Buying a Fedex Ground Route

[Xquestionman]

I am not looking at Chicago, I am on the east coast. Anyhow, seems to me that the labor issue works better in a more rural market...but not too rural cause you need the population density. I would figure the more rural an area is the less jobs there are which would mean less turnover.

 

[bacha29]

Buying up a bunch of Fedex routes has potential but it is by no means fail safe. From a national perspective the demographics are all over the place so are local economies and labor markets. Again you're only as good as that guy behind the wheel . From a character perspective getting top of the scale people requires top fo the scale money or close to it and getting X to give you the kind of money needed to get them is difficult and likely to get even harder now that the stock has fallen from 185 to 125 down by one third.Transforming people with serious character flaws and criminal backgrounds into fit and productive members of this society dedicated to the job and their employer made be your biggest if challenge if those are the only people you can get. I am not a purveyor of gloom and doom but you will be faced with the challenge of taking a seriously flawed business model in a strict command and control environment with terms that do not favor you in any way shape or form and make it a success not just for X but for you as well. Best wishes.

 

[Xquestionman]

I am surprised to hear that X does not have mandates on who you can hire. Seems like they control everything else. Does the contract permit you to hire someone with a criminal background?

 

[It will be fine]

Bacha, it's really not that hard to find good guys to drive. I know you never tried, so why do you talk like you know? Everywhere people are being paid poorly, that's all jobs in every industry. With the entry level driver program you can train anyone with no experience. It's not hard to grab a hard working warehouse guy that's only getting part-time hours and teach them to drive. You are certainly a purveyor of doom and gloom.

 

[It will be fine]

I am surprised to hear that X does not have mandates on who you can hire. Seems like they control everything else. Does the contract permit you to hire someone with a criminal background?

There are requirements and they can't have a criminal background. The control issue is a bit overblown around here. FedEx has very little to do with my day to day operations. They have no control over me, my schedule or how I choose to set up my routes and run my business. The major control issues were over guys that had 1 truck they drove everyday, you can read all the lawsuits for more info on that. Most of the issues have been addressed in the ISP model.

 

[bacha29]

Like hell I never tried. Nobody in my barn trained more people than I did. Warehouse? What warehouse? The only warehouse in my area had people on rotating shifts Too often the people I trained were confiscated by multi routes who treated people badly and fired on a continous daily basis. if fact that it got so bad that the people the terminal trained were being taken at such a rate that the terminal reached the point where they finally told the multi routes to fine their own replacements. It was a good move because finally they had to pay a respectable rate and treat their people like human beings. As for command and control nobody's buying you claim of autonomy as long as X's DOT numbers are on the side of your trucks.So get back to me on these autonomy claims when you're hauling under your own authority.

 

[Xquestionman]

The DOT numbers are X? That makes no sense to me. Please explain. Another question I have is if you can incorporate your biz in a tax friendly state like Delaware to avoid state corp taxes....or does X require for some reason that it be incorporated in the state where your terminal is etc?

 

[bacha29]

You drive under the Fedex operating authority as granted by the DOT. You haul their freight/packages under their DOT operating number which is on the side of every Fedex Ground truck along with the PUC numbers of some states. And it's that operating authority that is the be all that ends all.

 

[UpstateNYUPSer(Ret)]

You drive under the Fedex operating authority as granted by the DOT. You haul their freight/packages under their DOT operating number which is on the side of every Fedex Ground truck along with the PUC numbers of some states. And it's that operating authority that is the be all that ends all.

One of our local ground guys has his corporation name and what I assume to be his DOT number on the side of the car just behind the driver and passenger doors.

 

[It will be fine]

The DOT numbers are X? That makes no sense to me. Please explain. Another question I have is if you can incorporate your biz in a tax friendly state like Delaware to avoid state corp taxes....or does X require for some reason that it be incorporated in the state where your terminal is etc?

It's common in the industry. To display the FedEx ground brand on the trucks they have to operate under their DOT number. Contractors lease their vehicles to FedEx to operate under their authority. It saves a lot of headaches with regulation compliance.
You have to incorporate in the state you do business in.

 

[It will be fine]

One of our local ground guys has his corporation name and what I assume to be his DOT number on the side of the car just behind the driver and passenger doors.

It's still the FedEx dot. The new decals say owned by Boris inc. operated by FedEx Ground.

 

[bacha29]

And X decides what the sign looks like and where on the truck it will be displayed.

 

[STFXG]

You could have a subsidiary in the state you operate and a parent company in Delaware if you're going that route.

DOT numbers are only required on vehicles over 10k gvw.

If you're buying HD routes operating 2500 sprinters or similar smaller trucks you wouldn't need the DOT numbers. You also wouldn't have to worry about hours of service or FMCSA stuff. You wouldn't be covered under the motor carrier exemption of FLSA though, so you would be required to pay OT.

 

[Xquestionman]

Ok so guys are setting up subsidiaries with parent corps in DE? I am just trying to figure out a way to avoid that corporate tax, plenty of companies do it and its legal so I guess my real question is if X requires via the contract that you set the entire corp up in the state you are in?

 

[STFXG]

There's really no need if you are going to take the profits as a dividend.

 

[bacha29]

In most cases the guys as a requirement of X set up as S corps but are required by law to take a reasonable salary and profit above that salary is declared a distribution and are subject to FIT only. S corps are set up this way. X would not go along with LLC's or formal partnerships. S corps and C corps and that was about it.

 

[Xquestionman]

Gotcha, so you just take the whats left over as a dividend on a K1 or 1099 and don't retain any earnings in the corp, I should have thought of that...

 

[bacha29]

Right: In my case however since I'm single and have no family or mortgage I paid the tax on the distribution but left it in the scorp as after tax retained earnings.. The 3 of us have told you just about everything there is to tell you. Yes there can be quite a bit of good. Much bad and more ugly than you want to see. Sooner or later you will have to smilet or get off the pot. If it's a sure bet you're looking for this sure as hell ain't it. It's not a question of you thinking about this or that but rather X telling you that this is the way it's going to be.

 

[STFXG]

This thread should be a sticky. Get on that @bbsam !

 

[bbsam]

This thread should be a sticky. Get on that @bbsam !

Now if have to clean the screen...not sure if did that right.