So a business with depreciating assets (ya know, like every business out there) will be worth less because the value of those assets are declining? You aren't smart enough for this conversation.
Independent contractor routes that net over 1,000,000 a year
- Thread starter Bigmike3way
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So a business with depreciating assets (ya know, like every business out there) will be worth less because the value of those assets are declining? You aren't smart enough for this conversation.
Thanks for explaining what depreciation is. Now maybe you can explain how a business with depreciating assets will be worth less because the value of them are declining? Do you know that there are other things involved in the value of a business besides their tangible assets?
Wow!!!!! Do you think that when the total value of a business assets goes down, the value of the business goes up???? Cash flow is only part of the value. You seem like you don't want to even admit that the decline in value of the vehicles matters at all. Simple question- Which route is worth more- one that has a brand new truck, or one with no truck at all????
It really is that simple. And if you buy and sell a route in a one year period, unless you can prove rapid income increases in the future, you will lose money on the route if it includeda truck, or if you sell the truck as part of the business.
Some people, maybe you, think that a $5000 depreciation deduction that you take saves them $5000. That would make you wrong. That $5000 write-off saves you the TAXES owed on the $5000, or maybe $1500.
It really is that simple. And if you buy and sell a route in a one year period, unless you can prove rapid income increases in the future, you will lose money on the route if it includeda truck, or if you sell the truck as part of the business.
Some people, maybe you, think that a $5000 depreciation deduction that you take saves them $5000. That would make you wrong. That $5000 write-off saves you the TAXES owed on the $5000, or maybe $1500.
The assets are being used to produce revenue, far more than the cost of the asset. Every asset has a useful life. The value of the trucks is far less interesting to a buyer than the contract is. The contract is the biggest factor in the price of routes.
FedEx ground package volume is growing at an acceptable clip to "prove" this
You seem not to even realize that fedex can cancel your contract any time, and non-renew it any year. So in reality, the only real asset is the vehicle. No one in their right mind should sign an agreement that they can lose even if they do everything right. At a minimum, that fact is a huge devaluator of the potential income generated. You better take a look at California, where fedex is already buying out routes for a measley $30k each. When they get to you, you better have about 30 routes under contract to get your $1 million. And at that point, you better not owe anything on your vans. You won't be able to off load 30 of them when thousands of others are on the market at the same time. PS_ supplementals are worth nothing extra when fedex buys you out, but you are still stuck with a highly used vehicle.
It will be fine
Well-Known Member
Why would FedEx buy out routes when they can take them? I don't believe this is happening, it doesn't make sense. Are you saying fedex is buying service area back from contractors and servicing it with their own employees?
Crozz
Well-Known Member
FedEx is not just terminating contracts just because, they are switching to ISP and if your not at scale then you are on the wrong end of what FedEx wants and because of that they are letting these guys go. For the guys that are at scale and run their business right FedEx has no interest in running it themselves period. And for the comment about values of routes no investor is looking at the value of the vans. The only thing an investor wants is the contracts. Most smart investors know that their is a reason the contractor is selling and that's because they can't handle it nor do they know how to run a real business. Contractors where good on a 1 route contract when it involved having employees and running the route right they folded just a fact. Been around ten years and seen this happen over and over in two different terminals.
Buying out routes???
Don't blatantly lie, you have no credibility. They can incentivize an owner to sell to a current contractor. I will spell it out further they give money as well as the buying party gives money to compensate the seller so they can sell for a reasonable price. FedEx is not buying out contracts.
They ARE making offers to contractors because in CA even the ISP is very legally suspect and fedex knows that. Instead of facing more legal costs, Fedex is buying routes with the stipulation that the acceptance settles all legal claims.I suppose you didn't read about the lawsuit that found McDonalds was the co-employer of people employed by the franchisees. If fedex is the co-employer, as the dep pockets, they will assume all liability for costs. Why would fedex want to be a co-employer with some loser?
It was after that McDonalds casewhen fedex started the buyout. ISPs in CA are not willing to buynew routes from contractors because most of them know the ramifications. California is just the first. If fedex can limit the number of class members in a lawsuit by buying back routes in exchange for quit claims, they limit their damages.
Are you unaware that damages were assessed at an average of $100k per contractor in just the decision from the 9th circuit court???????
Not all states have the same laws, but fedex won't want to operate one system in the largest state plus others, and another system in other states. Fedex wants to be done with the lawsuits. Over 1/4 of a billion dollars lost in just one state is making Fred rethink things.
It was after that McDonalds casewhen fedex started the buyout. ISPs in CA are not willing to buynew routes from contractors because most of them know the ramifications. California is just the first. If fedex can limit the number of class members in a lawsuit by buying back routes in exchange for quit claims, they limit their damages.
Are you unaware that damages were assessed at an average of $100k per contractor in just the decision from the 9th circuit court???????
Not all states have the same laws, but fedex won't want to operate one system in the largest state plus others, and another system in other states. Fedex wants to be done with the lawsuits. Over 1/4 of a billion dollars lost in just one state is making Fred rethink things.
It will be fine
Well-Known Member
You're making stuff up here. Why would they buy routes when they could take them? In an ISP transition all contracts are voided at a set date. They wouldn't then turn around and start buying the new contracts. I think you're confused.
Here is a link to help you understand the issue. Under this law, Anyone who supplies workers to fedex( ISPs) to do Fedex's core business (delivery) is a de-facto partner of fedex, with fedex assuming liability for the ISP.
http://independentcontractorcomplia...-recruiting-firms-but-risks-can-be-minimized/
Fedex doesn't want partners, so after they reduce the number of potential lawsuits by reducing the number of people they contract with, they WILL cancel the contract. Fewer contractors means fewer class members.
Fedex will eventually shift to all employee drivers, with more flexibility to decide who delivers what package, and where and when. Fedex drivers will still supply the vehicle, which fedex will have more control over, and drivers will be reimbursed, by hourly pay, vehicle reimbursement, and maybe even a per stop and package pay. In fact, the pay method may look astonishingly like the original system under the single contractor system.
But, be clear, Fedex DOES NOT want to be legal partners with a bunch of small time 'ISPs" and have all the liability that a partnership exposes them to. The efficiency of having full control over drivers and the cost saving of still not having an entire fleet of vehicles will still keep them very competitive with UPS.
http://independentcontractorcomplia...-recruiting-firms-but-risks-can-be-minimized/
Fedex doesn't want partners, so after they reduce the number of potential lawsuits by reducing the number of people they contract with, they WILL cancel the contract. Fewer contractors means fewer class members.
Fedex will eventually shift to all employee drivers, with more flexibility to decide who delivers what package, and where and when. Fedex drivers will still supply the vehicle, which fedex will have more control over, and drivers will be reimbursed, by hourly pay, vehicle reimbursement, and maybe even a per stop and package pay. In fact, the pay method may look astonishingly like the original system under the single contractor system.
But, be clear, Fedex DOES NOT want to be legal partners with a bunch of small time 'ISPs" and have all the liability that a partnership exposes them to. The efficiency of having full control over drivers and the cost saving of still not having an entire fleet of vehicles will still keep them very competitive with UPS.
It will be fine
Well-Known Member
That says Fedex will share the liability for wages and worker comp. In the ISP agreement contractors agree to audits ensuring anyone performing services is treated like an employee by the ISP. ISPs have to prove they pay their drivers at least minimum wage and cover them with work comp insurance. According to that article, this law has no affect on the ISP agreement. FedEx has already taken the steps to limit their liability according to this law.
I don't see how you think this leads to Ground servicing areas with its own employees. It just says FedEx needs to ensure they are paid the legal minimum, and they already do that.
I don't see how you think this leads to Ground servicing areas with its own employees. It just says FedEx needs to ensure they are paid the legal minimum, and they already do that.
If this is what you believe, then you don't understand current contract law, any of the possible changes coming in the interpretation of that law, nor the ISP model ad it now exists.
So tell me. What has to change to bring about what you are suggesting?
Nothing. It is happening to fit the laws. Not tomorrow, not next week. It took almost ten years to get the Kansas decision and the Ninth Circuit Court Decision.. Fedex knew they were going to lose, but knew they could make money while they delayed it as long as possible.
Now other cases are coming to fruition- like the McDonalds case. Why you guys can't understand how that relates to you is why you are so gung ho on fedex. An ISP is going to face attempts from the teamsters at unionization any day now. That ISP with 10 drivers won't be able to replace them and if there are several ISPs with 5 or more drivers at one terminal, the union could shut you down in 15 seconds. If you aren't paying medical, dental, vacation, holiday pay, and a wage of close to $20 per hour plus overtime, you are going to be in trouble. Ironically, the decision to go ISP makes it easier to union drivers. It will be a lot easier to unionize one ISP than the whole terminal. First they ask for $14 an hour. They get it from the ISP who is afraid he will lose his contract with fedex. Then slowly, all the other drivers force the whole terminal to pay $14 an hour. Next year, it is $17 an hour. If you can't envision how this is going to go down, you are simply blind. Once the entire terminal is unionized, they go on strike. Fedex fires all the ISPs, and hires scabs, brings in managers, and scrambles to keep the terminal working.
ISP won't work. That's it. Can you afford to fight an attempt by your drivers to unionize???? Fedex is better off without you.
