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70 Replies Latest reply: Jul 4, 2013 11:14 AM by rgturner423 RSS

Have funds to purchase FEDEX ground routes. Risks involved ?

Novice
Currently Being Moderated
Good evening: I am a former Wall Street Business Owner who after 18 years of owning a small broker dealer, is now in final process of closing it down. With this being the case, I am currently researching businesses for sale in my local area. I reside in Monmouth County, NJ. I virtually was responsible for all facets of running my former business from human resources, staffing, compliance, accounting, payroll, records, budget and cost analysis, managing two trading floor operation all the way to acting as trustee for the firms pension plan. I was in the business since 1981 and incorporated in 1991. So, I am very well versed on the inner workings of running a small business.

I have been looking at various businesses ( brick and mortar to routes ) and one model that I have considered is the FEDEX ground route contractor business. My goal would to be at first to purchase one very good route ( I have the funds for that ) and work it myself for 6 - 12 months which is the approximate time frame I think I will need to familiarize myself with the ins and outs of this type of operation. After that time frame, if I believe it is still an excellent and viable model for growth and expansion, I would attempt to purchase another route and of course hire a driver. The business would be run under an LLC. By next spring, I plan on downsizing my house as my oldest son will soon be off to college. This will raise even more excess cash for me if I want to consider purchasing more routes. Again, if I find that this business model works, my ulitmate goal would be to own at least 5 routes within 5 years and at that point I would strictly be managing the routes and not working any one particular one full time.

Here is my concern. In researching FEDEX ground routes, I have come across information regarding FEDEX and its current issues regarding both the teamsters and the courts. So, I would like to pose the question to any current FEDEX ground route owners with tenure and preferably mutliple routes as to what their opinion is on this and what do they feel their risks are if FEDEX has to bring its route drivers into the union. Now I do realize that there are two groups of drivers, Express and Ground with the former being employees of the company and the latter being the independent contractor. It appears a few states are trying to force fedex to identify the Ground drivers as employees because they are pretty much governed by FEDEX but get absolutey nothing from them except a 1099. The argument being the companies avoidance of paying Payroll taxes ( amongst other things ) on all of these independents.

Please note, I am not looking for discussions on union vs. non union etc. or UPS vs. FEDEX. I am just looking for an insiders opinion on what he/she may think the current risk is to their investment as an independent contractor.

I am actually meeting with a route broker early this week to view other route opportunities besides FEDEX and will be meeting with other business brokers regarding various brick and mortar type operations. ( anywhere from deli's, dollar stores, gas stations with bays and c/stores to car washes, etc. ) I am really not married to any one particular type of business if the numbers put forth make sense.

Thanks in advance for your reponses.
  • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
    DomainDiva Master
    Currently Being Moderated
    Microsoft had the same issue with the IRS contractors versus employees. The difference here is that these routes are a part of their business growth model. However the IRS rules on contractors differ from what the responsibilities and obligations are for FDX ground drivers and route owners. If you go to the IRS website, there is a whole section on contractors. Once the union issue is solved (if ever...those things rend to drag on for years), the next person in line at FDX over the employee issue may be the IRS.

    Good luck.
  • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
    Novice
    Currently Being Moderated
    As I continue to research the FEDEX Home / Ground Delivery route business model, I would like to post another question. I have come across a "package" deal where there are 5 home routes for sale, which can be purchased any way I want ( i.e, 1, 2, 3, etc. ). I am actually meeting with the owner next week and will accompany him from start to end in order to view this business and of course to help me decide whether or not this is something I would want to do ( which I believe it is ). I am interested in his largest route which I can purchase with available funds. However, I may want to consider purchasing one of his other routes in addition and maintain his current driver. I have the funds to purchase a second route, but would much rather opt to obtain financing on it. Do you think a lender would be more apt to provide financing on the 2nd route if I can provide documentation showing the cash flow levels of both routes combined are adequate enough to support payment of the debt from net income?

    As always, thanks in advance for your responeses
  • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
    MoveForward Apprentice
    Currently Being Moderated

    How about if you contact several indiv. who own routes (not within the area you
    would be competive with) and ask if you can work for them (intern) for several
    weeks,get to know the business and what you are considering. Keeping in
    mind the holiday season will show you all the ins and outs (Nov./Dec)
    You do not want to learn as you go. You will have enough of this through the
    business aspect and marketing. The last thing you want is your reputation
    damaged due to learning the business as you go, once you learned it, your
    reputation could have damaged your success. Keep in mind if you find the
    FEDEX route is not for you it is better to know this before it is to challenging
    to sell in today non-loaning economy.

    There is two sides of the coin with FEDEX. They just laid off a massive amount of
    airline pilots and for whatever reason sent a large handfull quietly to Alaska to
    train to fly commerical airplanes? Sure less companies are moving packages which
    is the reason for the decline in pilots but why train for commercial airplanes
    are they heading in a second direction? And why is this so quiet? And they
    purchased land in Murfreesboro Tennessee (outside of Nashville) for a hub
    headquarter, then sold the land recently. Is the company stable?
    On the flip side, the United States Postal Service is on the edge of the
    mountain just holding on, so this allows FEDEX and UPS to jump in should
    they fall before pulling themselves up, giving you as an owner more security. But
    this is based on an "if".

    Personally I would get as close to another owner of a FEDEX route and rely on this
    person for a mentor (two to make sure they both agree with what you hear).
    Giving you clear understanding of your risks.

    • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
      DomainDiva Master
      Currently Being Moderated
      Federal Express is a stable company dealing with the downturn in the economy. They are also in the process of phasing out their 727 (3 crewmember aircraft). Before you start asking questions and making statements about the viability of a public company in a public forum you need to do some research.

      Personally if I had a choice between FDX or UPS, I would take FDX in a heartbeat.
      • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
        Novice
        Currently Being Moderated
        Hello DomainDiva: As I explained to the another "poster", I would not be considering forming a business entity ( again ) and becoming an independent contractor who's revenues will be derived from one customer if I did not feel FDX was a solid company and will continue to be going forward.
      • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
        MoveForward Apprentice
        Currently Being Moderated

        Domain..

        FEDEX to cut executive salaries ....www.bizjournals.com
        _____________________
        FedEx lost $876 million in the fourth quarter ....www.commericalappeal.com
        ______________________
        "The operating environment for our first two quarters in fiscal 2010 is
        expected to be extremely difficult," because of continuing weakness in
        manufacturing activity and climbing fuel prices. Per CFO Alan Graf Jr. FedEx".
        __________________
        FedEx plans to lay off 900 at Freight Unit, saying already slumping
        demand worsening this year....
        www.abcnews.go.com/business/wirestory?id=6840151

         

        ________________________

         


        Ghee Domain I always thought a forum was to learn for each other and
        ASK QUESTIONS! Thanks to your sarcastic answer I know the answer
        to a question. Your research is above. And one last thing...you may
        want to contact my local newspaper and let them know the 1000 job
        cuts in May with 500 from our Memphis FedEx hub is not real...
        www.memphisflyer.com/TheDailyBuzz and memphis.bizjournal.com

        • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
          DomainDiva Master
          Currently Being Moderated
          I did not say the cuts were not real. I said FDX is dealing with a downturn in the economy while adjusting their aircraft fleet.
        • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
          DomainDiva Master
          Currently Being Moderated
          The problem with your first post is that you did not cite any research or articles. You just made blanket statements which are dangerous in a public forum, people do stupid things when rumours start. Whenever a statement is made about any publicly traded company, article cites or web links should ALWAYS accompany the post.
          • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
            MoveForward Apprentice
            Currently Being Moderated
            Diva...
            So you want to create "forum rules" but you do not want to
            play by them. Where in your first statement concerning "Microsoft"
            did you show us where your information came from.

            We are all adults on this forum, trusting each other to help the
            other. We all understand comments and answers are
            simply suggestions and opionons based on what we know,
            read, have learned, or we understand this to be. Each of us is spending
            every waking moment of every day working on our business's and
            visions. When we need help we turn to this forum. When we
            have down-time we turn to this forum to read suggestions,
            learn from articles, feel like we are not alone when simular
            situations arise and help each other from not making mistakes
            we have made. Just because a company has
            gone public they are not perfect. Public companies are our
            role models, leaders and someone to learn from but not all
            have gotten to the top with the same values and ethics we want
            to have for our business's while others are falling due to the
            economy. Public or otherwise our waking moments in our lifes
            are equally focused on our business's.

            For us all to survive this economy we have to see the glass
            half full and work together.
    • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
      Novice
      Currently Being Moderated

      Hello MoveForward and thank you for your reply. Yes, thru diligence I have been able to locate a gentleman who owns mulitple Fedex routes several counties west of me and eventhough I could not obtain a phone number, I just sent him a brief letter in an attempt to make direct contact. I have also just reached out to someone else. This is a business where it is difficult to find people with experience from the inside to speak out online and voice opinions and/or give input.

       


      Having come from a business/finance bankground for the past 28 years, I do not question the stability of Federal Express as a company. I would not be considering becoming an independent contractor solely for one company, namely FDX, if I thought there was risk in the company as a whole not succeeding going forward. With DHL's competition out of the way and the USPS suffering to the point where they are offering buyouts and not renewing leases on key locations ( including the one near me ) in order to consolidate and cut costs and also merging routes which will most likely reduce service, FDX and UPS should be able to gain more market share.

      You bring up a very excellent point regarding not being forced to learn as you go and I already have a plan which I hope to put in place with a seller I am in touch with.

       


      Thanks again

       

       


      • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
        MoveForward Apprentice
        Currently Being Moderated
        Mark...so glad you are going with several services. We have a place
        called "GOIN POSTAL" it is located in a busy section of town.
        It is just like what you are talking about.
        I met the couple who opened this a year ago, a retired couple.
        Super upbeat and I bet they would speak to you. The franchise is
        www.goinpostal.com I have the private information for the owner
        of this franchise (names, etc.). If you are interested in speaking
        to them or emailing them let me know.

        Very Best to you!
  • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
    740bill Newbie
    Currently Being Moderated
    Hello Mark , I see you are researching Fed Ex Ground Rt's i am also i nterested in finding out more about them . I live in monmouth county a friend of mind owns 6 rt's in Newberg NY and he does very well for himself he just got involved with then about 3 yrs ago and has 6 rt's to date are you finding these routes through brokers or owners themselves ? I just moved here a few years ago and i am involved in the independent operator business with Arnold Bread just looking to pick your brain a bit did you come across any rt's close to the Belmar Area?

     

    Thanks
    • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
      Novice
      Currently Being Moderated
      Hey 740bill. Hope you have enjoyed living in Monmouth County for the past 2 years. Belmar is a nice area. I an not sure if there is a way to "private' contact you via the forum ( i.e. e mail ). I will have to research that. I would have no problem speaking with you personally on what I have found so far.

      I am going out this Tuesday to meet with a route owner and am still thoroughly researching this potential business opportunity along with a few other route possibilities.
  • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
    ICECREAMMAN2 Newbie
    Currently Being Moderated

    Hi Mark:

    I have been a courier driver, for a good size company many years ago. Also have delivered Lost Luggage from the Airport, for about 7 winters, in town and out of town trips. On call 24/7/365, as the airport was open 365. Some days were 21 hours back to back, etc.......

    I did mail parcels at christmas for Canada Post, and Helped Greyhound also at christmas time for two years in a row.

    The Xmas parcels you would start sorting parcels about 6:30 AM.

    Load the car, or van. and head out in the Weather, Snow, Wind , etc., Traffic, get to the area, and start dropping.

     


    My Questions to you:

     


    1. Do you love to drive, in all kinds of weather?

     


    2. On all kinds of road conditions?

     


    3. Morning Rush Hour Traffic?

     

     


    4. Day after Day, Week in Week Out?? 52 weeks a year.

    If you feel sick or not.

     


    5. If you look out your window, and can't see the house across the street, and say Just one time, I'm going back to bed.

    I think you should be looking to Find something else.

     


    I have Been there seen it, done it, told RCMP, to move because I needed to go thur.

    Also food delivery, for many years.

    Your vehicle, needs to be in great shape. Also having a back one would be a good Idea.

    Cal

     

     

    • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
      Novice
      Currently Being Moderated
      Hello Icecreamman. Thanks for pointing out some of the negatives. In reponse to your post:

      1. Do you love to drive, in all kinds of weather?

      Doesn't bother me. Been there, done that. For most of my working career I have driven 50 miles from my house to a Train Station to catch a Train 3 stops into the city. Thats 100 miles per day/ 500 miles per week. Driven in snow, rain, sleet, etc. Most days started for me at 5:30AM and home around 7 PM being my own boss. However, I was not on the road during most of my business hours. But, I do not mind driving in such conditions. When you are in business for yourself, one does what one has to do. Have to look at the bigger picture and the potential rewards down the road.

      2. On all kinds of road conditions? I think I answered that in # 1

      3. Morning Rush Hour Traffic?

      Well, the drive from my home to the depot is only 18 miles and easy back roads if I choose. I know the area very well. The routes are anywhere from 15 to 23 miles from the depot. Nothing to terrible.

      4. Day after Day, Week in Week Out?? 52 weeks a year. If you feel sick or not.

      One has to do what they have to do if you are in business for youself. Working brick and mortar hours from 9AM to 9 PM 7 days a week can be more taxing than working 7 AM till 5 PM in the elements on the road Monday thru Friday in my opinion.

      5. If you look out your window, and can't see the house across the street, and say Just one time, I'm going back to bed. I think you should be looking to Find something else.

      Never done that. Owning a previous business and knowing I had to get into the city, if 2 feet of snow was predicted, I'd always make sure my driveway was plowed by 4 AM to get out and leave an hour earlier ( 4:30 AM ) rather than normal ( 5:30 AM ).

      Thanks again for the post. Yep, I know what I am potentially up against. But winter is only 3 months out of the year and the benefits of owning a business can far out weight the inconveniences.

       

       

       

  • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
    dkmyllc Newbie
    Currently Being Moderated

    That is a great idea, the greatest risk I would for see is the ability for the ground and air shipment industry as a whole to shrink more as it did when DHL had failed to succeed in today's competitive shipping community. I also believe FEDEX has a very strong client base. I know they were mentioned in the new recently for under paying 10 99 employees however I think this is a minimal issue compared to the other financial issues mentioned in the news today.
    • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
      Novice
      Currently Being Moderated
      Yep "dkmyllc", I still find this business model very intriguing. I am meeting a seller for the 3rd time later this week and will also be meeting with someone that has both multiple ground and home delivery routes for a general discussion. We both come from the same former business background so I am very fortunate to have both found out about him and also successfully make contact with him.

      I am still looking at other business opportunities but this one still has my complete attention.
      • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
        ducelong Newbie
        Currently Being Moderated
        I am a fedex driver, did you say you were looking for a route in murfreesboro tn?, I can answer some of your question so fire away.
        • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
          Novice
          Currently Being Moderated

          Thanks ducelong for your reponse. I am in the Northeast. I have had the opportunity to recently speak to someone that owns multiple routes and I now understand the current business model completely. However, I am now weighing the potential risk if Fedex implements the new agreement in my state as they have done in both NH and Maryland, which thereby forces an individual route owner to purchase 2 more routes in order to qualify of the new agreement as the older standard operating agreement was not renewed. Even though my plan was to get to three routes within 12 - 18 months ( assuming more came on the market for sale out of the same depot ), my concern is being prematurely "forced' to expand if Fedex decides to go forward with the "newer" business model in my state. There will be many ways for a single route owner to proceed if this happens and all the positives and negatives have to be very carefully weighed out.

           


          One other situation I am trying to nail down is how these routes are priced for resale and what multiple they actually usually sell for ( one times mulitple of gross, 1.25 - 1.50 multiple of net, etc, etc, . ) Most routes that I have viewed ( including the current one ) in my area generally have between 135 and 175 stops per day for Home Delivery. At this point in time I am really not interested in Ground Delivery but will consider that as time goes by ( assuming I do proceed to purchase a single home delivery route ).
          • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
            Quinn1212 Newbie
            Currently Being Moderated
            Good day to you Mark,

            I too am looking into buying a route from a local man in Southern Louisiana, mine being Ground Delivery. I have not had a chance to ride with him yet but do plan on it. My drive to the depot is right at 47 miles but the routes location is in my home town also where I live, so it would be a longer drive to the depot but not bad once I get back in town. He also told me FedEx does not worry about what time he makes it back as long as the deliveries had been made. Have you heard anything about this? So you can just about run in-between the weather if need be. I also have a plan like yours, not only as a job for me right now but eventually expanding it into a few routes with employees driving under me. According to the seller the route will soon have the option in becoming two. He said we could get together one day and speak with his representative to see how splitting the route could benefit me on my investment. I know the area I would run as it's where I grew up which is a plus for me. I was wondering if you had a chance to check out the figures on gas, truck maintenance, insurance and any other effects that should be included in your total figure of expenses. With you being fresh in knowing about the new agreement have you seen anything about Louisiana being a potential state for this? I'm extremely impressed with your background and to have someone with your knowledge looking into the same opportunity as I, makes me smile. I still have a lot of research to do myself however look forward in hearing your results thus far. Thanks a lot for your time
            • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
              shirlee Newbie
              Currently Being Moderated
              Hi,

              I am interested in the fact that your potential seller said Fedex doesn't care what time you get back to the terminal......does that mean they don't care how early or late you deliver to homes. The pick ups would have to be done during business hours. Did he indicate how long the route would take on a normal day and how many stops he had?
              • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
                Quinn1212 Newbie
                Currently Being Moderated

                 

                He said around 60-70 stops and some nights bring the truck back to the terminal 9 that night, not becasue of a long day at work but rather personal gain. I will ask more about it tomorrow and will post.
                • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
                  shirlee Newbie
                  Currently Being Moderated
                  great, thanks!
                  • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
                    Novice
                    Currently Being Moderated
                    Shirlee and Quinn: I will respond hopefully within 24 hours to your posts. I am a lil busy at the moment and I want to reread everything and respond accordingly. I am meeting with a seller who owns 10 routes this Thursday morning. I have already met with someone that owns 4 routes and is looking to lighten his load to 3 ( he had 5, sold one and still has four ). Anyways...I will be in touch.

                    I will say this. Fedex Ground pays better than home because Ground is 95% commercial deliveries where you have to obtain a signature for every package delivered ( FEDEX pays you a small fee for signatures. I believe $1.00. So if you deliver 100 packages, thats $100.00 more than Home packages per day ) which becomes very time consuming. It is a different animal than "Home". Home you just drop, ring the bell and run. Home gives you street by street printed directions for your route prior to your leaving the depot. Ground does not - you are on your own. Home does not make as many pick ups as Ground. You will work longer hours with Ground. You may have to wait and make pickups as late as 6:30 PM .Ground is Mon - Fri. Home is Tues - Sat. I am not opposed to working long hours ( the Home route I was on made 143 stops in one day and we left the depot at 8:30 AM and returned at 5:30 PM ). I will try to gather more differences as I speak to people.

                    Will be in touch,

                    Mark
                  • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
                    Quinn1212 Newbie
                    Currently Being Moderated
                    Hello again Shirlee,
                    Just got done speaking with him, he said FedEx has the trucks ready at 7:30 but he gets there around 8:30. He also stated that they are real lenient as long as your deliveries are made for that day.He said some nights he wouldn't bring the truck back till 10pm because he had to pick up a few things from the supermarket. As far as how long it takes him on a normal day, around 9-10 hours but this route is more driving then deliveries? He also added that FedEx gives a bunch of bonuses year round including fuel surcharge, good driving every 3 to 4 months, and a few others like yearly rises. I wanted to take a ride with him one day to see how it all was ran which he said not a problem. I'll keep you updated on my finds and wish the best for you!
            • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
              Novice
              Currently Being Moderated

              Hi Quinn1212: I will share with you what I have been able to find out via research and also share some opinions.

              First and foremost: RIDE THE ROUTE. Get to the depot at the exact time your seller does and spend the entire day with him. View what he does in the depot before he leaves, while he delivers and when he gets back. 47 miles is a long distance ( 84 round trip ) and then you have mileage on top of that for deliveries on the route. This is not like regular driving. It can be very grueling working any type of route. It is good that your know the route area because Ground does not provide custom daily "street by street" guides ( pretty much similar to mapquest ) like Fedex Home does.

              Second: If you have not done so already, request the FEDEX settlement sheets from the seller regarding the route you are considering. I would request a current sheet, which are produced on a weekly basis, and then I would also request all of December 2008's sheets. This way you can see the volume spike for the holidays and the last sheet from '08 should have a year end number.

              Third: As far as FEDEX's concern for when you return to the depot. You are in independent contractor. You can start at 7 AM if you want or 10 AM if you want. It is up to you. Just make sure you hit all of your stops. Some packages may have to come back because being that GROUND is mostly commercial, the majority of packages will require signatures. If you cannot obtain one for some reason, it will have to be noted in your scanner and then you will have to redeliver the following day. KEEP IN MIND THIS: IF YOU ARE DELIVERING MOSTLY TO BUSINESSES, THEN YOU BETTER MAKE SURE YOU LEAVE EARLY ENOUGH IN THE MORNING AND ALLOW ENOUGH TIME TO HIT ALL OF YOUR STOPS BEFORE THE BUSINESSES CLOSE. YOU WILL BE SIGNING AN OPERATING AGREEMENT WITH FEDEX AND BE AWARE THAT UNDER CERTAIN CIRCUMSTANCES, FEDEX WILL HAVE THE RIGHT TO CEASE YOUR ROUTE AND CANCEL YOUR AGREEMENT LEAVING YOU WITH NOTHING. ( there are risks in every business venture.. Be Smart -- Allocate your time efficiently, make your deliveries and DRIVE SAFELY ! )

              Fourth: Expansion. Make sure you have a business plan if you intent to expand. Funding is an issue. Most lenders will not make loans for routes. Staffing is an issue. You will need dependable, responsible drivers with a very clean driving record. Their mistake will be your mistake. Their productivity will reflect directly on yours. You have now gone from a single route owner into a business -- How will you form your business? LLC, Inc.,etc. ? Are you comfortable with managing people? What if they call in sick? Do you have back up drivers? ( you better. It's your business and the packages have to be delivered ).

              Fifth: Splitting routes: I have to assume that the seller is referring to what is called a "supplemental route".. This would be when your route reaches its threshold level and requires another truck to handle all additional deliveries. Obviously, each particular truck can only handle so many packages and each route is designated with a threshold level. So, if the route you are referring to is on the cusp of consistently being near or above threshold, then you may have to consider leasing another truck with a driver. Fedex may ask this of you. I do not believe you have to accept packages over threshhold. From what I understand, if you are over, the depot may call you say at 3 AM and ask you what you want to do. If you do not want the amount over the threshold, then they will split them amongst other routes within the depot or FEDEX may take care of it themselves if they have any temp drivers on hand. Keep in mind, once you start making deliveries over threshold, you get paid more per package delivery ( the rate is very good -- at least for "home". I have to assume "ground" is similar ). Be prepared for this scenario come the holidays. I questioned the profitablity factor regarding this with a few route owners and it definitely makes sense around the holidays to consider renting an additional truck and hiring a temp driver ( FEDEX may supply them but at your cost). Pay the driver by the stop this way you are always in control of expenditures. It was shown to me on one of the home routes I was looking at which did an average of 145 - 170 stops per day exploded to between 300 and 400 stops per day in November and December. Paying the driver a reasonable per stop rate still yielded an extra $125.00 - $200.00 per day for the owner after all expenses. You do the math. That's a good number. One more thing regarding the supplement. Eventually if the supplement gets big enough, from what I understand FEDEX may assign it a separate route number so now you have two routes for the price of one. You can do with it as you wish. Keep it and work it or try to sell it off.

              Sixth: Expenses: Rough estimates on home delivery ( not sure if they are the same for ground ): Scanner is about $23.00 per week. Miscellanous + truck washing is about $12.00 per week. These two expenses come out of your revenues on the settlement sheet. You receive credits on the sheet for "signatures", scanning and loading packages onto the "home" delivery truck ( Ground loads the truck for you so you may not receive this credit ) and the fuel supplement I believe is $0.11 per mile ( now "home" delivery route mileage is calculated according to the street by street directions. Ground does not provide this so I am not sure how they figure out their fuel supplement ). FEDEX requires you to utilize their insurance carrier and those costs will also be backed out. Liability, accident/collision and workmens comp will be auto deducted on the settlement sheet. I would figure on approximately $60.00 per week for these expenses. I would allow $25.00 per week for maintenance, $750 per month for truck lease and then gas, which will all depend on how many miles you travel. I would use these numbers though: There are 253 delivery days to a year ( allowing 5 delivery days per week and 7 holidays per year ) . Allow 10 miles per gallon at $2.75 per gallon. The variable is how many miles you drive per week. As an example, if you drove 500 miles per week at 10 Miles per gallon at $2.75 per gallon, that would be $137.50 per week or $7150 per year LESS $2860 ( .11 per mile suppluement according to home ) per year. I think it is safe to assume that you should generally allow between $21,000.00 and $25,000.00 per year in expenses for a single route. The only one large variable being is the mileage and the fluctuation of the cost per gallon for diesel. Of course, there could be incidentals -- truck break down, etc. THE SETTLEMENT SHEETS AND THE OWNER DOCUMENTATION SHOULD PERMIT YOU TO NAIL DOWN THESE EXPENSES ( AND REVENUES ) VERY ACCURATELY.

              Finally, how about how you get paid: I only know this for home: You get paid per stop, per package delivered, per package pick up, per signature. You get paid an advertising rate per day because you are using the FEDEX Logo on the truck and wearing their uniforms. You get paid what is called a "core zone" rate every day. This rate is calculated on how far you first stop is from the depot and then how many stops you make per day. Of course, you get your fuel supplement. You will receive a monthly bonus for customer satisfaction and operating 100% according to your agreement with FEDEX. You will receive "x" amount per package delivered over threshold. If you are a multi route owner, you will receive more bonuses for excellent performance. The multi route bonuses level off when you own 5.
              • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
                mrfakrash Newbie
                Currently Being Moderated
                Mark,

                I thought your post regarding the Fedex routes was outstanding..You are so right..I am a former Courier with Federal Express..Was a couruer for 2 yrs until last October..I am looking to purchase a route or two myself within the next few months..I saw your posting regarding settlement sheets...My question to you, are viewing the settlement sheets enough, or would you need a due diligence specialist to assist with your due diligence before purchasing a route?
                • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
                  Novice
                  Currently Being Moderated
                  First, sorry for not following up on this thread until now. I've been quite busy and have had some other matters to attend to.

                  Mrfakrash: To answer your question. It is really up to you. I can tell you that I did not use anyone to perform a due diligence. I did most of the research myself and spoke to a few very well experienced owners and then put it all together after looking at the settlement sheets. There really cannot be any "smoke and mirrors" on settlement sheets for single route owners. Multiple route owners can designate stops into another routes settlements sheets. For example: Route A and Route B. The owner has two drivers for Route A and one driver for Route B. Being that Route A is split between two drivers, he can opt to have part of Route A's stop to be credited into Route B's settlement sheets. So, if he is selling route B, you will want to be more diligent in finding out how many stops and how big of a territory you are purchasing in the Route B transaction. It is not difficult to figure out.
  • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
    shirlee Newbie
    Currently Being Moderated
    Hi Mark,

    My husband and I, along with our 26 yr. old son are also looking at buying a route. We have spoken with a contractor who recently sold his route and a contractor who currently owns 2 routes. They both think that Fedex routes are good profitable businesses. We have also read horror stories on the internet about the heavy handed managment at some of the terminals. I hope most of that is sour grapes! I have not heard any percentage used in determining a price for a route. I am curious as to why you picked home delivery over ground? I have heard ground contractors make more money......Are you planning on driving or hiring a driver. Our son would be our driver. I have also read that fed ex likes you to work 11-12 hr day 5 days a week. This would be fine some of the time but are you hearing that is an everyday occurance. I am sure there is a limit as to what one driver can deliver. Any advise that you would be willing to share would be very much appreciated. Are you planning on working out a training period with your seller?
    • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
      Novice
      Currently Being Moderated
      Hey Shirlee: Please see my detailed reponse to Quinn above. I will add a few more things according to your questions:

      You said: They both think that Fedex routes are good profitable businesses.

      Reponse: Profitability will depend on the size of the route. If you plan on financing it somehow, allow for that as an additional montly expense. From what I have seen so far in my area, a home delivery route averaging 135 - 170 stops per day can certainly provide a very reasonable living ( of course that depends on the person and their situation and how they manage their money ).

      You said: We have also read horror stories on the internet about the heavy handed managment at some of the terminals. I hope most of that is sour grapes!

      Response: No matter where you work or go, you will always tend to come across someone difficult to deal with. I too have read some articles but I believe the ones I were reading were regarding managers relating to the employees under their management. I have not personally met the managers of the depot I may be working out of but have scene them at work with the independent contractors and all seem to be on the same page and working cooperatively.

      You said: I have heard ground contractors make more money......Are you planning on driving or hiring a driver.

      Reponse: From what I understand, Ground gets paid more. I think this extra revenue comes into play because they deliver mostly to commercial businesses and signatures are mandated unlike home delivery ( occassionaly some home packages are signature required ). That fact may mean an extra $1.00 per package for Ground contractors. I am not aboslutely certain on this but it makes sense to me.

      Response: Yes, if I go thru with this, I plan on driving the route myself.

      You said: I have also read that fed ex likes you to work 11-12 hr day 5 days a week. This would be fine some of the time but are you hearing that is an everyday occurance. I am sure there is a limit as to what one driver can deliver.

      Response: It all depends on the size of your route and the distance from the depot. Yes expect to work long days. Any business owner should. Like I said above, I worked a route that had 143 home deliveries and 164 packages delivered. We left at 8:30 AM and got back to the depot at 5:30 PM. Now, this depot is only 18 miles from my home. So, I left my house at 6:15 AM in order to scan the packages and load the truck, worked the entire route without taking one single break and got home at 6:15 PM. That's a 12 hour day. In my previous business I worked 70 to 80 weeks for almost 12 out of 18 years. If you decide to go into the retail business, expect to work 12 to 14 hour days, 7 days a week. If you want to be in business for yourself, then you have to expect to put the time in. The benefits.. With FEDEX, you will get your money deposited into you checking account every week on time. The harder you work, the more you will get paid. If you decide to expand into multi routes, then you benefit from additional revenues. Will you ever be able to not drive as a multi route owner? Yes and no. Always be prepared to have to drive, but if you own 5 or more, for the most part if you know how to run a business, then you should be able to pull out a decent salary while just managing, which includes being at the depot in the early AM to make sure your trucks are being loaded, your drivers are there, there are no mechanical issues, etc. etc. But, ALWAYS be prepared to drive, just in case.

      You said: I am sure there is a limit as to what one driver can deliver.

      Response: As stated in the previous reponse, all routes have a threshold level. See the reponse above for details.

      AND ONE FINAL NOTE: YOU HAVE TO PAY YOUR OWN HEALTH INSURANCE. OF COURSE IF A SPOUSE WORKS ANOTHER JOB THAT MAY BE TAKEN CARE OF.
      • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
        shirlee Newbie
        Currently Being Moderated
        Hi Mark,

        I had to chuckle when I read you were looking at an Ihop franchise and did anyone have any information on that......my experience with Ihop was usually about 1:00am for breakfast after a fun night out.....they do have a great breakfast.

        Thank you so much for all your information, you certainly have been helpful. We have a little bit of a situation with our seller because he does not want any other drivers or management to know he is selling. I am sure that is because he feels he can get more from someone outside the terminal. He also does not want to finalize anything until after the first of the year, which I can certainly understand. Therefor he feels like he has lots of time to wait for a better offer. This route is in a good area and makes about 110-150 stops a day. He says it grossed over 90K last year and is set for the same this year.

        Are you planning on taking the driving school Fedex offers or going though a private school. Neither myself, my husband nor our son have any driving experience. Our son would be the driver,and if he goes through Fedex driving school we would have to be listed as the contractor I believe. I think it would be called non driving contractor.

        It sounds like home delivery is more labor intensive with having to load the trucks. For ground they load them at the terminal I wonder why it is different?

        Good luck with your desicion.....remember Ihop would be 24/7.

        Shirlee
        • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
          Novice
          Currently Being Moderated

          Hi Shirlee: Like I said previously, make sure you get copies of both the current and '08 year end settlement statements for the route you are thinking about buying. If he has multiple routes, the numbers may be a little more difficult to figure out because sometimes one route has a lower threshold level than another and the owner will opt to put his "peak" above threshold deliveries into another route thereby skewing the numbers. However, the key really is to what the daily delivery stops are. 110- 150 stops grossing over 90K sounds about right for a GROUND route. What State are you in?

           


          As far as labor instensity. GROUND you will be delivering more packages and heavier ones on average than HOME. Also, like I previously stated, GROUND does not offer "turn by turn" directions every day for the route. So, even though the truck may be loaded for you, you will have to sort thru the packages and write down the best order to deliver them in. I may even suggest getting a GPS and input the stops into the GPS. Either way, this will probably take just as much time as it does to scan and load a home delivery truck and by loading the truck yourself, you can put them automatically in order of delivery stop. I have done it, it is not all that bad in my opinion. Also with GROUND you will be making a bunch of pick ups and most will be larger packages and you HAVE TO make these no matter what. A lot of companies use FEDEX exclusivley and schedule daily pick ups. Some may be as late as 6:30 PM. You do get paid better on both pickups and deliveries.

           


          If I decide to go forward, I will be taking a private class. If one takes the FEDEX driver course, you have to wait a year to buy a route. But, if some reason, you pay and use a 3rd party, this is not an issue.

           


          Regarding the seller not wanting to sell until 2010. If he is a multi route owner, you can always try to negotiate a deal now to get you started immediately and asign him any amount of packages over threshold during PEAK time ( late Nov. until Christmas Eve. ). If he is a single route owner, you can always negotiate buying the route now and paying him for the amount earned over threshold during PEAK. Everything can be negotiated.

          During PEAK, expect to work 6 days per week and 14 hour days.

          Regarding IHOP.. 25 employees should be enough to handle 6 AM till 11 PM hours seven days a week. No reason an owner cannot open and stay thru the morning rush, then go home and come back during the course of the rest of the day.

          I've looked at Franchises, Commercial Manufacturing, Florists, Deli's, Pizzerias, Bagel stores, other types of routes and more. No matter what, long hours will be required. The difference is some are 5 days a week, 6 days a week or 7 days per week.

           

  • Re: Have funds to purchase FEDEX ground routes. Risks involv
    Redman1 Newbie
    Currently Being Moderated
    Hello Mark, I am looking at a Fedex Home Delivery myself. I would like to know how you got in contact with the route seller. I also reside in Monmouth county. Thx Redman1
    • Re: Have funds to purchase FEDEX ground routes. Risks involv
      Novice
      Currently Being Moderated
      I began the process via a business broker, which really ended up getting me nowhere. But, it was a good experience to meet with one and go thru the 2 hour discussion and touching upon multiple possibilites.

      Thru much diligence on my own and I mean 100% on my own I came across a potential seller.
      • Re: Have funds to purchase FEDEX ground routes. Risks involv
        Redman1 Newbie
        Currently Being Moderated
        ThX I contacted a route broker a few days ago still waiting for info on the route he has for sale.
      • Re: Have funds to purchase FEDEX ground routes. Risks involv
        gblambo Newbie
        Currently Being Moderated
        Hello - All - I too am looking seriously at buying 4 fedex ground routs. Did any of you actually buy a route? If yes - can you tell me how it is going? Can we speak directly to one another? I will provide my telephone # if you would be willing to speak with me. Thank you all for the info so far. G.B. Lamb
        • Re: Have funds to purchase FEDEX ground routes. Risks involv
          Novice
          Currently Being Moderated
          Yes, I have purchased my first HOME DELIVERY Route ( not ground ) just 2 weeks ago and am working thru the process of understanding how this model works. Ground is a different animal all together from what I understand.
          • Re: Have funds to purchase FEDEX ground routes. Risks involv
            soj8888 Newbie
            Currently Being Moderated
            thats bizarre, that goes against what i was told when i spoke to an individual seller of a fedex route, a broker, and fedex themselves. they each stated that an individual would need 6 months of behind the wheel commercial driving AND the fedex saftey course, or 1 year of behind the wheel commercial driving, for a fedex home route, even if you were not planning on driving the route yourself. did fedex approve you without this experience?, if so what did they require?
          • Re: Have funds to purchase FEDEX ground routes. Risks involv
            JWC888 Newbie
            Currently Being Moderated
            Hey Mark, Enjoied you process of buying a Fedex Route .. I am in the same process in Ga .. I was wondering what was the going rate to pay a driver per month> ,, I am looking at 2 routes with 2 drivers.
            • Re: Have funds to purchase FEDEX ground routes. Risks involv
              Novice
              Currently Being Moderated
              Most I have spoken to pay their drivers on a "per stop" basis.
              • Re: Have funds to purchase FEDEX ground routes. Risks involv
                elanjo Newbie
                Currently Being Moderated
                Hi Mark. Curious how you are doing with your route? I am currently looking at a home and ground route for sale in my area. Would like to get some information from you when and if you have time. Don't know how to contact you other than this thread since there is no PM or email contacts listed. Thanks.
              • Re: Have funds to purchase FEDEX ground routes. Risks involv
                seekingroute Newbie
                Currently Being Moderated
                After much research, I am set on buying a ground route. Fedex requires that the buyer have 1 year commercial driving experience or 6 months + fedex approved driving school.

                I have the funds to buy a route, but not the driving experience, not even six months. Is there any way around this rule? Or game over for me?

                If have some advice but would rather not post on this board, you may email me here:
                seekingroute@yahoo.com
                • Re: Have funds to purchase FEDEX ground routes. Risks involv
                  Amovida Newbie
                  Currently Being Moderated
                  Mark. Thanks for your excellent and detailed information on your consideration of FedEx routes as a personal business pursuit. How about some follow up details for this thread. I saw that you have purchased a route around November of last year (2009). What has been your experience? Are you happy about your business decision? Has the day to day of driving a route become cumbersome or is it still something you enjoy? Were there any financial surprises such as unforeseen expenses or hiccups in the income stream?

                  You have great details in your thread leading up to your purchase and now "radio silence"! As a potential buyer of 9 routes shedding some light on the next chapter of your business venture would prove invaluable to myself and the other followers of this thread. Thank you in advance for your response. Sincerely, Sean
                  • Re: Have funds to purchase FEDEX ground routes. Risks involv
                    Novice
                    Currently Being Moderated
                    First, sorry for not following up on this thread until now. I've been quite busy and have had some other matters to attend to.

                    Sean: To answer some of your questions. Yes, I am very happy with my "business" decision. As far as working the route........ Everyone is different. For some it is grueling day in and day out for others, it is not. One of my issues was by 1 PM in the afternoon , I was completely bored.. LOL....Please understand that I did not enter this business to be a permanent full time driver. I entered this business to be a multi owner and manager of a large P & D operation but in order to get there, one has to work the system in order to completely understand the ins and outs. Unlike you, who is looking to make a large purchase from the onset, I chose to slowly build. I will be expanding via another route purchase come next month and that alone will provide me with much flexibility as far as permitting me to drive less, manage more and enjoy what I consider to be a very good ROI.

                    I am completely new to the P & D / Trucking business so I passed on an opportunity to purchase 5 routes at once. I would have to assume that you are in this industry already being that you are looking to purchase 9 routes. I would suggest that you perform diligence on your sellers business and on the drivers..i.e. MV records and FEDEX driving records. Sean, I am curious as to where you are located and whether you are looking at ground or home routes because they are two different types of animals.

                    I have had no financial surprises and no unforeseen expenses. The only expense that I would consider to be variable is the maintenance on the truck(s) and the price of gas. Being new to the trucking business, I can say this.. I am surprised at the poor quality of these trucks. I have not had any "major" issues, but a few minor ones. Workman's compensation and truck insurance are all processed via FEDEX's main insurance carrier. I purchased a used P-500 with my first route and will be doing the same with my 2nd route. In addition, I will be purchasing a van for myself as my intentions would be to cap my personal daily stops at a level that permits me to be done by 1 PM, while having two drivers with the P-500's do the majority of the deliveries between the two routes. This will also allow me to handle any problems between the two routes.

                    As far as further expansions. I am not in a rush to purchase a third but would immediately consider it if the right opportunity arises. Although, my business plan is to have a 3rd route within 2 years from now. I may also do something in the FEDEX Ground division. But, that decision does not have to be made immediately.

                    Sorry for the "radio silence" but I have been both busy and extremely sidetracked and to be honest with you, I had forgotten all about this thread.

                    Mark
                    • Re: Have funds to purchase FEDEX ground routes. Risks involv
                      GDA1981 Newbie
                      Currently Being Moderated

                      Mark,
                      Your info collected through this site has been the most informative i could find on the net. I am also interested in purchasing a fedex route and trying to build a network of multiple routes within the next few years. I live in monmouth county as well and would love the opportunity to pick your brain regarding all the first hand experience with the day to day business, before i go ahead and jump into this career choice head first. If you have any time to discuss, please contact me (George) at endlessambitionz@yahoo.com.

                      Thanks,
                      George

                    • Re: Have funds to purchase FEDEX ground routes. Risks involv
                      Amovida Newbie
                      Currently Being Moderated
                      Mark-

                      I wanted to thank you for breaking "radio silence" and finding time to share your experiences-post purchase with myself and the other members of the online
                      community. It has been very valuable and inspiring to hear that your business has mostly gone as you thought and that hard work is carrying you through.
                      I also appreciate your caution to ease into the water slowly rather than plunge, which I'm sure is sage advice. It won't matter for the moment, the package
                      of 9 routes that I was looking at was sold partially internally at FedEx and also externally, so for the moment that business opportunity has passed. Thanks
                      for the advice and keep all four of the rubbers pieces down! Sean
                • Re: Have funds to purchase FEDEX ground routes. Risks involv
                  Novice
                  Currently Being Moderated
                  First, sorry for not following up on this thread until now. I've been quite busy and have had some other matters to attend to.

                  Seekingroute: As far as I know, there is no way around this new safety rule implementation. Perhaps you should consider going out and working as a driver for a different organization utilizing the same type of vehicle and then persue your interests.
      • Re: Have funds to purchase FEDEX ground routes. Risks involv
        jamesjp351 Newbie
        Currently Being Moderated
        hi mark. i am just finishing up my first seasonal assignment driving for fedex home delivery. i am interesting in owning and driving my own route but was told that i had to wait one year because i took fedex's safety driver training course. how do you get around this? any help would be appreciated. thanks
  • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
    alytus Apprentice
    Currently Being Moderated
    sounds good
  • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
    jamielz Newbie
    Currently Being Moderated
    Mark,

    I have a similar background as yours and am also considering the same move. I'm in NYC, can we discuss over the phone or over coffee and compare notes? I may be buying over the next 2-3 weeks?
    • Re: Have funds to purchase FEDEX ground routes. Risks involved ?
      Novice
      Currently Being Moderated
      Jamielz:

      Provide an email address and I will try to contact you.
      • Re: Have funds to purchase FEDEX ground routes. Risks involv
        byebyelye Newbie
        Currently Being Moderated
        Dear Mark,

        First off, let me thank you for all your extremely informative posts. THey have been invaluable in helping me decide on buying Fedex Ground routes. In 7 hours, I will be meeting someone who is selling his Fedex Ground routes. He has a 5 routes from the same terminal in California and I am looking to buy them outright to operate as a non-driving owner. All personnel are in place (managers + drivers) so apparently I won't have to do a lot of driving, but I have printed out ALL your posts and have been studying them religiously so I realize that at some point I will probably need to step up to the wheel.

        One question I have is whether Fedex still requires me to have commercial driving experience and/or Fedex driver school in place BEFORE buying the business, even though I will hiring employees to do so. I am sure I will have even more questions after I meet the seller, study his settlement sheets, and figure out how keen his people are to stay in place! Would love to spend a few minutes (promise no more than 10:) picking your brains as to how I can best proceed. My email is kllye(at)ucdavis.edu , please let me know what the best way is to contact you.

        Yours,
        Lye
        kllye(at)ucdavis.edu

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