS, tried to develop its own network of company owned stores and failed to make them profitable businesses.  FedEx is now learning that lesson.  It's a great thing to have a brick and mortar presence in every community- as long as the company doesn't have to pay for it!

As far as Postnet buying up failing UPS/MBE stores- it won't happen.  The franchise contract is written so aggressively, that even after  closing  their store  due to bankruptcy, the franchisee can still be made to pay royalties for the remaining term of the franchise contract!

Franchise regulation IS necessary.  This year UPS was touted by some study as providing the "best return on investment".  They compared UPS and included the UPS Stores as a part of the business, even tho UPS does not own the stores.  How could a mathmatical analysis be made comparing non-owned business sites against company owned asets?  When asked, the survey's author stated that they felt 'comfortable' with their comparison of apple to antelopes and specifically wanted to demonstrate how UPS's use of the franchise system was a good way to finance growth.  How could this study be credible? It's easy to follow UPS stockvalue over time.  The stock has not increased in value for a loooonnng time.

 For me, I'd put it regulations that EVERY franchisor must open and run a franchise site for 1-2 years, with the standards that a new franchise would have to purchase ( rent, fixtures,expenses, labor, etc.)  Only after they survived for 2 years and provided an audited finacial report of operations for this business unit could they apply for a franchise license. 

Just my opinion, but the facts are available in the public record.

Paul Steinberg's picture

Lets not forget Amos

And wasn't Jim Amos (of MBE and now of Sona MedSpa fame) a past occupant of that IFA slot? And I thought the KaBloom flowers honco was a past occupant as well, before the government went after KaBloom. DeBolt seemed a nice guy, the only one I would trust.

Surveys

Those who don't have to fear a huge Tsunami coming their way, are more likely open to share the whole range and risk there are a few who have things to say or list, which are not the very best. Those are also the franchisors who are willing to learn and improve over time and with that further encourage feedback for constant improvement of their systems.

On the other end, you always got those who provide one sided statistics and believe they can fool the franchise investors, who are generally inexperienced in their new field of business and franchising in general. That is really an easy target. But even these folks should know that a report or statistic that only lists the good and none of the bad and the ugly is worthless. It may provide some of the fluff the franchisor wants you to know, but only the more experienced and more sceptical investigator will be savy enough to make more sense of the information and dig deep enought as discussions progress.

Fed-Ex Kinko's not a Franchise like The UPS Store

Good to hear from you, Mom, and, as always, you express your opinions with great style and form, and they are especially pleaseing to me because I agree with everything you say.

I really agree with your next to the last paragraph, i.e. "that EVERY franchisor must open and run a franchise site for 1-2 years, with the standards that a new franchise would have to purchase (rent, fixtures, expenses, labor, etc) Only after they survived for 2 years and provided an audited financial report of operations for this business unit vcould they apply for a franchise license."

Paul Steinberg's picture

You should lose your money!

If it is that important to you that a franchisor have actually owned a company store and been in business at least 2 years (and I strongly agree with you) then...

Read the UFOC and only consider zors that meet those criteria.

Post-contractual overreaching and abuse of discretion by zors against zees with high sunk costs is one thing; but...

Not bothering to read the UFOC to find out if the zor has existed for at least 24 months?? That's just plain stupid, and you deserve to get taken to the cleaners.

But Paul, you know that P-ZEES can't read the UFOC

But Paul, you know that many or most Zees would be incapable of reading and understanding the terms, and the implications of the terms in actual practice, of the UFOC's that become the contract of adhesion signed by the eager and happy franchisee.
And, you know that ZEES looking for a job and who have confidence in their own ability to read and who trust those big Brand Names who are so visible OFTEN decide that they have to save money and won't pay $1,000 to "$1,500 to critique a UFOC.
If there is a sucker born every minute, he/she grows up to vote and to buy a franchise?

Paul Steinberg's picture

Read it in Urdu

I have clients whose native language is not English. I have some who spoke Arabic and French long before they learned English as a third language. I have clients who came to this country speaking nothing but Urdu and Hindi.

And somehow, they all managed to learn to read English.

If they can read English, so can the vast majority of prospective zees, who were born here. (I was born in the Bronx, so for me English is a second language as well, but I manage).

Seriously, if you don't understand something, either educate yourself (by yourself or hire someone) or if you can't be bothered, don't invest in something you don't understand.

People are not nearly as dumb as they act when you hand them a UFOC. They sure can find their way to the courthouse when things head south a few months or years later, and from their talk of "adhesory contracts" and such legal terminology they would put Clarence Darrow to shame. I have multi-lingual franchisee clients who can tell me a thing or two about "triple net leases" and the Unemployment Insurance Law of the state of New York.

C'mon guys... grow up and deal with the real problems in franchising (of which there are many). I don't like franchisors taking advantage of people's gullibility and greed, but they do it because there is a seemingly endless supply of such prospects.

And don't perpetuate this idea that only stupid people buy franchises. I have a lot of happy franchisee clients, and they are no fools.

When you think you are buying a Poodle!

When you think you are buying a Poodle and you discover you have purchased a Pig-in-a-Poke, then you poke around in the poke to find out what happened to you. #hy am I stuck with this pig? How come I didn't know I bought a "pig-in-a-poke" but, of course, it is too-o-o late and you just weren't smart enough to get a good attorney or a good advisor to tell you that there are still a lot of corporate predators out there with big brand names that make lots of money selling a Pig-in-a-Poke!
I stand corrected. Maybe they could print the UFOC in Urdu or Hindi and English-speaking people would have to go to attorneys or advisors to get it translated. This might be the solution!

FuwaFuwaUsagi's picture

potential quote of the year....

Paul pens:

C'mon guys... grow up and deal with the real problems in franchising (of which there are many). I don't like franchisors taking advantage of people's gullibility and greed, but they do it because there is a seemingly endless supply of such prospects.

My reply:

I nominate this for the quote of the year.   Paul nails it square.  The problem is the "market" consistently rewards franchisers for disreputable behavior.

FuwaFuwaUsagi

Paul Steinberg's picture

Poodle birth certificate

Guest writes:you think you are buying a Poodle and you discover you have purchased a Pig-in-a-Poke

Let's be clear about the specific issue raised in this thread. The matter was franchisors who had been in business less than 12 or 24 months. The premise was that such systems should not be permitted to franchise.

My response was that how long a franchisor has been in existence is readily ascertainable by even a cursory glance at the UFOC. There are issues (such as sourcing and post-termination royalties and integration clauses and the interplay between control of the real estate and choice-of-forum clauses) where zees without legal knowlege can go astray. But the age of a franchisor is (with the possible exception of Cuppy's) not one which I have ever had difficulty finding in a UFOC.

To speak of a "good" attorney is a subject for another day; true that many attorneys don't spot some franchise-specific contractual matters and shouldn't be dabbling in franchisee representation.

But-- many prospective zees are simply too cheap to pay for an attorney and even those that get an attorney want the attorney to be a cheerleader and some even get annoyed at the attorney who doesn't have on the rose-colored glasses.

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