Buying ROUTES/ISP Don't trust Fedex Or Contractors

Discussion in 'FedEx Discussions' started by Exec32, May 1, 2018.

  1. Exec32

    Exec32 Active Member

    1. Own your own Business
    2. 5-10% Growth a year
    3. Be independent, entrepreneur.
    4. Your business will be worth millions
    5. I make millions

    1. ISP's are cheap labor corporations. They specifically provide expensive resources and low skill labor. ISP's only own their assets and liabilities. Assets consist of commercial trucks that are expensive, depreciate and lose value, and have limited use outside the industry.
    Liabilities - ISP's cost are extensive and in comparison to revenue adjustments and bear out very little, and on many occasions negative net income/profit. Workers comp will continue to eat into a margin that in reality does not exists. Truck lease payments, insurance, maintenance, fuel, uniforms, and other cost are expected, however these cost in comparison to your Revenue will not reflect in increased profits.
    THE BOTTOM LINE IS MAKE SURE YOU GET ALL ACCOUNTING RECORDS OF REVENUES & EXPENSES, ESPEACIALLY ANY THING THAT INVOLVES THE OWNER ATTEMPT TO MANIPULATE THE BOTTOM LINE. In other words the labor, management and expenses that an owner can hide by manipulating the true cost of their involvement. Some don't pay themselves a market wage, they do not disclose the true extent of their involvement with day to day activity, they claim they go home every day at 9am, you have to examine their books...do not rely on them being an accurate reflection of potential net.
    There is much more to include, just do you due diligence, do not trust a word the Contractor says or Fedex. Do not trust,,,VERIFY!!!!!!

    2. 5-10% GROWTH A YEAR - This is very misleading. Growth does not mean Profit. Fedex has designed a complex settlement process that avoids or eliminates gains in profit. The Growth that comes takes years to reflect as profit, in the mean time you will experience quarter after quarter and year after year of increased expenses and losses. A comparison of expenses and revenue will reflect a net negative result for years. A promise of increase in equity is an empty promise that involves risks they will not tell you. This equity they speak of only comes from what the market will dictate, and by the way also what fedex will consent to. Fall out of favor in any way, and all of the so called equity is subject to be eliminated. That risk alone depreciates the so called equity benefit. THERE ARE CONTRACTORS WALKING AWAY FROM THIS SCAM, LEAVING THE NON EXISTANT EQUITY. DO YOU RESEARCH. DO NOT RELY ON FEDEX OR CONTRACTOR RESOURCES TO VERIFY.
    If you ever hear a contractor say in any of these posts, or in general conversation,," That guy just didn't want to grow", in the process of a negotiation with them, immediately have a certified accountant and attorney review your entire agreement and any data you was given to rely on. This is a red flag that the person you are dealing with lacks integrity and/or is a complete con at worst.

    3. Be independent/entrepreneur-
    The relationship does not allow for any REAL independence, except the condition that you are independent as it relates to expenses, risks, liabilities. It is extremely important that you do not account for independence in your expectations in any beneficial manner, it does not exists. There is an inherent benefit to owning your own business,,control, flexibility, freedom, these should be eliminated from your business plan/expectations. For your loss of these benefits you will receive nothing in return.
    Efficiency is not reciprocal. Fedex can care less of how you can do more with less. In fact they see this as a threat to your relationship. Fedex just wants you to do more FOR LESS. Couple that with the loss of independence and you will soon realize the mistake you have made.

    4. Your business worth? -
    Depends on what you owe on your ever depreciating assets and compounding net returns. Your proprietary area has no real measurable worth, you do not own it. Fedex will try to convince you that you do when it fits their agenda, but they will exert control over this imaginary proprietary interest as they see fit. They will control you and your interest. They will exercise control and consent over what you can do with it. All this subject to how much you cooperate with all their demands. How you like that nightmare. As the problems with this model become more exposed and the horrible experiences of other contractors can be confirmed you will be left with a very small market of available customers willing to risk their money with this scam.

    5. Make millions - it's not what you make, it's what you profit. If you are able to gather reliable data, absent the owner's manipulated input, and interview former contractors, communicate with active drivers, and compare ROI with the industry standards, then and only then have you begun the process of due diligence. DO NOT TRUST THE BROKER, DO NOT TRUST THE OTHER PARTY, DO NOT TRUST FEDEX. VERIFY
    YOU HAVE TO UNDERSTAND WHAT WILL BE EXPECTED OF YOU FOR THE NEXT 5 YEARS. HOW WILL THIS IMPACT YOUR REVENUE. WILL YOU BE ABLE TO OPERATE WITH THOSE EXPECTATIONS AND ACCEPT THE SMALL PROFIT MARGIN WHILE EXPOSING YOURSELF TO RELENTLESS HARRASSMENT FROM FEDEX. IN CLOSING, YOUR CONTRACTOR BUDDIES, THEY ARE YOUR COMPETITORS AND THEY TURN ON EACH OTHER ALL THE TIME. DO NOT LET YOUR GAURD DOWN WITH THEM.

    Oh bye the way it is not worth what they say.

    Disclaimer - I am a contractor, I have witnessed these things at more than one terminal and interacted with many officers and managers of Fedex. I do not believe this model or relationship is legal, and is subject to extreme corruption at the cost of public trust.
     
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  2. bacha29

    bacha29 Well-Known Member

    Part 4 of your explanation puts everything if perspective. The only tangible asset you the contractor exclusively own assuming that you have them paid for are your trucks. One of the fastest depreciating pieces of equipment known to the US economy. Your proprietary rights are an intangible asset 100% supported by XG's willingness to support them by means of the granting and conveyance of those rights which can be revoked at any time for any reason.

    I will never understand why any bank would grant a loan in an amount greater than the book value of the trucks. yet some still do but for how long ...you just don't know.
    BTW. Your comments regarding the relationship between contractors are spot on. They're all greedy. The wanted it all for themselves. One of XG's most effective management tools is found in the way they play them off against one another like well......rat's in a cage.

    By far the biggest injustice of all is the belief on the part of many contractors that there will be this huge golden parachute waiting for them when they sell for they believe will be millions. Well, it might be there but as XG has stated many times they are not in the business of creating an enterprise for anyone including route contractors. Therefore that hoped for pay off will only occur if there is a market for the contractor's routes . Unfortunately XG will decide whether or not to allow for the creation of that market proving conclusively that they do in fact control everything from the first day you're there until the last day you're there.
     
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  3. corp slave

    corp slave New Member

    Not sure why anyone would buy a route from a contractor. You can get em for free!
     
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  4. bacha29

    bacha29 Well-Known Member

    In most cases these days when a contractor goes below the Mendoza Line they usually take the routes and dump off onto the next lucky contestant that usually being the guy operating nearest to the departed contractor.
     
  5. STFXG

    STFXG Well-Known Member

    TL;DR
     
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  6. Cactus

    Cactus Just telling it like it is

    In a nutshell, you’re just gonna be Fred’s mechanics and overseers, all at your cost.
     
  7. bacha29

    bacha29 Well-Known Member

    Or his own little Simon Legree
     
  8. MyGround Support

    MyGround Support New Member

    This is by far the most accurate post on FXG routes out there. single digits returns.
     
  9. SecondTier Driver

    SecondTier Driver Active Member

    To any prospective buyer reading this there are many successful stories as well as failures. Obviously the extreme agressive lean more to the failure side the guarded sometimes optimistic posts are more on the successful.
    There is A LOT wrong with the Ground system and procedures (no one would ever say different) but that doesn’t mean for everyone it is the worst thing in the world. Some of us made extremely good money but I will say it kicked my ass to get it. There was no possible way I ever saw that absantee was a possibility for what return I wanted so I never tried to run it that way. The growth for my area was 25%+ year over year but I also only wanted to do it for a few years till I decided I had enough.
    It will push your thresholds and you will find out what you can handle. For people in the right area and certain abilities it can yield a massive return though.
     
    Last edited: Nov 28, 2018
  10. SecondTier Driver

    SecondTier Driver Active Member

    I agree 100% to verify anything and everything and also don’t buy BFE rural areas unless you are confident in a huge boom coming that way.
     
  11. bacha29

    bacha29 Well-Known Member

    Indeed. The nation's rural areas are depopulating and those who remain are by and large ageing and living on limited fixed incomes.
     
  12. Fred's Myth

    Fred's Myth Nonhyphenated American

    Not in Texas. In the DFW area, those who are better off are moving to the rural areas in ever-increasing numbers. Undeveloped (affordable) land is becoming rare. Developed land (residential) is going in the neighborhood of $150k per acre.

    Your experience is no more universal than mine is.
     
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  13. SecondTier Driver

    SecondTier Driver Active Member

    I’d kill for an acre at $150k. I don’t even want to know what LA and NY would do for $150k/acre.
     
  14. vantexan

    vantexan Well-Known Member

    Just because you live in coal country doesn't mean there aren't thriving small towns across the country.
     
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  15. Operational needs

    Operational needs Virescit Vulnere Virtus

    Farm land is being carved up left and right on my route for million dollar houses. The county planning board is scrambling to slow it down. I could never afford a house on my rural route. Too much money moving in, driving up property taxes and property values.
     
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  16. Fred's Myth

    Fred's Myth Nonhyphenated American

    Property taxes in the desirable areas around here are almost as much as the principal part of the mortgage payment.
     
  17. bacha29

    bacha29 Well-Known Member

    Wait until the 2020 census comes out then we'll see. The issue we were discussing was the challenges rural area contractors face .Being an Express employee all of your life you still got paid no matter how good or bad the demographics of the area you serviced were. Not the same when it comes to Ground. In the fast growing metro area where your tires never come in contact with your chances of success are better. Not as easy in the rural area. Either way you're only as good as the economy and the roads in the area you serve.
     
  18. bacha29

    bacha29 Well-Known Member

    Let me try to break it down simple enough that even you could understand it. The subject was buying an ISP/CSP contract and the challenges one would face if the demographics of the area an interested buyer was considering where off standard from those the XG business model is based on. You worked for Xpress except for the numerous times you quit and had to go crawling back. You got paid no matter how good or bad the demographics of your coverage area were.
     
  19. Exec32

    Exec32 Active Member

    Appreciate your prospective. Indeed people can make money doing this, however the risks are great considering a contractor has only one customer (X) and you will have to abide by all their demands or suffer the consequences. Final point, a contractor owns only the trucks and liabilities.
    Someone can use their money towards many other opportunities and receive the same, and in most cases, better returns with far less risk.
     
  20. vantexan

    vantexan Well-Known Member

    I responded to you saying people were leaving rural areas. Maybe in your neck of the woods, but there are plenty of thriving small towns nationwide. You're not one of those guys that sees what's right in front of him and assumes it's like that everywhere are you?