The UPS Store FDD Item 6: Other Fees | What Franchisees Need to Know
What Is FDD Item 6 and Why Does It Matter for The UPS Store?
Item 6 of any Franchise Disclosure Document is titled “Other Fees.” It is required by the FTC Franchise Rule (16 C.F.R. Part 436) and must disclose every recurring fee, contribution, or payment obligation the franchisee will owe during the term of the franchise agreement. Item 5 covers the initial fees. Item 6 covers everything that comes after.
For The UPS Store specifically, Item 6 is critical because the shipping and business services industry carries operational costs that interact with the franchise fee structure in ways that significantly affect profitability. When you layer the franchise system’s fees on top of these operating costs, the margin available to the franchisee narrows considerably. Understanding every line item in Item 6 is essential for making an informed investment decision.
What Fees Does The UPS Store FDD Item 6 Disclose?
The UPS Store Item 6 covers several categories of ongoing financial obligations. Here is a breakdown of the major fee categories:
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| Fee Category | Typical Amount | When Paid |
|---|---|---|
| Royalty Fee | 5% of gross sales | Monthly |
| Advertising / Marketing | 3.5% of gross sales (1% local, 2.5% national) | Monthly |
| Technology Fees | $2,418 annual technology development and support fee | Monthly / As incurred |
| Other Fees | Transfer fees, training costs, insurance, signage, equipment upgrades | Varies |
Each of these line items deserves analysis. Let us walk through the most consequential ones.
The Royalty Fee
The royalty fee is the core ongoing payment to The UPS Store. At 5% of gross sales, this represents the franchisee’s ongoing cost for the right to operate under the The UPS Store brand and use the franchise system’s operational model. For a location generating $700,000 in annual gross sales, the royalty alone can represent a significant annual obligation. This fee is calculated on gross sales, not net profit. Whether your location is profitable or not, the royalty is owed on every dollar of revenue.
Advertising and Marketing Contributions
The UPS Store requires franchisees to contribute to marketing efforts. The advertising contribution of 3.5% of gross sales (1% local, 2.5% national) goes toward national brand marketing and may also support local advertising initiatives. The franchisee has limited control over how the national marketing fund is spent, though local advertising cooperatives may provide more input.
Technology and Additional Fees
Technology fees cover the operational platforms required to run a The UPS Store location, including point-of-sale systems, operational software, and customer-facing technology. Additional fees include Transfer fees, training costs, insurance, signage, equipment upgrades.
Attorney’s note: The UPS Store’s fee structure benefits from the 8.5% combined royalty and marketing rate being relatively moderate compared to other retail franchise systems. However, the gross sales calculation includes all revenue including UPS shipping revenue, on which margins to the franchisee are relatively thin. Because shipping services often represent the largest revenue category but carry lower margins than print, mailbox, or notary services, the royalty is effectively taxing revenue streams with very different profitability profiles at the same rate. At Lopes Law LLC, we always recommend modeling the total Item 6 fee burden as a percentage of projected revenue, not just the headline royalty rate. The total percentage is what matters for your profitability analysis.
How Do Item 6 Fees Add Up for a Typical The UPS Store Location?
To illustrate the real financial impact of Item 6 fees, let us look at a hypothetical The UPS Store location generating $700,000 in annual gross sales:
| Fee | Estimated Annual Cost |
|---|---|
| Combined Franchise Fees (Low Estimate) | $59,500 |
| Combined Franchise Fees (High Estimate) | $77,000 |
| Total as % of Gross Sales | 9% to 11% |
That is 9% to 11% of gross sales going to franchise-related fees before the franchisee pays for labor, rent, supplies, insurance, or any other operating expense. Understanding this total fee burden is essential for building a realistic financial model. For a deeper look at financial performance data, see our guide on FDD Item 19 financial performance representations.
How Does The UPS Store Item 6 Compare to Competitors?
PostNet charges a 4% to 5% royalty with lower advertising contributions. FedEx Office operates company-owned locations. The UPS Store’s 8.5% combined rate is competitive within the shipping and business services sector.
When comparing franchise opportunities, always calculate the total Item 6 fee burden as a percentage of projected revenue. This total percentage is the number that matters for your profitability analysis, not the headline royalty rate alone. For more on evaluating franchise agreements, see our guide on franchise agreement red flags to watch for.
Why Legal Review of Item 6 Is Not Optional
The fees disclosed in The UPS Store Item 6 represent contractual obligations that will continue for the full term of the franchise agreement. Signing without fully understanding these obligations is the financial equivalent of signing a long-term commercial lease without reading the rent schedule.
A franchise attorney can help you model the total fee burden against realistic revenue projections, identify fees that may increase over the term, evaluate the technology fee escalation risk, and compare the total cost structure against other franchise opportunities. If you are also evaluating your exit options, our franchise exit audit can help.
At Lopes Law LLC, we review shipping and business services franchise FDDs regularly. Our flat-fee FDD validation review is $3,000 and covers all 23 items of the FDD, with particular attention to the fee structure in Item 6 and the financial data in Item 19. For a complete overview, see our guide on what to expect from an FDD review.
Important: The fee amounts and percentages discussed in this article are based on publicly available FDD information and industry estimates and are provided for educational purposes. Actual fees vary by location, market, and the specific terms of your franchise agreement. Always review the current FDD with a qualified franchise attorney before making any investment decision.
Frequently Asked Questions About The UPS Store FDD Item 6
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Last updated: March 12, 2026
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