Looking at Opportunity to become FedEx ISP
- Thread starter Mama Llama
- Start date
Crozz
Well-Known Member
You act like you know it all witch nobody does. FedEx is a great investment, but with lots of risk and with lots of rewards. You have to do your research before you by in if you buy routes less than 5 psa or 500 stops then you failed your research and know your numbers and you better have help from someone with experience. If you think u can buy in fedex and just become successful then your crazy. Ten years of experience has made me and my crew what it is today. 1 truck to 25 in two terminal and 7 line hauls. I've taken big risk I have failed a few times. If you buy after ISP has taken affect good luck getting in the game you better have big pockets. Fedex is great and has many flaws but what company in the US doesn't have flaws. Just my rant for today.
I saw a lot of people hurt by fedex fraudulently claiming that they were operating with independent contractors when it came out later that fedex intentionally created the 'contractor agreement' solely as a basis for them to avoid costs.. Simple as that. As soon as the costs of the ISP model change, they will change again. Anyone thinking of buying needs to know the history of fedex, especially since all the same people are in positions of power. Their mindset has not changed.
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Fedex has changed models already. What makes you believe so earnestly that they won't change again???? I don't where you get so much trust in a company that has publicly stated that they don't care about anything but lowering costs?????? IF/when the ISP model isn't in fedex's best interest, they have reserved the right to void all the contracts without compensation. Why would you pay to buy a business when your partner reserves the right to cancel anytime they decide. I got in without spending a dime, and would never pay for a business with no real value. Buying a route or routes or service area is buying a job that can be taken away anytime. The potential buyer needs to be aware of the terms of the contract- including the fact that fedex can cancel at any time without cause, and leaving you without recourse. Why pay for that??????????
You seem to think you know it all, and of course you have a vested interest in making people believe you have a business worth thousands of dollars when tomorrow it could be worthless. If more and more people know that fedex can cancel anytime without cause before they buy, it lessens your value. Of course you want to push the narrative that all is fine, and always will be, which in my opinion, is wrong.
Mama Llama
Member
I wasn't specifically looking for this opportunity, it found me and I have the background. If I sit back a few years and wait to see how things shake out with the ISP model, the opportunity may not present itself again. I understand the environment in light of the recent court rulings, but I am considering taking a calculated risk. Every investment has risk, and FedEx is "for profit". I would expect nothing less than that they would make decisions to increase their margin (i.e. ISP model vs. employees). If the ISP model changes, I am betting that it will take several years to turn the train around.
Yes, it will take some time, but in the meantime, your business becomes worthless. Fedex will roll out whatever change in one or a few states at a time. As soon as that happens, you won't be able to sell. If you can form a corp and borrow the money, it makes sense. Pay yourself all the profits while it lasts, then close the corp declaring bankruptcy.
If you can run an ISP, you can run an apartment building. I bought a small complex that needed repairs, mostly deferred maintenance, and doubled the value in two years. Even buying single family homes is safer. You can buy as many as 5 single family homes with $100k in many parts of the country. After debt service, maintenance, taxes, etc, you can pocket hundreds of dollars per unit per month. Even if you pay a manager, you can stil profit if you buy smart.
Don't sell yourself short by taking unnecessary risks. You know for certain that costs to operate will go up and the value of your trucks will go down every year.
If you can run an ISP, you can run an apartment building. I bought a small complex that needed repairs, mostly deferred maintenance, and doubled the value in two years. Even buying single family homes is safer. You can buy as many as 5 single family homes with $100k in many parts of the country. After debt service, maintenance, taxes, etc, you can pocket hundreds of dollars per unit per month. Even if you pay a manager, you can stil profit if you buy smart.
Don't sell yourself short by taking unnecessary risks. You know for certain that costs to operate will go up and the value of your trucks will go down every year.
Well said!!!! These guys defending x are in from the beginning or close to it. They got their routes cheap or for free. So, of course they will defend it. If you buy I doubt you will get your original investment back. Invest elsewhere too much legal uncertainty and too much x rule changes. Buy something you really own.
Please. All those "hurt" by FedEx read the exact same contract I read and knew what was expected of them. It's true that X has played "fast and loose" but these "victims" chose to be there.
I did get mine for close to free. But I have never and will never tell someone it is or isn't a good deal. Too many variables.
However, to therefore determine it is a scam or not viable in the long term ignores the larger picture of franchising and contracting in the US. Fact is, X is much the same as all of them; taking advantage of profitable business law.
It isn't me saying it is a scam. It is the courts who accused fedex of creating an employment contract in the guise of an independent contractor agreement. You should know by now that fedex has an entire set of manuals outside the contract that they use to tell you what they say the contract says, when those manuals may directly conflict with the contracts. If you think that all fedex goes by is exactly what is in the contract, you are willfully ignorant of the truth and playing 'see no evil' with yourself.
You seem unaware that those manuals are what the courts decided were the smoking gun that they made the ruling on. And if you think fedex tossed those manuals when they started the ISP model, I have a bridge to sell you.
And if you somehow expect current law to change in the US, you have not been following politics. Nothing gets done, unless absolutely necessary, and changing rules on IC determination is far from absolutely necessary. And for someone considering buying, for you to advise them that under future law, they will be fine, when current law leans the other way, then you are giving poor advice.
Correct. The law will not change. Therefore the model will continue to be tweaked, challenged, and tweaked.again. we have literally been hearing of it's impending demise for decades. Too much money to be made by those on top.
Would you buy a route now,if you wasn't in the game already?
Oh, hell no!
But the stock trader who bought 10 routes is more than happy with them.
I was just curious. I see many people inquiring about buying routes. Just wondering how you would advise them.
I dont. Too many variables. But for the guy with $750 grand and looking at the growth potential and eventual sale, it tends to look like a very good deal.
Should someone borrow that money to buy routes? I find it hard to see how that would work well.
You think it will be tweaked, without knowing how much, and I think it will be dumped. Are you suggesting someone should value a business with either of those conditions as they would value a business without those risks????
Using a standard business valuation model for an ISP contract would be foolish without a substantial discount for the uncertainties. In just 2-3 yrs it will become more clear as to the profitability of ISPs as fedex tries to hold onto every penny. And fedex will know in a few years if they can make more profit with another model or cut profits from ISPs. If they think ISPs are making too much money, they will always find someone who will underbid you.. Whatever you think, the ISP model is in the testing phase on both sides. ISPs haven't yet faced difficult renewal talks where another ISP thinks he can undercut you. For a potential buyer, that possibility is a large detraction in value even without the legal problems the model faces.
If you pay $40,000 per route for 5 routes, based on the current contract with fedex, in a couple years, expect cutthroat negotiations with fedex, who at the same time will be offering others the ability to take over your business if they can further undercut your bottom line. Fedex actually MUST try to cut your pay in order to fulfill their fiduciary responsibility to the shareholders.
Would you buy a business for $200k knowing that in a couple years, that business could be taken from you, when you based the value on certain facts? Believe me- Fedex will shop around finding the lowest bidder when your contract comes up for renewal. That puts pressure on you to make sure you pay your drivers less, since that is really the only controllable expense you have. And then you have the pressure in the opposite direction of other contractors who see your best drivers and will offer them more, especially if they have even slightly more profitable routes or terms in their contract with fedex.
It is a cutthroat business from all sides, and as someone coming in new, there is a target on your back. IF you need vehicles next year, and fedex tightens up on pay as compared with costs, you have no choice but to lose part of your earnings to make up the difference. Fedex will be examining and comparing settlement checks to see where they believe that can make cuts to your earnings. Fedex still won't allow single ISPs in a terminal because they want to use the competition between ISPs to reduce their costs, while forcing you to scrape the bottom of the barrel to make ends meet.
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