Looking at Opportunity to become FedEx ISP

Discussion in 'FedEx Discussions' started by Mama Llama, Oct 8, 2015.

  1. Mama Llama

    Mama Llama New 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?
     
  2. Operational needs

    Operational needs Well-Known Member

    If you do a search all that info has been posted multiple times.
     
  3. Mama Llama

    Mama Llama New Member

    I did get a lot of information, but was concerned that the picture has changed since the conversion to the ISP model.
     
  4. Serf

    Serf Active Member

    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.
     
  5. It will be fine

    It will be fine 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.
     
  6. STFXG

    STFXG Well-Known Member

    I'll make your valuation easy. 50k per route plus the value of the trucks. You're welcome.
     
  7. FedEx GT

    FedEx GT Active Member

    I think that would depend on where you are at. That is nowhere near valuation in my terminal.
     
  8. STFXG

    STFXG Well-Known Member

    Would you pay more without any way to put a value on them?
     
  9. dmac1

    dmac1 Active Member

    Needs to sell to keep out of bankruptcy.
     
  10. STFXG

    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.
     
  11. bbsam

    bbsam Moderator Staff 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.
     
  12. STFXG

    STFXG Well-Known Member

    That makes sense. Have fedex define the area and give you average daily volume for that area. At least get a ballpark value.
     
  13. bbsam

    bbsam Moderator Staff Member

    Right. Plus they give a feel for "Annual Service Charge". Usually higher in rural areas.
     
  14. It will be fine

    It will be fine Well-Known Member

    They can expect the combined revenue of the 2 CSAs to be less than the original 1. Because... Ya know why not? That's how FedEx rolls.
     
  15. UpstateNYUPSer

    UpstateNYUPSer Very proud grandfather.

    www.howmuchismyscamworth.com?
     
  16. bacha29

    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.
     
  17. Crozz

    Crozz 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.
     
  18. Mama Llama

    Mama Llama New Member

    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.
     
  19. dmac1

    dmac1 Active 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.
     
  20. bbsam

    bbsam Moderator Staff Member

    You seem to have a bias against Fedex Ground. Why is that?