Looking at Opportunity to become FedEx ISP

I have the opportunity to purchase 5 routes and could use some advice. I think it will be difficult to value the group of routes because the tax returns are based on a business that currently owns more than these 5 routes. Are the FedEx Settlement Statements by route? Can you suggest any other documents that I should review?
 

Serf

Well-Known Member
I have the opportunity to purchase 5 routes and could use some advice. I think it will be difficult to value the group of routes because the tax returns are based on a business that currently owns more than these 5 routes. Are the FedEx Settlement Statements by route? Can you suggest any other documents that I should review?
Roger that. Also, I was hoping you could intellectually DISAGREE with my post about Non DOT and DOT drug tests. Instead of showing up here and disagreeing. Good luck, robot.
 

It will be fine

Well-Known Member
I did get a lot of information, but was concerned that the picture has changed since the conversion to the ISP model.
If they are already in ISP, settlement is only broken down by truck. The truck could be on a different route on different days. It will be difficult to value just a portion of a total contract since you won't know how the portions of settlement besides stops and pieces will be split up between the 2 new contracts. I would ask why the seller is only selling 5 routes and not everything.
 

dmac1

Well-Known Member
If they are already in ISP, settlement is only broken down by truck. The truck could be on a different route on different days. It will be difficult to value just a portion of a total contract since you won't know how the portions of settlement besides stops and pieces will be split up between the 2 new contracts. I would ask why the seller is only selling 5 routes and not everything.
Needs to sell to keep out of bankruptcy.
 

STFXG

Well-Known Member
How would this kind of deal work under ISP? If I own 10 PSAs and sell off 5 after conversion to ISP, would I and the new operator both have to renegotiate with FedEx over the two CSAs? I'm assuming that's the case.
 

bbsam

Moderator
Staff member
How would this kind of deal work under ISP? If I own 10 PSAs and sell off 5 after conversion to ISP, would I and the new operator both have to renegotiate with FedEx over the two CSAs? I'm assuming that's the case.
You are correct. However, there is a calculator available to give you a good idea of the revenue each CSA (contracted service area) would generate before the sale.
 

STFXG

Well-Known Member
You are correct. However, there is a calculator available to give you a good idea of the revenue each CSA (contracted service area) would generate before the sale.
That makes sense. Have fedex define the area and give you average daily volume for that area. At least get a ballpark value.
 

bbsam

Moderator
Staff member
That makes sense. Have fedex define the area and give you average daily volume for that area. At least get a ballpark value.
Right. Plus they give a feel for "Annual Service Charge". Usually higher in rural areas.
 

bacha29

Well-Known Member
Sounds to me like the guyis trying to sell his least profitable routes. And you other guys know a route is only as good as the demography in which it operates.
 

Crozz

Well-Known Member
Routes range from $35k to $75 without trucks this all depends on if your routes are in town routes or rural routes. You need to know the units per truck running if it's 85k a unit run if it's $105k a unit it's worth going after. If anyone disagrees with this they don't know what they are talking about.
 
Thanks for the advice. I believe they are all in town, but I will be reviewing the service areas to confirm this. Crozz, the information that you gave me is more consistent with the asking price and other information that I got through research.
 

dmac1

Well-Known Member
You should wait a few years for all the legal issues to work themselves out, and see what actions various states take against the ISP model. You stand to lose your entire investment plus whatever value the vans have. I would never invest in a business that you know is undergoing such close scrutiny by all legal authorities, even if your state isn't directly involved.

Those selling routes, or even those who own routes have a vested interest in talking down the negative and talking up the positive. Just think about the natural bias they have to protect their own. IN 4-5 years, if the model stamds on firm legal footing, you will know. At this point, unless you are getting a discount for the legal issues, paying as much for a Fedex ISP business doesn't make sense. If the price you are paying is based off comparable businesses with similar income potential but without legal questions surrounding it, then you are not getting the fair price.

Maybe there are a lot of routes being sold for comparable prices, but there are a lot of naive people who see this as an easy business to understand and operate. If 1000 people across the country overpaid for a business frought with issues, it doesn't mean that you should pay the same price. It isn't like owning a home you overpaid for. At least you can live in a house if you can't sell it. But as I said, you may be paying for a 'business' that has no value at all in a few years. If you can find a bank to loan you money, as they will on a legitimate business, let the bank take the risk.

IN a few years, since value of a business is based on income compared to other businesses, you will still get the same value for your money without the legal questions if they are fully resolved.
 

bbsam

Moderator
Staff member
You should wait a few years for all the legal issues to work themselves out, and see what actions various states take against the ISP model. You stand to lose your entire investment plus whatever value the vans have. I would never invest in a business that you know is undergoing such close scrutiny by all legal authorities, even if your state isn't directly involved.

Those selling routes, or even those who own routes have a vested interest in talking down the negative and talking up the positive. Just think about the natural bias they have to protect their own. IN 4-5 years, if the model stamds on firm legal footing, you will know. At this point, unless you are getting a discount for the legal issues, paying as much for a Fedex ISP business doesn't make sense. If the price you are paying is based off comparable businesses with similar income potential but without legal questions surrounding it, then you are not getting the fair price.

Maybe there are a lot of routes being sold for comparable prices, but there are a lot of naive people who see this as an easy business to understand and operate. If 1000 people across the country overpaid for a business frought with issues, it doesn't mean that you should pay the same price. It isn't like owning a home you overpaid for. At least you can live in a house if you can't sell it. But as I said, you may be paying for a 'business' that has no value at all in a few years. If you can find a bank to loan you money, as they will on a legitimate business, let the bank take the risk.

IN a few years, since value of a business is based on income compared to other businesses, you will still get the same value for your money without the legal questions if they are fully resolved.
You seem to have a bias against Fedex Ground. Why is that?
 
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