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Looking for some insight on purchasing and running a ground route
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<blockquote data-quote="dmac1" data-source="post: 2098560" data-attributes="member: 60252"><p>The idea of buying a fedex ground business has one big sign that says 'Do not buy.'</p><p>I say this because the contract allows fedex to cancel your contract at any time for no reason. They can cancel it without warning. And then you have the right to seek arbitration. While waiting months or longer to get to arbitration, and pay half the cost, you will have no income.</p><p></p><p>If you already own a trucking or delivery business, it could make sense to buy and just have fedex as an additional customer. But if you have a family, you should not risk any savings to buy.</p><p></p><p>IF the seller will finance at 0% and take only a payment of maybe 1% of weekly gross, and be willing to forgive the debt when/if your contract with fedex is cancelled, it might make sense. </p><p></p><p>When determining profit, look at the bottom line amount that taxes were paid on, and not cash flow, because cash flow over some period of time may not include the cost of purchasing replacement vehicles. </p><p></p><p>And definitely keep in mind that fedex intends that owners not be drivers. The requirement to own multiple routes makes it almost impossible to figure out the value of a single route currently owned by an owner operator. An employee will be limited to fewer hours than an owner would be, and is unlikely to to be as efficient. An employee may not be willing to work 12 hours a day, every day. An employee may not be willing to work when ill, and you may need a back-up driver for each employee you end up with. </p><p></p><p>And as your fleet ages, you will experience ever higher maintenance costs, so just calculating value based on 1-2 years of tax returns can paint a false picture. Fedex routes do not have fixed costs like operating a retail store. Every month your income and expense will vary. And you ALWAYS need to have back-up plans for vehicles and drivers. Any driver worth having will almost immediately become worth more than you can afford, as that employee will be looking at better options. You will be stuck with those willing to work for low wages and no benefits, meaning they will not be top line workers, and meaning they may decide without warning to just not show up, or decide that they need to stop working in the middle of the day. They will get stuck in potholes, and drive your vehicles like they don't own them. </p><p></p><p>Good luck</p></blockquote><p></p>
[QUOTE="dmac1, post: 2098560, member: 60252"] The idea of buying a fedex ground business has one big sign that says 'Do not buy.' I say this because the contract allows fedex to cancel your contract at any time for no reason. They can cancel it without warning. And then you have the right to seek arbitration. While waiting months or longer to get to arbitration, and pay half the cost, you will have no income. If you already own a trucking or delivery business, it could make sense to buy and just have fedex as an additional customer. But if you have a family, you should not risk any savings to buy. IF the seller will finance at 0% and take only a payment of maybe 1% of weekly gross, and be willing to forgive the debt when/if your contract with fedex is cancelled, it might make sense. When determining profit, look at the bottom line amount that taxes were paid on, and not cash flow, because cash flow over some period of time may not include the cost of purchasing replacement vehicles. And definitely keep in mind that fedex intends that owners not be drivers. The requirement to own multiple routes makes it almost impossible to figure out the value of a single route currently owned by an owner operator. An employee will be limited to fewer hours than an owner would be, and is unlikely to to be as efficient. An employee may not be willing to work 12 hours a day, every day. An employee may not be willing to work when ill, and you may need a back-up driver for each employee you end up with. And as your fleet ages, you will experience ever higher maintenance costs, so just calculating value based on 1-2 years of tax returns can paint a false picture. Fedex routes do not have fixed costs like operating a retail store. Every month your income and expense will vary. And you ALWAYS need to have back-up plans for vehicles and drivers. Any driver worth having will almost immediately become worth more than you can afford, as that employee will be looking at better options. You will be stuck with those willing to work for low wages and no benefits, meaning they will not be top line workers, and meaning they may decide without warning to just not show up, or decide that they need to stop working in the middle of the day. They will get stuck in potholes, and drive your vehicles like they don't own them. Good luck [/QUOTE]
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