Buying 3-4 routes with a manager already in place

Discussion in 'FedEx Discussions' started by Spark, Apr 3, 2012.

  1. Spark

    Spark New Member

    Hi guys I just read johnnys post about buying a route but I had a question for the owners of routes, is it worthwhile or a profitable investment to buy 4 routes and pay for them in cash(so we get a better price vs financing) then I have a previous owner and driver manage the routes( he is a friend of the family) and therefore I am completely a silent investor? What kind of return could I get on my money? the Profits would be split between two silent investors and the manager, any thoughts or suggestions would be greatly appreciated and welcomed, thx
     
  2. Mr Shifter

    Mr Shifter Active Member

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  3. Mom

    Mom New Member

    It's impossible to know for sure what your return would be without seeing a few years of revenue information, but I agree with Mr. Shifter.

    In these deals I have seen in the past, there is a real reason the current owner finds it too risky to keep himself invested...especially if he claims to want to stick around to manage the organization.

    Splitting the 'profits' three ways in a deal like this could get tricky, too. There are two ownership situations like that in the facility I operated from and I speak regularly to all parties...in general, it seems like a nightmare.

    Don't take my word for it though. Take all available financials to a good CPA or similar professional and have them value it and put together projections, and go from there.
     
  4. BrownBlue

    BrownBlue New Jack

    Seen quite a few in my area go under or had the contracts cancelled for just about anything to give them to some other shmo.
     
  5. Spark

    Spark New Member

    Thx for the quick responses, the guy who is selling is getting out completely, the person who will manage it for us is somebody completely different, two of us( one being me) will be completely hands off
     
  6. bbsam

    bbsam Moderator Staff Member

    Completely hands off? I'll take your money and let you stay hands off. I know you mean it in a metaphorical sense, but I would be very wary of just what your rights are in the eyes of the company and of the law.
     
  7. Spark

    Spark New Member

    yes, of course metaphorically, however, if I buy the routes and the contract is done that way as split w/ three people and we designate one of us as the manager, what could be the problem? i appreciate any and all input, thx bbsam, you and mom are both very helpful as i have read all of your other posts, bbsam, question to you if the routes are run well, what kind of return on equity can you get from a route based on your experience? would you or mom be able to give me examples of the amount you guys make on a route? (sorry, don't know if this is possible) this would be a side investment for the two silent investors, and a full time business and work for the third owner and manager,
     
  8. bbsam

    bbsam Moderator Staff Member

    I am basically gagged in terms of talking about profits due to a disclosure agreement all ISP candidates are required to sign. I can say, however, that seeing Ground pull an 18.8% profit margin last quarter doesn't make me want to cheer. It makes me want to throw up.

    As far as purchasing a route with partners goes, FDX signs agreements only with corporate entities (not LLC's, etc) and thus cannot and will not view all partners as equal owners. Things can get sticky.
     
  9. Spark

    Spark New Member

    i see, thx for your guys help, mom, if you have a second can you go in detail further about buying routes when they are on fire sale? are you actively asking people, are you just paying attention to what's going on? did you finance them or buy them out with cash? any more thoughts is appreciated, since you, bbsam, and other contractors are not allowed to give out your profits because of disclosure agreement, could either one of you or anybody else tell me what profit margin they would be happy to have or they are shooting for?, is it , 5, 10, 15, or whatever percent as a general rule?
     
  10. bbsam

    bbsam Moderator Staff Member

    Personally, for the risk and investment I would say 25%. Sounds high, but it does piss me off that they are more than willing to let people simply go farther and farther into debt for their own bottom line. And that's not even paying my drivers Express scale wages.
     
  11. Nick9075

    Nick9075 Member

    Can you explain this more? I was going to buy 4 routes in the CT area with drivers already in place for cash but not exactly 100% sold & comfortable. The seller has since dropped the price from 340K to 285K cash. I asked about how much you are under the control of Fedex and was told you have complete complete control as far as running/managing the routes.
     
  12. this will be good reading
     
  13. Nick9075

    Nick9075 Member

    Do tell.. The routes I have been looking at have been averaging 500-700 packages a day. The ISP has already grossed over $110,000 thru the end of March. Is buying these routes to run semi absentee (I am trying to keep one on as a manager) out of state a bad idea?
     
  14. huskres

    huskres Member

    I would look to another business to put your money in where you have absolute control. Just sold my route a couple weeks ago.
     
  15. Nick9075

    Nick9075 Member

    Why?? The numbers have been verified. I went thru all the settlement sheets thru March 2012 & 2011
     
  16. Spark

    Spark New Member

    Yes nick I would be interested in learning also why people are not interested in the business when like you the numbers I'm looking at look pretty good, nick you mentioned elsewhere that the gross revenues on your routes was over 470, what was the net profit on that gross?
     
  17. huskres

    huskres Member

    Why? Because you can be doing 81 mph in a 75 zone in your personal vehicle and get your contract pulled if they dont like you. Your driver can get in an accident and cause no injuries but more than 50k in damage, which really isn't much these days and they can pull your contract. Your driver can scan a package and use the wrong code and they can pull your contract also. They have absolute control over your business. Do you want someone to have that much leverage over your so called business? You also have no real recourse, its damn hard to fight them in any type of legal action.
     
  18. CJinx

    CJinx Well-Known Member

    Or don't break the law, avoid preventable accidents, and scan correctly?