Buying a Fedex Ground Route

Discussion in 'FedEx Discussions' started by Xquestionman, Jan 12, 2016.

  1. bacha29

    bacha29 Well-Known Member

    He's keeping up with the payments and his help is staying around. He had to fire one guy who got in trouble with the law. Another ISP is expected to put his routes on the market due to an expected fraud conviction. Given the possibility that a couple of his routes will be dumped on the guy I sold to I will be standing by ready to help him if I can. Here's the funny part. The buyer of my routes bank wouldn't lend a dime even though his father was the president of the bank. It's like they said it's an intangible asset with no known book value beyond the blue book of the trucks and they are one of the fastest depreciating pieces of equipment known to the U.S. economy.While the chicks might be free they would be lending money for nothing and that wasn't good enough in the bank's mind. Therefore routes that are being sold for at prices above the trucks blue book are based on revenue growth that is completely speculative and completely under the control of X whose interests and profit margins will always come before the contractors margins. Now that the little sole proprietors are going away how long will it be until the investor class who has been propping up the market for these routes becomes as fed up as the little sole proprietors were when they got out? It all comes down to how much money you are willing to put on the table in exchange for a contract that in no way shape or form gives balanced representation to that money Oh by the way.That guy the route buyer fired. Another ISP had no choice but to hire him because the spare driver bin was completely empty. And this was a guy that UPS to their great relief was able to fire after 20 years
     
  2. dmac1

    dmac1 Active Member

    Why would a bank loan any money on a contract that could be cancelled any time the other party wanted with no recovery? Fedex put that in the contract. In other contracts, such as with the federal government, you get paid a set amount guaranteed by the contract, and as long as you perform, you get paid.

    With fedex, you could perform, and still see the contract cancelled after 1 year or even less if fedex unilaterally decides to change their model. How many single route owners have already lost their 'business' when fedex went from IC to ISP, even though they had performed for many years and loved what they were doing?

    Sure, they'll loan a small amount for a short period, but fedex doesn't pay enough to be able to repay the ridiculous prices being sought in a short time. And do you really want to risk your family's well-being and security by using your home to get the money? If a bank can't put a value on an ISP contract, it has no value in the real world.
     
  3. bacha29

    bacha29 Well-Known Member

    Thank you for helping me to frame the entire issue.
     
  4. STFXG

    STFXG Well-Known Member

    You know that loans can be SBA guaranteed, right? I know plenty of guys who have received them.
     
  5. bacha29

    bacha29 Well-Known Member

    True, but the SBA will only guarantee no more than 75% of a loan of $150,000 or more 85% if less than $150,000 but that's the maximum leaving the lender on the hook for the rest. Furthermore the interest rate can be as high as 2.75% above the base rate. Plus a loan processing fee along with annual service fee. While it can be a solution from the contractor's perspective as well as the lender it's anything but a sure bet. Coming back to the guy who bought my route his father was all too happy that I would finance the entire purchase because of his belief that the SBA would not guarantee a high percentage of the loan leaving a higher exposure than he wanted his bank to take on.
     
  6. UpstateNYUPSer

    UpstateNYUPSer Well-Known Member

    So if you hold the note and the buyer defaults do you get to keep his money and the delivery route?
     
  7. bacha29

    bacha29 Well-Known Member

    After 3 consecutive months of nonpayment the route is mine. At that time however he will below the minimum required number of routes. Therefore if he defaults on my note it will be the same as having defaulted on his entire contract. I don't lose a minute of sleep . In fact I told him that if he runs into trouble to let me know .
     
  8. It will be fine

    It will be fine Well-Known Member

    You only need one agreement for members of an association. If you're a member you don't bid on open areas. If you do anyway and are awarded the area you owe the previous owner some type of compensation over current market value. Something like 100% of past 12 months revenue. Make it punitive and legally enforceable to take over open area. This would give contractors some leverage in negotiations. If there are no sharks waiting to take your contract you can push back more and let the work sit for a few days if you can't come to a deal. There are few outside companies that could and would be willing to step in and take over an open CSA. 5 trucks alone would put off most investors.
     
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  9. bacha29

    bacha29 Well-Known Member

    Outstanding. The practice of X playing contractors off against one another has to stop. Just think of the U.S. nuclear policy back in the 1970"s It was called MAD. it stood for Mutually Assured Destruction. That term applies today for as long as it's tolerated by contractors. Screwing one another over just get routes that have the revenues driven down so low that it is impossible to make anything off of them which in the end will collapse base revenue for ALL routes creating Mutually Assured Destruction. No doubt that right now X is wondering why contractors as a whole still haven't figured this out . But in the mean time managers will continue to line their pockets with the revenue concessions they are extracting from unsuspecting contractors
     
  10. bbsam

    bbsam Moderator Staff Member

    We don't see any sharks around anymore. I'm not even sure I could give a route away anymore. It just becomes too much of a headache.
     
  11. MrFedEx

    MrFedEx Engorged Member

    Mr. Smith, the plantation master, loves it when his slaves are consumed by in-fighting. It's that "competitive entrepreneurial spirit" that keeps Ground the fine organization that it has become.

    Bottom line: Fred still gets his money no matter who "owns" the route, so it's in his best interests to have you pitted against each other.
     
  12. dvalleyjim

    dvalleyjim Active Member

    From the ISP owner I work for, I guess he's lying and your telling the truth.
     
  13. bbsam

    bbsam Moderator Staff Member

    Could be the way he structured his contract. Personally i wanted to keep the bonus money as low as possible.
     
  14. Cactus

    Cactus Just telling it like it is

    Please welcome our newest contractor Melvin McDuped.

    Deal with the devil.jpg
     
  15. bbsam

    bbsam Moderator Staff Member

    What's the back story? Why is he signing? He looks worried. Is not signing worse than signing?
     
  16. Cactus

    Cactus Just telling it like it is

    He should be worried.
     
  17. bacha29

    bacha29 Well-Known Member

    Sign or not sign. It doesn't matter . X Ground freely admits that it doesn't consider a single provision to be binding upon itself.
     
  18. Bounty

    Bounty Active Member

    You found bbsam
     
  19. Cactus

    Cactus Just telling it like it is

    Whisper it quietly but he's taking independent contracting.....oops sorry I mean ISP to the next level, the silver screen.

    Coming soon:

    Deal with the devil 2-003.jpg
     
  20. bacha29

    bacha29 Well-Known Member

    Already nominated for 27 Emmy's 16 Oscars and 3 ESPY's and that's just in the fantasy category.