The Thinker

SuperShuttle: Have you no shame?

No, I suppose not. You are a business, after all, and businesses are all about making profits through all means fair and unfair. So this article should not have surprised me. Yet it made me, a mild manner person, so irate I wanted to throw a brick through the window of SuperShuttle’s corporate offices.

SuperShuttle of course is the ubiquitous blue van found in many U.S. cities. They exist principally to get travelers to and from the airport. I fly reasonably regularly, mostly for business, so I cannot help but be acquainted with SuperShuttle. Most often I am on a SuperShuttle going to and from Denver International Airport. Most recently I was on a SuperShuttle from Boulder to DIA on April 1st.

A couple of years back I was chatting with the driver (they tend to be quite loquacious with customers) and I learned that he was not an employee of SuperShuttle, but a franchisee. He was mentioning that he had to take some time off from work to finish his taxes, not a small thing if you run your own business. I remember finding his remarks curious but until today I had forgotten about them. But today’s Washington Post article resurfaced this memory, and the memory of the less than a handful of us passengers who made that trip from Boulder on April Fools Day on a blue SuperShuttle.

It’s clear where SuperShuttle is making its money, and it is principally off franchisees. Holy nickel and diming, Batman! They are more creative in adding fees for their franchisees than TicketMaster is at adding reservation fees, surcharges and Will Call fees. Only it’s not customers who are paying these fees. Shuttle rates tend to stay relatively static. Rather it’s the franchisee. As the Post reporter Emma Schwartz reports it:

Enajekpo doesn’t complain too much. Any money will help, especially this week when he already owes SuperShuttle $1,054.45. There’s a $197.59 fee to pay down his franchise purchase, $179.20 for his van lease, $144.31 to cover insurance and a weekly $500 system fee for using the SuperShuttle reservations and equipment. He also has $33.35 in fees that SuperShuttle charges him for customer discounts or additional booking fees from third-party Web sites.

On top of that, Enajekpo owes SuperShuttle $79 from last week. Plus, he’ll have to pay the company revenue sharing fees — 10 percent of fares for runs to the airport and 27.5 percent for runs from the airport, plus an airport fee.

SuperShuttle is hardly alone in its franchisee model. Fedex drivers are often franchisees, not to mention the guy at your local UPS store.  Many franchise opportunities are great. Others, like apparently SuperShuttle’s, are traps that screw many if not most who sign up on the hope of living the American dream.

Fees are just one way these drivers are screwed, but there are so many other ways to screw them. The most common way, which I witnessed during the two years as a commission salesman, is to saturate the market with salesmen. What it did was turn the sales floor into a dog eat dog world, where salesmen would literally race to be first to a customer entering their sales territory. But at least during my days doing retail, for the now defunct Montgomery Ward Corporation, I was an employee. (The Wards brand was purchased, but it is an online only retailer now.) Granted, my time as an employee would have been pretty limited if I could not earn in commissions more than they had to pay me in minimum wage. But I had certain rights and while I might in theory need to pay Wards back for wages I did not earn in commission, payment would come in the form of a kick in the ass out the door with my pink slip. A franchisee for SuperShuttle is not an employee, thus has no rights, but is legally obligated to pay for the privilege of driving a blue SuperShuttle van, plus those other fees, with no guarantee that he will have enough customers to make it all profitable.

Just as Wards loved to saturate the sales floor with extra salesmen, SuperShuttle has learned to saturate the market with franchisees. They say they don’t do this, but the article makes clear that many franchisees simply cannot make enough money to keep up with their fees, let alone earn minimum wage because they don’t have enough customers. The fees are owed regardless, but curiously there are no corporate guarantees that they will have sufficient customers to earn those fees. The predictable result is that many if not most of these drivers are caught up in a no-win cycle. They are unable to drop the franchise because they have payments to make on their vans for which they are legally liable, and no way to know if SuperShuttle will deliver them enough customers to earn enough money. The predictable results: a lot of bad feelings, angry franchisees and lots of long hours hoping to make up the revenue they need to keep their business afloat.

Some of these franchisees are wondering why they aren’t employees. SuperShuttle used to have employees driving their shuttles, and they had salaries and benefits. The bean counters apparently ran the numbers and determined the company would be more profitable if they were franchisees instead.  The predictable result: lots of franchisees feeling like they have been screwed. They have been. Money is essentially being pulled from their pockets to keep SuperShuttle profitable. It doesn’t appear that SuperShuttle plans to raise rates, or if they do, that they will share more of it with their franchisees. And why the hell would they? They have their franchisees right where they want them: by the scrotum. And why not saturate the market with new franchisees? After all, all those fees just adds to their bottom line.

Franchising has gone too far, but we may not yet have seen its logical end. If Fedex and SuperShuttle drivers can be franchised, then why not airline flights as well? I should probably hesitate to give airlines like United any ideas, but they could charge a franchisee $100,000 a week for the right to run an aircraft with their logo on it, and let them worry about aircraft maintenance, and hiring pilots and flight attendants. United would still control the fare, of course, but they wouldn’t need any stinking employees, in fact they could be in hock to them instead. What a win for United shareholders!

SuperShuttle in fact has gone too far. Apparently in Denver, SuperShuttle drivers have won the right to form a union, but Denver is the exception. Shuttle drivers perform a service, protect the reputation of SuperShuttle, and they will do a much better job of it if they become the employees they actually are, rather than the legal abstraction of a franchisee.

I must be a socialist, but I think there should be legislation tightly reigning rules for franchises. There is a large difference between owning a McDonalds restaurant franchise where you have a store parked at one location where the owner hires his own employees and a SuperShuttle franchise consisting of one guy or gal where you are constantly on the move and have no say about how many other SuperShuttle franchises you will be competing against. These employees-in-essence absolutely deserve the right to be real employees. Meanwhile, anyone thinking a SuperShuttle franchise is going to be his or her step to realizing the American dream should read this article and look elsewhere.

As for me, I discovered that the apparently socialist Denver Regional Transportation District has hourly buses between Boulder and DIA, even early on Sunday mornings when I need to leave, for a $13 fare, less than half of what SuperShuttle charges. They even load and unload your suitcases for you. Moreover, their drivers are employees who earn a living wage. I’ll be on the Route AB bus next time.

4/23/12: Corrected to show that Fedex drivers, not UPS drivers, are often contractors. Also found this video of conditions at LAX:

 

3 Responses to “SuperShuttle: Have you no shame?”

  1. 11:54 pm on April 22 2012, Joseph said:

    Thank you for your post. You are so correct on your observations. SuperShuttle is a predatory and ruthless company. They take advantage of people that are resigned to driving because they’re usually immigrants that don’t see much hope other employment. Additionally, most have invested what little money they have to buy a van and buy a franchise for $30-50K; thus it’s not easy to walk away. In Los Angeles, they continue to add more companies and franchises: Express Shuttle and Execucar to name a few. No wonder drivers don’t make more than minimum wage.

  2. 12:31 am on April 23 2012, Justin Scott said:

    Regarding airlines, it’s not a franchise per se, but there are a number of major airlines that outsource a fairly large percentage of their flights to smaller regional carriers that act, for all intents and purposes, like they are part of the larger carrier. Their employees and aircraft carry the larger carrier’s logo, all of the branding matches up, the flights seamlessly connect, etc. To the passenger, it all looks like the same company through and through. Only when you get into the fine print on the ticket will you notice that one or more legs of your flight are “operated by” some other company. In the event of an accident, that smaller carrier is liable, not the larger carrier that you purchased the ticket from. It’s similar to a franchise model, and the contracts are usually set up in such a way that the smaller carrier is only paid for completed flights which makes them more apt to push the limits for weather minimums, inspections, pilot fatigue, and the like.

  3. 8:31 am on April 23 2012, Mark said:

    Yes, I am aware that most major airline carriers subcontract to regional carriers the short, local flights in the turboprops and stuff. This is not quite the same thing as what SuperShuttle does though, because these regional airlines tend to be large airlines in themselves, just slap the United Express logo or whatever on their planes.

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