Question: Is now a good time to buy a FedEx Ground Route?

[TOWJOE]

Originally Posted by cahammo

I am a newbie, both to this board, and potentially to this profession. I have the opportunity to purchase a FedEx Ground Route in town with a population of 30K. The price on it is $75K. The current contractor uses two trucks and two drivers (the contractor is not one of the drivers).

I know there are lots of legal battles going on at FedEx trying to decide if the ground contractors and drivers will eventually become employees or not. Will someone break this down for me. I would assume it would be advantageous for me to be an employee rather than a contractor, but how long is this expected to drag on in the courts?

Bottom line... based on the sketchy info I have provided, is this route a buy or a pass? Thanks in advance.

Don't waste your money buying any type of route.
I used to be a contractor for RPS ( now known as FedEx Ground) I got lucky that they open a new route and didn't have to buy it, but I saw some guys there buing routes for $80k and $75k and within a few month they found out the hard way that they got scam. Must routes don't make the money that the seller said it does. And I always say that if you have something that is profitable why do you need to sale it!
Sorry my reply came so late, but I'm new to this site.

[bbsam]

Originally Posted by TOWJOE

Don't waste your money buying any type of route.
I used to be a contractor for RPS ( now known as FedEx Ground) I got lucky that they open a new route and didn't have to buy it, but I saw some guys there buing routes for $80k and $75k and within a few month they found out the hard way that they got scam. Must routes don't make the money that the seller said it does. And I always say that if you have something that is profitable why do you need to sale it!
Sorry my reply came so late, but I'm new to this site.

Hi tow. Welcome to the sight. How long ago were you a contractor? I'm a contractor who owns 6 routes. Why would I sell one? Because if someone handed me a $75,000 check, it would be time to go shopping. I like spending money. There are those who sell because they are poor business people. I would do it because it would be a blast to spend it all.

[Artee]

Originally Posted by TOWJOE

I saw some guys there buing routes for $80k and $75k and within a few month they found out the hard way that they got scam. Must routes don't make the money that the seller said it does.

That doesn't seem like a very smart move. Wouldn't the buyer sit down with his accountant and go over the books of the seller and find out what kind of financial shape that route/business is in? Or is it an impulse buy for most people?

[mark111]

Regarding FEDEX Routes. Some have said don't buy one. Routes never make money. Some do not understand why people sell them.

Well.........I am in the process of purchasing a home delivery route that grosses in the low 100's, includes a relatively newer paid off truck and averages 135 - 170 stops per day. It is EXTREMELY easy to verify the profitability of these routes via Fedex Settlement Sheets. Expenses are very straight forward also. My territory will be in a very dense area ( 18,000 residents ). It is a very profitable route. At the same time, I will be entering an agreement to purchase another route from the same seller pretty much under the same conditions. I want to get to three routes in 1 year. I will have back up come peak season from someone who has a large staff of 20+ and I will have back up from someone for vacation time. It is not that difficult to get back up within a terminal that has a group of contractors ( some multi route owners ) that work together. It's in everyones best interest.

If you are a smart business man, you will know how to do diligence and verify whether a particular business model makes sense or not. For some it may not. For others like myself, it makes complete sense. I have looked at at least 50 different businesses ( resales ) over the past 6 months and I have owned 2 other companies in the past ( one for 18 years which I am no longer part of and one for 2 years which I am active in ). As a businessman, I have obviously decided to form my 3rd corporation and yes it will be a trucking and delivery company.

There are numerous reasons why people buy and sell assets whether it be Gold, homes, commercial real estate, routes.....etc. There is value to everything and its a matter of what the seller and buyer agree is fair value at the time of the closing transaction. If you were a commercial real estate owner and wanted to expand to a different area that you thought offered tremendous growth potential and needed to raise capital in order to do that, what is one thing you may consider? Well, how about selling off some of the real esate that was purchased years ago in order to fund your new expansion model?

By doing the correct research, a thorough due diligence and understanding various business concepts, one should be able to identify and decide when any business is a viable one or not.

[UpstateNYUPSer]

mark, that was a very well thought out and insightful post. It sounds as though you have done your homework and I wish you nothing but the best.

BTW, you should also know that I will be doing all that I can to get some of that volume back.

[bbsam]

Originally Posted by UpstateNYUPSer

mark, that was a very well thought out and insightful post. It sounds as though you have done your homework and I wish you nothing but the best.

BTW, you should also know that I will be doing all that I can to get some of that volume back.

does this include taking a pay cut in 2013?

[UpstateNYUPSer]

Originally Posted by bbsam

does this include taking a pay cut in 2013?

Concessions are almost sure to be coming in 2013, whether it be a wage freeze or paying for a portion of our health care.

Let's just hope our pay and benefits never match those that you provide to your employees.

[bbsam]

Originally Posted by UpstateNYUPSer

Concessions are almost sure to be coming in 2013, whether it be a wage freeze or paying for a portion of our health care.

Let's just hope our pay and benefits never match those that you provide to your employees.

Yes, let's hope so. Should continue to bode well for my bottom line.

[UpstateNYUPSer]

Originally Posted by bbsam

Yes, let's hope so. Should continue to bode well for my bottom line.

...at the expense of the bottom line of your employees.

[MrFedEx]

Originally Posted by mark111

Regarding FEDEX Routes. Some have said don't buy one. Routes never make money. Some do not understand why people sell them.

Well.........I am in the process of purchasing a home delivery route that grosses in the low 100's, includes a relatively newer paid off truck and averages 135 - 170 stops per day. It is EXTREMELY easy to verify the profitability of these routes via Fedex Settlement Sheets. Expenses are very straight forward also. My territory will be in a very dense area ( 18,000 residents ). It is a very profitable route. At the same time, I will be entering an agreement to purchase another route from the same seller pretty much under the same conditions. I want to get to three routes in 1 year. I will have back up come peak season from someone who has a large staff of 20+ and I will have back up from someone for vacation time. It is not that difficult to get back up within a terminal that has a group of contractors ( some multi route owners ) that work together. It's in everyones best interest.

If you are a smart business man, you will know how to do diligence and verify whether a particular business model makes sense or not. For some it may not. For others like myself, it makes complete sense. I have looked at at least 50 different businesses ( resales ) over the past 6 months and I have owned 2 other companies in the past ( one for 18 years which I am no longer part of and one for 2 years which I am active in ). As a businessman, I have obviously decided to form my 3rd corporation and yes it will be a trucking and delivery company.

There are numerous reasons why people buy and sell assets whether it be Gold, homes, commercial real estate, routes.....etc. There is value to everything and its a matter of what the seller and buyer agree is fair value at the time of the closing transaction. If you were a commercial real estate owner and wanted to expand to a different area that you thought offered tremendous growth potential and needed to raise capital in order to do that, what is one thing you may consider? Well, how about selling off some of the real esate that was purchased years ago in order to fund your new expansion model?

By doing the correct research, a thorough due diligence and understanding various business concepts, one should be able to identify and decide when any business is a viable one or not.

Gee. Let me ask a simple question, OK? If these routes are so profitable, why would the seller get rid of them? Second, have you also done your research on the legal issues surrounding FedEx Ground? Funny, you don't even mention it and I'll bet FedEx(or the seller) didn't either.

Seriously, good luck on your venture, but it doesn't sound like you know very much about the package delivery business. "Expenses are very straightforward?" What happens when your vehicle needs a new diesel engine ($$$$) and you have to lease another truck while it's down ($$$$) and then one of your fresh off the boat drivers T-bones a car ($$$$) or whacks the roof at a 10 ft dock with his 10 ft 6inch tall truck? Want more?

[bbsam]

Originally Posted by UpstateNYUPSer

...at the expense of the bottom line of your employees.

As Mel Brooks so eloquently put it, "It's good to be the king!"

[mark111]

MrFedex wrote: If these routes are so profitable, why would the seller get rid of them?

Answer: You need to read and better comprehend the anology made with the commercial real estate example.

Mr. Fedex wrote: Second, have you also done your research on the legal issues surrounding FedEx Ground? Funny, you don't even mention it and I'll bet FedEx(or the seller) didn't either.

Answer: Absolutely and have openly discussed this issue with both the multi route seller and others. Perhaps I know a little more than others about this situation. There are reasons why I want to get to three routes and anyone who truly understands this situation will understand why.

Mr. Fedex Wrote: Expenses are very straightforward?"

Answer: Yes they are and as with any business, there can always be incidentals.

Mr. Fedex Wrote: What happens when your vehicle needs a new diesel engine

Answer: Thats an incidental. What happens if you owned a pizzeria and your pizza oven stopped working? What happens if you owned an printing business and your printing machine burns out and needs replacement? What happens if you are a stock broker and instead of selling 10,000 shares of stock for your client you buy 10,000 shares and by the time you realize it and make and correct your error you are out $25,000? Want more?

There are risks to every business and every business owner understands both the risks involved and the rewards and makes the appropriate decision.

Mr. Fedex wrote: and then one of your fresh off the boat drivers T-bones a car ($$$$) or whacks the roof at a 10 ft dock with his 10 ft 6inch tall truck? Want more?

Answer: The two additional routes I plan on purchasing will come with drivers that have 4 - 5 years experience on the route(s). Every driver's record is on file at the terminal and those files are available to be viewed by any potential buyer.

Thanks for the well wishes and concerns !!

Finally, as a multi business owner who in the past has built a business from $100,000 per year to over $7,000,000 per year in revenues in 8 years, I understand how to conduct due diligence on various business models.

[bbsam]

Mark 111, welcom aboard to BC and Ground. Many happy profits to you.

[mark111]

Thanks bbsam and upstatenyupser !!!!

[MrFedEx]

Originally Posted by mark111

MrFedex wrote: If these routes are so profitable, why would the seller get rid of them?

Answer: You need to read and better comprehend the anology made with the commercial real estate example.

Mr. Fedex wrote: Second, have you also done your research on the legal issues surrounding FedEx Ground? Funny, you don't even mention it and I'll bet FedEx(or the seller) didn't either.

Answer: Absolutely and have openly discussed this issue with both the multi route seller and others. Perhaps I know a little more than others about this situation. There are reasons why I want to get to three routes and anyone who truly understands this situation will understand why.

Mr. Fedex Wrote: Expenses are very straightforward?"

Answer: Yes they are and as with any business, there can always be incidentals.

Mr. Fedex Wrote: What happens when your vehicle needs a new diesel engine

Answer: Thats an incidental. What happens if you owned a pizzeria and your pizza oven stopped working? What happens if you owned an printing business and your printing machine burns out and needs replacement? What happens if you are a stock broker and instead of selling 10,000 shares of stock for your client you buy 10,000 shares and by the time you realize it and make and correct your error you are out $25,000? Want more?

There are risks to every business and every business owner understands both the risks involved and the rewards and makes the appropriate decision.

Mr. Fedex wrote: and then one of your fresh off the boat drivers T-bones a car ($$$$) or whacks the roof at a 10 ft dock with his 10 ft 6inch tall truck? Want more?

Answer: The two additional routes I plan on purchasing will come with drivers that have 4 - 5 years experience on the route(s). Every driver's record is on file at the terminal and those files are available to be viewed by any potential buyer.

Thanks for the well wishes and concerns !!

Finally, as a multi business owner who in the past has built a business from $100,000 per year to over $7,000,000 per year in revenues in 8 years, I understand how to conduct due diligence on various business models.

Good answers. I think you'll find the package delivery industry a bit "different" though. I've seen some very successful multiple IC's in my area, but caveat emptor, OK?