Questions from a prospective buyer (again...)

Discussion in 'FedEx Discussions' started by p28006, Jul 14, 2014.

  1. p28006

    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!
  2. yadig

    yadig Member

    Can you handle selling your soul to the devil?
  3. STFXG

    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.

    Sent using BrownCafe App
    Last edited: Jul 14, 2014
  4. p28006

    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...
  5. soc151

    soc151 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.