October 14, 2005
Mail Boxes Etc. Franchisees Win Appeal Against UPS
More than 2 years after a group of 35 Mail Boxes Etc. (MBE) franchisees sued MBE's parent company, UPS, in California state court, the California Court of Appeals vacated a trial court order denying the franchisees' requests to consolidate their claims in arbitration. The Court of Appeals also struck down portions of arbitration clauses in the franchise agreements as "unconscionable" and held that some of the arbitration costs incurred by the independent trade association representing the franchisees could potentially be shifted to UPS. The franchisees alleged declining profits, loss of branding, as well as loss of franchise territorial protection as a result of converting their MBE stores into UPS stores.
In March 2001, UPS purchased The Mail Boxes Etc. Corp. for approximately $192 million. At that time, Mail Boxes Etc. comprised 3,400 U.S. franchise operations and about 1,000 units internationally, making it the largest consumer shipping and packaging network in the world. UPS launched The Gold Shield Program in early 2003 to convert Mail Boxes Etc. stores into UPS stores.
Posted by franchiselawblog at October 14, 2005 06:46 PM