Purchasing Fedex Routes

[QH_Industries]

I represent a Chinese chemical manufacturer looking to invest in the United States. While I don't have any experience with Fedex/UPS, I do have experience running a business and have a BS in Business Administration/Economics. I realize that may not mean much regarding the day-to-day of a Fedex ISP, but I know how to run a business.

My coworker and I have been doing some research regarding different investment opportunities that can offer us large returns without assuming huge risks. In the course of this research, we came across several listings for Fedex routes boasting excellent returns. For example, one route in the SE (priced @ ~$600,000) claims a NP of $174,000. Considering our lack of experience in this industry, we would lean heavily on a competent GM, whom could hopefully hire quality drivers and take care of any problems that arise. Our office, however, would be located in a different state and we would not be available to 'drop in' on a regular basis. I suppose what I am asking is this; is it possible to run a successful ISP being in a different state? This isn't to say we would devote no time to it, I could absolutely work from my office and periodically take a flight to check in on things. I recognize the fact that in order for an ISP to work like this, I would likely need to provide an adequate salary for a prospective GM, thereby eroding my profit margins -- but I am realistic, even a 12% annual ROI would be an adequate return for us.

So, is it possible to run a profitable ISP while working in a different state? Based on my own assumptions, it is not, unless we control several routes all under the supervision of a single manager (e.g. we purchase 5-7 routes). Funding for this endeavor would likely be $8xx,xxx cash.

Please feel free to ask me any questions if you would like something clarified. I appreciate any input you can offer (especially from existing IC's).

 

[westin]

Dude, seriously, run and invest elswhere.

 

[QH_Industries]

I appreciate the reply, could you elaborate a bit? Any particular reason? While I can understand drivers being (somewhat) expendable, I would be willing to compensate a GM well to ensure smooth daily operations. To me, it seems like a volume game. If you can invest enough to purchase a number of quality routes, you can make good money. Maybe I'm missing something?

It seems a few IC's here are doing fairly well for themselves, albeit dealing with headaches.....but if you can point me in the direction of an investment with >15% ROI and no headaches I'd like to offer you a job!

 

[QH_Industries]

Also, I was hoping someone could clarify this for me -- If we did purchase several Fedex routes, would I still be required to qualify as a driver (even with FT drivers and a qualified manager)?

 

[QH_Industries]

I would also be willing to compensate an experienced driver/IC in helping get this off the ground? Anyone interested?

 

[STFXG]

It's possible to run absentee. Your problem with buying in at that large of an operation and running it absentee will be finding a manager competent and that you can completely rely on. But you can assign them as your business contact when you are operating out of state and they can handle everything for you.

You don't need to be a qualified driver to contract with fedex. And you can only get approved as driver with driving experience.

A 12% ROI wouldn't be difficult to attain. Even with paying a manager a good salary. I'd suggest finding a former or current contractor. There's a lot of ins and outs with fedex that would just make it an easier transition if you have someone with experience in dealing with the company. They will blow a lot of smoke and you need someone that's been around and knows when it's smoke and its a real threat.

FedEx exerts a lot of control with the contract. That's the reason people say to stay away.

 

[QH_Industries]

Thank you for the reply STFXG. I agree, finding a competent manager will be difficult. I was hoping to find a package of routes with a manager and staff already in place, but those are (apparently) hard to find and may result in a bit of culture clash. Obviously it's essential the manager and I are on the same page, which works in both of our best interests (a hefty return come year end).

Can you recommend any route brokers or mediums I can utilize to get in touch with IC's willing to work with someone like me?

 

[STFXG]

I don't know of any brokers or anyone who has dealt with brokers. Most sell by word of mouth between contractors or bigger operations break down and sell off in pieces (can sell for more that way).

 

[QH_Industries]

From what I understand, when larger operations are broken down and sold in pieces, there is an opportunity to 'hide' some expenses and mislead a potential buyer. Do most sellers attempt to hide their loses through some form of creative accounting? Proper due diligence will likely root out any suspicious omissions, but I am curious is this is standard within the industry.

Also, if anyone could point me in the direction of legitimate sellers and a purchase is made, I am certainly reward you effort in some fashion.

Thank you.

 

[barnyard]

Another viable option would be purchasing a chain of Dominos pizza franchises. A friend used to make a good living by buying distressed franchises, turning them around and reselling. He said that the only reason he sold them was because he enjoyed moving around the country. He owned a Dominos franchise next to a studio that I ran.