Not long ago, some people offered predictions of doom and gloom about how fax machines would impact the shipping business.
Today, such statements bring wry smiles to employees at Unishippers as they go about adding new franchises.Unishippers, 2595 E. 3000 South, increased shipments by a healthy 26 percent in 1997. Moreover, the company, with 298 franchises spread throughout 50 states, is looking to expand to England and Japan.
This isn't a bad record for a company in business for just 10 years and directed by Steven L. Nelson, president and chief executive officer, who originally started in the condominium and storage-building business and admits he knew nothing about the shipping business until 1987.
As an indication of the company's success, it is constructing a $6 million building at 6600 S. 700 East, which will be ready for occupancy in April.
Nelson, Randy Miller, Ken Draper and the late Mike Sant built the company to a point where it received a Franchise 500 Award from Entrepreneur magazine and was named one of the top 200 franchise companies and top 10 business service companies by Franchise Times.
Other accolades include being listed among the world's top 200 franchises and top 62 global franchises by Entrepreneur International and receiving a Platinum 200 Franchise Relations Award from Income Opportunities.
All of this has come about in spite of fax machines and other sophisticated means of transporting documents. For Uni-shippers franchises, the trend is for businesses to ship documents, birthday presents, live organs for transplant, hazardous materials and many other items that go by air.
Nelson originally got into the real estate business through Miller, whom he met while serving a mission for The Church of Jesus Christ of Latter-day Saints. They converted apartments into condominiums between 1975 and 1980 and then directed their talents to the mini-storage business along with Sant.
They built one ministorage complex in American Fork; five in Dallas, Texas; two in Lexington, Ky.; one in Kansas City, Mo.; and two in Salt Lake City under the name Landshire Development. They still own the two in Dallas.
Draper was working for DHL Services and sold for American Express upon taking the shipping service. Early in 1987 he went to Purolater Courier and negotiated discounts for shipping, based on a projected volume.
Draper reached the volume, but he needed money to finance the project, so he went to Nelson, Sant, Miller and Lynn Holtby for investment money and formed Utah Shippers Association. Holtby was bought out a few months later.
Not knowing anything about the shipping business, Nelson set up a desk in the hall of a house at 4500 S. 1000 East, hoping to enroll 10 businesses in the association the first year.
He proceeded to enroll 85 businesses in 3 1/2 months, reaching the $10,000 goal to maintain the discount. He did so well that he decided to get out of the ministorage business and into shipping. One acquaintance suggested he set up a distributorship to ship items to northern California.
The name United Shippers Association was shortened to Unishippers, and a franchise program was established. The franchises eventually did better than the company-owned ones.
United Shippers was doing about $250,000 worth of business monthly in 1987 when Nelson went to Airborne Express and received a five-year contract and later an 18-year contract, necessitating changing the database to Airborne in 1988.
Each franchise costs 5 cents for every person in the county or counties covered by the franchise. With the buying power of 100,000 businesses, Uni-shippers' franchises receive a 40 percent discount from Airborne Express, and Unishippers receives a 6 percent royalty.
A company wanting to make a shipment calls Airborne Express, which sends a truck to pick up the item. After putting an account number on the shipment, Airborne Express sends the franchisee a bill. The franchisee then pays Unishippers its royalty and the customer also saves money, Nelson said.
Because the size of shipments vary, Unishippers' franchises also ship via Pilot Air Freight, BAX Global, Sky Courier, Mailfast, TNT Express Worldwide and Viking Freight. A year ago, Robert G. Brazier, president of Airborne express, wrote to Nelson and said Uni-shippers was his largest domestic customer with $70 million in 1996. That is expected to exceed $100 million in 1998.
Nelson said all of the franchisees are expected to gross $200 million this year. He is looking for a 30 percent annual growth. Uni-ship-pers has 35 employees in the Salt Lake office, 600 employees nationally and 350 people on the streets selling discounts to businesses for shipping items.
He said Unishippers is a different kind of franchise operation because the franchisees don't have to continually sign up. Nelson said it's a very automated business, but the initial investment is relatively small, costing only between $2,000 and $4,000 for a computer printer and accessories; $1,000 to $3,000 for office furniture and equipment and $1,500 to $3,000 for travel expenses to train two people.
Operating expenses include the royalty fee, sales representatives' commissions, printing and supplies, postage and mailing and bad debt write-off. Nelson said these figures are taken from an average of the dozens of franchises.
Nelson said Unishippers fills the niche of express shipping for small businesses having an uneven schedule of shipments. From one package to hundreds, the companies doing business through Uni-ship-pers still receive the discount.
In addition to the express delivery, Unishippers formed Auditpro in 1997 to audit the shipments of large shippers for accuracy. Nelson said Auditpro also is a franchise operation and franchises are being sold.