Have you heard the story about when a scrappy little franchise competitor pulled the rug out from under The UPS Store? He took over one of their top locations by convincing the landlord to not renew the franchisee’s lease.
Well, I’m just the guy to tell you how it went down because I was the scrappy little upstart that masterminded the deal. If you’re a franchisor or a large multi-unit operator, then you’ll want to pay attention. This is a “cautionary tale” about why it’s essential to stay on top of all your locations — and why lease management software is invaluable.
Nothin’ But PostNet
I’ve been a franchisee, franchisor, and supplier for multiple brands over the past 30-plus years. Now I work as a franchise advisor and consultant, helping brands and franchise owners reduce risk and improve results.
From 2001 until 2013, I promoted and developed 17 new PostNet locations in Minnesota and Wisconsin. I also owned several of my own PostNet stores as a franchisee in the Minneapolis-Saint Paul area.
If you’re not familiar with PostNet, I describe it as a cross between a small, on-demand print shop and a UPS Store. It’s a retail location where you can rent a mailbox, get business cards, documents, signs, and banners printed. The stores also offer full packing and shipping services. PostNet is a one-stop business services shop you can count on as your outsourced support staff.
When I was in this growth phase with PostNet in the early 2000s, I was itching to get a store into the neighborhood where I lived in Saint Paul. There’s a retail shopping center called Highland Village Center not far from my house, and I was certain it would be an ideal PostNet location. It was THE center for our neighborhood.
I even had personal experience with the traffic and demographics of the shopping center, because I had once owned a Cost Cutters hair salon franchise location in the same center a few years earlier.
As I built out PostNet stores across the region and started having success as a franchisee, I kept looking at that shopping center down the street. I racked my brain, trying to figure out how to get in there.
At this point, you’re probably wondering why I didn’t just approach the landlord and strike a deal. That would make sense in most situations. However, it wouldn’t work in this situation, because the center already had a UPS Store, which had been there for a long time.
The UPS Store was our direct competitor. But, “competitor” is an understatement. They were 10 times the size of our brand at the time. We had a couple hundred stores back then, and they had a couple thousand.
‘Let Me Have It’
I couldn’t stop thinking about getting a PostNet store into that center. Every time I went to the grocery store, I’d look in the window and think, “Damn! This is just a terrible example of what a UPS Store should be.”
That’s what killed me.
It was not a pretty store. The place was dirty and tired. The operator didn’t seem to care. Overall, the place looked really bad — not a good example of retail.
Then I came up with my strategy. I decided that if I see this UPS Store location as a disgrace and believe the neighborhood deserves something better, then other customers must feel the same way. The landlord can’t be happy about the situation.
So I decided to give them a better alternative.
I wrote a letter to the property manager to introduce myself, tell them about the new PostNet brand, and let them know I wanted to be in the shopping center. I acknowledged the reality that The UPS Store probably had an exclusive. But I also came right out and asked them to let me have the space when the UPS Store renewal came around.
Then I started a slow-drip letter-writing campaign to state my case. Over and over and over.
I would send them a letter about every six months.
“Let me have it.”
Every time I opened a new store or won an award, I’d send a letter and let the property manager know. When I saw a new tenant come into the center, I’d write and remind them I wanted to be next.
“Let me have it. Let me have it.”
Man, was I ever persistent.
“I see you turned over the photo shop. Now why don’t you turn over the UPS spot. I want to be there. That’s my spot. I want it.”
And it’s not like I was forming a relationship with these people. I never heard a word back from them. I was just ringing the bell, every time I could. If I had something good to say, then I’d send them a letter.
Eventually, that lease came up for renewal. The property manager went to the file for The UPS Store, and guess what was in there?
All those letters I’d been sending for three years.
Suddenly she’s looking at this collection of notes with all those messages I’d been lobbing in: Your center is beautiful … everybody else in that center has a nice, fresh-looking store … this store is a blemish on an otherwise beautiful center … let me have it … I’ll put in a brand new store … I’m a professional operator …, I’ll take it up to where it should be.
That’s when I got the call.
“Hi, this is so-and-so at Highland Village Center. UPS is up for renewal. Do you still want it?”
The property manager sent me an LOI. I negotiated a little bit back and forth, signed it, and sent them the check. Then they gave the UPS operator his 30-day notice. Apparently, they didn’t give him any reasons. They just said they weren’t renewing.
I waited a week to make sure we had a done deal, and then I visited the UPS guy.
That might seem like a gutsy move, but here’s another lesson for you in addition to persistence: Create a smooth transition.
I wanted to preserve as much of this guy’s business as I could.
The worst thing he could say to customers would be, “Hey, I’m closing, you’ve got to go somewhere else.”
What I wanted him to say was, “I’m closing in a few weeks, but the new store coming in can take care of you.”
Trying to Build Bridges
I walked into The UPS Store in Highland Village Center late on a Friday and said to the operator, “Hey, the word on the street is that your store is closing.”
He gave me a sideways look and asked how I knew.
I dropped the bombshell and told him I was the guy taking his space. Then I tried to win him over.
I said, “Look, man, I’m sorry to do this to you, but I’m taking your space and here’s what I’m bringing in.” I gave him my PostNet card and explained that I wanted to take care of his employees and customers.
For obvious reasons, the gentleman was kind of hostile, which I understand. I would have been, too.
But I kept pushing on.
“I’ll hire your employees. I’ll do anything I can to make this easy on you. I’m trying to do the right thing here. You have mailbox customers. They don’t want to get disrupted. You’ve got business customers bringing their packages for shipping. We’re going to do everything you do and more to take care of them. This will happen one way or another, so let’s take care of the customers.”
I offered to buy some of his inventory and pay for his customer lists. But he didn’t seem interested in anything. He was pretty uncooperative. And again, I can understand the guy’s frustration.
It was time for me to go, because I wasn’t making any progress. Before I walked out the door, I handed him an envelope with some cash, and I said, “This is for you, just please don’t leave me any landmines.”
Never Missed a Beat
The next day, I put an ad in our local paper announcing that PostNet was coming to Highland Village Center. I didn’t disparage the previous tenant. I just told the locals that we’d be there for all their packaging, mailing, and printing services. It boiled down to: “Don’t go anywhere else. We’re coming. You’ll like it.”
At the end of the month, it was time for the transition. The UPS Store closed early that day. I got the keys, went in about 10:00 that night to check things out, and it looked like a bomb went off in the place. It was a disaster. That guy did not leave a clean, vanilla shell.
But I didn’t want to miss a day of business. So with a couple of buddies, we spent the whole night getting the place whipped into shape. We tore out the old fixtures and pushed everything back 20 feet from the front door. We put up floor-to-ceiling PostNet banners to block the mess, set up a card table with POS, a few brochures, and information, and had the place ready to open at 8 a.m. the next day. Didn’t miss a thing!
It was a long, tiring night. But it had to be done. If any customers walked through the door and saw that mess, they would have immediately taken their business somewhere else. And I wasn’t about to let that happen.
We remodeled that store over the next two weeks, staying open and operating through the complete remodel, with most of the construction happening at night. Through the transition, we kept all the UPS Store customers. It turned out a lot of them had been wondering when something like that might happen. The store was such a mess, that no one was surprised.
No one except the franchisee who lost his location.
‘How Could You Let This Happen?’
Six months after we opened in Highland Village Center, I had an experience that every franchisor should be interested in.
I was at a franchise conference and ran into Stuart Mathis, who was the UPS Store president at the time. I knew this guy pretty well. We’d served on an International Franchise Association (IFA) committee together. He walked up to me, started wagging his finger in my face, and said, “You! You’re the sonofabitch.”
At that point, what happened with the Highland Village store felt like old news to me. It had been half a year. So I couldn’t figure out what he was talking about. Then Mathis says, “You did that deal in Saint Paul, didn’t you? You caused me a lot of headaches!”
Oh. THAT deal. Sure — ummm, yes. I guess I’m the sonofabitch.
I let him blow off a little steam, and then we sat down to talk.
I told him the whole story and said that from my perspective, I did UPS a favor because of what a terrible operator his old franchisee was. His operation was hurting their brand.
“I was mad when it happened,” Mathis told me. “But then I found out who the franchisee was, and that you were the guy moving in. And I understood. I would have done the same thing. But let me tell you something — we changed our entire real estate management strategy because of what happened in Saint Paul.”
Then he said something I’ll remember for the rest of my life: “You embarrassed me in front of my franchise advisory council because they heard about it. They said, ‘How could you guys at corporate let this happen to a franchisee?’ ”
The council members were frustrated because if one of their own had screwed up, they rightfully expected that the location should have gone to another operator in their brand instead of losing it to a direct competitor.
And they were right.
I had exploited a hole in their process that was promptly plugged after the Saint Paul debacle.
“Because of you, that’ll never happen again,” Mathis said. “Now, we have a whole new lease review process. We have all new data points. We added riders to all the leases that the landlords have to let us know if, for any reason, they’re not renewing the lease.”
Despite all the embarrassment and frustration, Mathis seemed to respect me for having the gumption to go after that opportunity the way I did. And I’m still proud of pulling it off. That one store was a drop in the bucket for them, but it was a big deal for me. It was a real David and Goliath situation.
I also got some satisfaction from knowing they learned a lesson and revised their business practices because of me. They screwed up. The corporate guys and the other local franchisees — they were all asleep at the wheel.
I was aggressive and persistent, but it’s not like that deal happened overnight. I kept after it for three years. At some point during that 36 months, the other franchisees in that brand should have been on that guy to clean up his store or offer to buy it. But they just stood by and let it get worse.
If you’re a franchisor, you can’t afford not to have Leasecake as part of your back-office tech stack. The little bit of money you spend in annual licensing fees pales in comparison to what it’ll cost you if one location slips through your fingers.
If you’re a multi-unit operator, you’re juggling way too many responsibilities with too few people. I know that from first-hand experience. Without a solid lease and location management software tool, you will make a mistake sooner or later. It’s just a matter of time. And it will COST you!
And if you’re a broker, you owe it to yourself to get your multi-unit operators on Leasecake. It’s a win-win because they won’t miss any renewals, or other time-sensitive, business-critical events. And you gain visibility into their needs, so you’re always prepared for the next lease negotiation.
If you have any questions about my PostNet experience or want to learn more about my franchise consulting services, then you can get in touch with me through my contact form.
Known as “Johnny Franchise” in the industry, John Francis has franchising in his blood. His parents were pioneers in the industry, turning their family haircutting business into a 1,000-salon franchise empire. He has been a franchisee and a franchisor for 30-plus years, and has a deep understanding of the issues both sides face.