Questions from a prospective buyer (again...)

p28006

New Member
Hello All!

First time poster here. I have been reading several threads from people asking questions about buying FedEx routes. I too am considering purchasing a route. I have spoken to a broker who specializes in selling routes in my area and he has given me a P & L sheet on a HD route he has listed for sale. It is an urban route in a very affluent area that comes with one older P500 that supposedly had the engine rebuilt last year. He says it is in need of a second vehicle/driver as it is pushing nearly 200 - 210 deliveries on some days. Gross income, excluding any bonus, averages $2,600/wk. I do not have current driving experience on a similar vehicle, but do have experience driving a similar vehicle many years ago. Broker says that he will have no problem getting my approved to drive. I want to drive the route so that I can be profitable and to get to know the business from the ground up as I hope to expand in the future. The route I am considering is owned by a Contractor who owns multiple routes and is consolidating his business into a new terminal that is to be opening next year and does not want routes running out of two terminals. I am going to go out on the route next week and have yet to see the financials other than the P&L Sheet.

My questions are:

1) What is a good rule of thumb on the value of this route (I have read 1.5 - 2x Net)?
2) Is the broker blowing smoke when he says he can get me approved to drive?
3) Is running a supplement on this route cost effective or just a drain on profitability?
4) Am I at a disadvantage being a one-route contractor in today's environment?
5) What other questions should I be asking (other than why not invest in real estate, etc...)?

Any constructive input from those in the business would be greatly appreciated.

Thanks in advance!
 

STFXG

Well-Known Member
1) route value varies on too many things to give a good estimate
2) yes the broker is blowing smoke. Without the current experience you will not get approved.
3) supplementals are a drain. They are not worth running both financially and due to the risk when you are a single route owner.
4) no disadvantage. A route is a route. Single route drivers can still make good money.
5) get the truck info. They have a maintenance record on file with fedex showing everything that gets done to the truck. Verify the work was done.

2600 a week for a single HD route sounds high. Get weekly settlement statements for the one PSA that you are looking at. P&L statements can be fudged for a single route.


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p28006

New Member
Thanks for your reply STFXG. Was afraid of not getting approved. Not sure if it makes sense to get in if I can't drive. At least to fill in for sick/vacation, training, etc...
 

soc151

Well-Known Member
Make sure your state isn't going to switch over to the ISP model any time soon. You'd have to hold a fire sale or buy at least 2 more routes to qualify as an ISP.
 
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