UnhappyFranchisee.com posted concerns related to the 33% SBA loan default rate of Goin’ Postal franchisees, a rate high enough to earn Goin’ Postal a spot in our list of WORST FRANCHISES IN AMERICA (by SBA loan defaults).
The high SBA default rate matches the termination rate of franchises for the past 3 years, as disclosed in the 2012 Goin’ Postal Franchise Disclosure Document (FDD).
At the beginning of 2008, there were 283 Goin’ Postal franchises in operation.
Another 37 were sold, for a total of 320 Goin’ Postal franchises.
Also during that period, 112 Goin’ Postal franchises were terminated (or ceased operation) for a termination rate of 35%.
In the response we received from Goin’ Postal CEO Marcus Price, Mr. Price does not dispute the number of closures. He discusses the reasons for those closures, and points out that Goin’ Postal has fared better than some of the other postal center franchises.
Message from Marcus Price, CEO, Goin’ Postal Franchise Corporation
We just saw this post about Goin’ Postal and I wanted to respond to each of the items specifically.
Firstly, as the CEO of Goin’ Postal Franchise Corporation I take my position very seriously and we strive as a company to make everyone successful. Unfortunately for many reasons not everyone is successful. Looking at the statistics you show, while we did have a net loss of franchises over the course of the 2008 – 2011 period of 7%, or 22 units, that was over the worst part of the recession. By contrast in the same period our similar competitors such as PostNet and Pak Mail had domestic loss rates of 24% and 21% (figures from Entreprenur.com). While each company has a good business model the large problem during the period was real estate costs combined with a slight drop off in business due to the recession. Franchisees that opened at the end of the real estate bubble signed leases with high rent rates due to the lack of commercial space available and when the recession happened and vast numbers of businesses closed up around them there was nothing to justify the high rents they were paying and so multiple units of all brands and industries failed for the same reason.
The personal account from the franchisees doesn’t help us improve anything as it is anonymous and doesn’t allow us to address their problems with them directly but we will respond to their points.
We inform potential franchisees about the shipping industry and that you have no right to ship with any carrier and that is even specified in our FDD. Each carrier is an independent business and as such they make their own decisions. We DO inform franchisees that they may lose their ability to ship UPS but in most cases they do not. This was one of the unlucky franchisees. As for DHL, Every company that shipped with DHL domestic lost the DHL service at the same time when they pulled out of the US and ceased offering anything other than international service. Our stores still offer DHL international services. The franchisees quotes that a single carrier is 30% of your business. With all things equal any carrier will be an equal percentage of your business as the others but if you lose one you do not lose that percentage of your business as customers will merely choose from what is available. Even though our main company store has all the major carriers there is still one carrier that gets 90% of the business as that’s where we steer it as we believe that’s what’s best for the customer.
We almost never sue for liquidated damages unless the franchisee has done something egregious to cause us to. While our franchisees sign a contract agreeing to 3 years of royalties as liquidated damages we ALWAYS work with the franchisee, generally taking their old Point of Sale Systems as a trade off as they are loaded with our proprietary software and we can recondition them for use in our classroom.
Training is NOT about after hours partying. Until several years ago, we did host a Wednesday evening barbeque at our headquarters for incoming franchisees so they could socialize with all of our staff and get to know everyone they would be interacting with. We cooked, supplied drinks, games and regularly played poker (not for money). We did it because we wanted to make franchisees part of our family and so everyone here knows who we are helping on the other end of the phone. For a few years we haven’t done those Wednesday evenings but we are almost ready to start them up again. We take pride in treating franchisees like family, we never thought someone could use socializing as a negative.
We do have other brands and business ventures like all entrepreneurs and large businesses. Whenever we have an idea to cross promote one of our businesses that will help franchisees we allow franchisees to take advantage of those other businesses to offer in their stores. Some ideas and come and go while other stick around for a long time. We also partner with other industries to allow our franchisees to offer additional products In their stores, usually at no cost to the franchisee. Anything we can do to improve profitability is our goal.
It pains me to know this franchisee failed as I take any closure very personally and always think “was there something else I could have done”. While we have a management team to interact with franchisees for every aspect of their business all franchisees know they can always come to me personally with a problem if they feel like they aren’t getting satisfaction with whatever issue they are dealing with.
Ultimately some businesses fail in any industry in any climate but we work hard every day to make our system a success and I always welcome recommendations from current and past franchisees so we can improve our system. Feel free to email me at firstname.lastname@example.org.
CEO. Goin’ Postal Franchise Corporation
4941 4th Street
Zephyrhills, FL 33542
UnhappyFranchisee.com thanks Mr. Price for responding openly to our post, and to participating in the discussion at our website. Our goal is to provide a discussion that spans both sides of an issue so that franchise buyers can make more informed decisions.
We also applaud Goin’ Postal for posting their current Franchise Disclosure Document (FDD) on their website, which enables opportunity seekers with an important due diligence tool early in the process.
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