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Buying a Fedex Ground Route
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<blockquote data-quote="Xquestionman" data-source="post: 2008173" data-attributes="member: 61684"><p>Looking to buy a fedex home delivery route as a new biz opportunity. Trying to get my head around a few things here. I would be willing to work in the biz as needed and probably drive a route for the first year so I could learn the work end, then just be a backup with a manager. Naturally, my biggest question pertains to what a fair valuation is? Is it 1.5x net cash flow or 3x net, seems the pricing is all over the place especially when a broker is involved. What type of net off gross % is normal? It seems like X has been involved in lots of litigation relating to this subcontractor model. I get that since 2011 the contractors are now paying the drivers W2, but what is to prevent X from pulling the plug on the contractors and just going to an employee model like UPS? Seems that it might save them a lot of trouble and naturally that is a big concern if investing in a route. Also, who owns the route, I get the impression that X owns it and just contracts it out. What is to prevent local politics at the terminal level from a contractor loosing a route to say...a buddy of the corporate manager etc? Is there a bunch of BS and backroom games with this? I spent 25 years in corporate, so I know how big companies are and the games they play. Also, what is the deal with X giving out new routes as biz grows? Are those bought by contractors or just given via some procedure or politics. Please give me the inside scoop. I am looking for the unvarnished truth from those in the game.</p></blockquote><p></p>
[QUOTE="Xquestionman, post: 2008173, member: 61684"] Looking to buy a fedex home delivery route as a new biz opportunity. Trying to get my head around a few things here. I would be willing to work in the biz as needed and probably drive a route for the first year so I could learn the work end, then just be a backup with a manager. Naturally, my biggest question pertains to what a fair valuation is? Is it 1.5x net cash flow or 3x net, seems the pricing is all over the place especially when a broker is involved. What type of net off gross % is normal? It seems like X has been involved in lots of litigation relating to this subcontractor model. I get that since 2011 the contractors are now paying the drivers W2, but what is to prevent X from pulling the plug on the contractors and just going to an employee model like UPS? Seems that it might save them a lot of trouble and naturally that is a big concern if investing in a route. Also, who owns the route, I get the impression that X owns it and just contracts it out. What is to prevent local politics at the terminal level from a contractor loosing a route to say...a buddy of the corporate manager etc? Is there a bunch of BS and backroom games with this? I spent 25 years in corporate, so I know how big companies are and the games they play. Also, what is the deal with X giving out new routes as biz grows? Are those bought by contractors or just given via some procedure or politics. Please give me the inside scoop. I am looking for the unvarnished truth from those in the game. [/QUOTE]
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