FedEx Routes | How to Buy a Business
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- เผยแพร่เมื่อ 9 ส.ค. 2018
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I have a riddle for you--
What do you call a business with 100% dependency on one customer who can end the relationship at any time and who can arbitrarily change the rules and hold you to a high standard AND limit your ability to seek other customers?
A FedEx route.
Climb aboard this big rig and let me tell you what I think about these businesses here: • FedEx Routes | How to ...
I think you can buy them, BTW. You just have to be wise about how you manage the risk.
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4 years later - you just saved me from a $3million mistake
That's what I'm here for. Cheers!
We had a John Deere franchise one of the last single store owners in the state of Texas. our last year we had record sales and took 25% market share from one neighbor and 40% from another neighbor. Both neighbors owned multiple stores. When we went to renew our franchise that year Deere told us we had to sell to one specific dealer and that John Deere was financing the deal. That's a situation similar to the one you feared. I don't know what all politics took place it was obvious that some did. We had owned the dealership in our family for 40 years and had record sales parts and service numbers. They even bragged about me at a dealer meeting couple months prior. Told the other dealers that if they needed help gaining market share that I could teach them. Lol you can't trust any corporation.
@westtexas are you still in Buisness with John Deere as a franchise owner ? I’m interested in something like that
Glad to find this video as I've looked at several of the "FedEx Routes" for sale. You answred several of my key questions surrounding these "opportunities". Thanks!
Glad to help Kevin.
Hey kevin is there like a link where i could shop around theses routes
Very informative. Love your podcast too!
Thanks
You are totally correct sir! Great job!
Thanks for watching. Do you have experience with these routes?
Thank you for this video.
No problem Eric, glad to be of help.
Great insight thank you
You're welcome Richard. Thanks for watching.
Thanks for video
I'm glad you found it helpful Vijay
The best advise in my 10 years of business.
Thanks Darway. Glad you enjoyed it.
As long as Fedex's DOT numbers are on the side of the side of your bank financed truck and fedex bar coded boxes are going in the truck they have and will control everything and yes it's now a one year contract. In addition a contractor has to have a minimum of 5 routes. Moreover there's not one single term or condition in that company's unilaterally drafted and implemented contract is binding upon the company. Moreover you have to find somebody willing to match and or exceed the production of a UPS driver for about 60% of the pay that UPS driver gets. The risks are very high in exchange for modest returns.
Wow, great insights Robert. Thanks for sharing this.
Great analysis david.
thanks
How do I buy the route?
Real good analysis
Glad you like it.
Exactly!....great observation on FedEx contracting outside I would pass on this one.👍👍👍👍👍👍
It's a good way to earn money if it's the right route. You just can't pay more than what the risk entails.
The perspective you offer is clearly that of someone who is outside looking in. Here is a fact. FedEx does NOT indiscriminately replace contractors. It is wholly disruptive & unsettling to a specific terminal to do so. There are strict operating contractual rules. When these are followed, the business prospers. Fedex does set the compensation rates. The ROI is acceptable, will not be excessive. Understand contractors work for FedEx , the company does NOT work for the contractor. Want the whole pie,? start your OWN parcel delivery service. The allegation that contractors are "replaced" absent Just Cause, is simply an unfounded myth. Why can a contractor sell his routes if he does not own them?
Great points. Are you an operator Bill?
@@DavidCBarnett Thanks for the reply. Suffice to say that I was involved w/ FedEx ground, familiar w/ P&D + Line haul. My perspectives are based upon personal experience. Is it necessarily a hands-on investment, absolutely. The value $ of the routes must be fairly evaluated. The drivers are the critical asset, do not purchase a collection of "well used" trucks. The current trend toward no contact internet purchasing bodes well for these routes to return sustained ROI. Owner input is essential, prepare to learn the mechanics of managing routes to become effective administrator.
@@billupstateny9151 Bill I’m 34 years old i was looking into possibly purchasing a fed ex route with your experience would you recommend it and if not what should I look to invest in as far as routes
@@jasonrivera8902 First, FedEx requires the min operation of 5 P& D routes. Secondly, if you understand that it is a labor intensive investment requiring daily supervision, then it is a rewarding $ & worthwhile endeavor. If you have zero knowledge of the parcel delivery business, you may experience a very rude awakening. Contractual obligation of previous owner to remain involved for a transition period is essential.
Excellent video and its spot on true. Huge risk to pay millions for a 1year contract and sole supplier. The contract I read said the same as yours. Thanks for the details you make in your videos.
Thanks, I enjoy doing it. I hate seeing people get swept up in excitement and making bad business decisions.
Spot on David...
Thanks John
I’m literally in the process of seeing if this is a good move to make. The payment process from Fed Ex to the contractor seems pretty solid. I’ve only just started my Analysis. I really don’t like how the rules can change in an instant, your video is very helpful..
Great perspective, yes you are signing to single customer. Is there any insight to FEDEX contract renewals or companies that did not get the renewal? Also I am hoping these routes are protected and the use of FEDEX semi guarantees volume
From what I've read, they treat you as a supplier of services. That's the extent of the relationship.
He is absolutely right.
Thanks Jay, glad you're enjoying the vids.
I didnt know this!!
The purpose of the channel is education. Cheers.
Any franchise you deal with, essentially, if you describe the way you did on the video, have one customer. If you have a Pizza Hut, you have to deal with Pizza Hut's FDD. You are working for Pizza Hut and selling their pizzas (not yours). Essentially, what you described affect all franchise, license, dealer, jobber, etc type agreement. The key is to get a very good deal. And I completely agree with Robert Long's comments.
I disagree. In the Pizza Hut example, they are a supplier and provide a structure to follow (including rules and penalties.) But the customers are choosing your pizza over others and there is a lot you can do to make sure the customers are happy and keep coming back and tell their friends. If you lose a customer, you can replace them. In the Fedex example, there is literally only one customer. If you lose them, you own a truck with no cash flow.
@@DavidCBarnett Note that I don't sell FEDEX routes. And thank you for the disagreement. I think its great that you warn folks that this is not a slam dunk business. However, I'm pretty sure you have read other franchise, license, dealer type agreements that when you sign up for those "Brands", you need to please that particular corporate and adhere to their rules. Amazon FBA, Valero gas stations, and many other brands have 1 customer, in my view. Anyway, I respect your opinion.
What if you finance through SBA loan? Would that be a better way to finance one of these routes?
Well, if you use an SBA loan then you'll owe the entire amount to the bank regardless of the outcome of the business.
I own a franchise and security company. There are risks and pros and cons in all businesses. I'm so tired of suing people who owe me money.
Yeah, I hear you. Been to small claims too many times over the years.
I don’t work for fedex and never had but can I still buy trucks and get approve md for routes?
Umm. I certainly don't make those decisions for FedEx. You need to speak to them.
What’s your opinion on renting trucks for the routes?
If you own a truck, you're basically renting it to your own distribution business. Kinda like the problem with a business owning real estate. It messes up your understanding of true costs and what you're earning for your time.
What business do you recommend someone invests in? What do you tji k about assisted living homes or va homes etc...?
It depends on what you know and your experience. This question would have a different answer for most people.
The FedEx contractor business model is not nearly as risky as described in the video. I would advise anyone interested in this business to dig a little deeper and you will be pleasantly surprised with what you discover.
Hi Alex, what is your experience with this? Have you been an operator?
@@DavidCBarnett it is important to understand how long FedEx has operated this type of business model and how important these contractors are. Turning on the contractors would prove to be disastrous for FedEx
@@marklavilla4243 ok, then the sellers will understand this and therefore won’t have a problem financing the goodwill component of the selling price.
Buyers will always pay a fair price if they feel their risks are manageable.
@@DavidCBarnett That is a good strategy
@@marklavilla4243 John Deere said that their C & CE dealers were very important to them and stated at their annual dealer sales meeting in Florida that you "would never see a John Deere product in Home Depot" The next year they were at Home Depot and the answer to that question was "never is a very long time" They then said how valuable their dealer network was for service. A young territory manager let slip that their corporate think tank had analyzed eliminating the dealers entirely and setting up their own service centers but determined that it would not be profitable and dropped the project.
Great video, I was just about to put a contract on one of these businesses, but after this video I think I will pass. I don’t like the (1) customer scenario, to big of a risk, thank you David
Thanks Reeldealva, I got a lot of questions about these kinds of businesses and wanted to share the risks that I see. Any business you buy has to make sense for you.
FedEx does not need or accept fair weather speculators, stick to your Day Trading gig !
Sorry forgot the link th-cam.com/video/jaHkbYOmmPk/w-d-xo.html
Great video, can you please compare FedEx, UPS and Amazon DSP? I want to start a business this type but I don’t know which company should I go with because each of them have their own platform. Thank you so much. Give me advice please
Analyzing new business opportunities is not really for this channel. Too many unknowns. I prefer to look at things with a track record.
@@DavidCBarnett I want to know more about ISP FedEx routes here's my email wbrownjr19@gmail.com I have a few questions after watching the video.
@@williebrownjr.8522 you do not buy routes, you buy the equipment to deliver. Routes are granted to contractors as in you put a bid in for a route and is granted on not money but by what or who you know and/or are liked and/or reliability or both. IF you want to get in to contracting, you will want the contract and have a lawyer read it. So if you get a contract and buy someone out, you bought the vehicles not the routes, the routes are up to FedEx and can change with or without notice from year to year with contractor negotiations. I will also add posting in social media can cost a contract and/or disqualification of drivers.
What if you have other equipment that has other customers?
Well, then it's more of a real business. The size of the FedEx business would be a factor because you could still have a customer concentration issue.
beyond buying a route how else do carriers get these runs from fedex?
If you look at their website, they initially started this as a purchasing function. They would need suppliers to do any new routes they wanted to set up. I'd contact them and see if there were opportunities.
How do you share the risk with the seller?
By making the seller finance part of the transaction under the right terms. Watch this: th-cam.com/video/ygguRA9G4zc/w-d-xo.html also, like, share, subscribe, etc. ;) thanks
8:25 and i guarantee you any guy dropping a negative comment did in fact, not even read his contract.
How do I buy a fedex route ?
Thank s
They are often advertised, or just start talking to owners and see if they'd like to sell.
@@DavidCBarnett thanks
It's a great video but has Fedex pulled out of a contract? never heard of this before. Also, can't you just get more routes and expand the business? what about Amazon routes? if we follow your risk that's like saying what if tomorrow the whole of North America stops buying from Amazon? is that a reasonable assumption lol
Fahad, I was asked to evaluate the opportunity. Any single-customer business is very risky and a buyer has to enter this deal knowing what could happen. In my business experience, everything runs one way, then it can all change quickly. The reason FedEx has contractors is so that they keep the option of quickly changing. Otherwise, they'd want the control offered by having employees. The single-customer model gives FedEx all the power in the relationship.
Please walk us through how these guys win fedex contracts at first place and built it and then resell it to us. How they do it?
Talk to the FEDEx purchasing department. I would imagine there was once a time where these opportunities were advertised and now there is a class of operators who likely get first shot when new routes are created.
It’s not actually possible to do this directly with FedEx any longer. That’s likely one of the reason the routes have gotten more expensive.
@@stacysmith7092how much are the routes now on average ?
Have you spoken to a single FedEx contractor who lost their routes/business? Count them all up and and see how many you can find that lost it.
I've spoken to several who were having a real hard time making ends meet and then were able to save themselves by finding someone to buy it from them.
I was asked for my opinion based on the information I could find.
A single-customer business can't have a high value... it's just too risky.
I'm not saying these can't be successful businesses, I'm just saying it doesn't make sense to pay too much for them.
I’m an Amazon DSP operator and we essentially are in the same predicament with Amazon being our single customer. We have less control of operations/routes/etc and bound to the same annual contract renewals. I’ve even seen other operators get kicked off the program prematurely despite them doing everything in exemplary fashion.
@@aznbo187 I am surprised you did not get a "heart" for this comment. You are essentially agreeing with the host even though I would think Amazon would be the greediest, the worst and the most ruthless of business partnerships. Then again which large corporation isn't? I once did Amazon Flex, a sister venture to Amazon DSP
Done ever buy a FedEx ground route. It’s a trap
Did you buy one? What was your experience?
It’s to much risk to become contractor for Fedex ground
Hi JB. Do you know anyone who has done this? How did they fare?
@@DavidCBarnett I know each and everything about it I can help you and give you information about it
@@voice2282 what made it such a big risk?
Not worth it buying Fedex routes from independent csp “ contractor service provider of Fedex ground.....! Not worth doing business just don’t buy routes
Hi JB, do you have first-hand knowledge of how these businesses are doing? I always love to hear from people who are in different sectors.
@@DavidCBarnett lookup Route Consultant...
@@DataGeek903 I've been watching him, I'm attending a webinar soon, is what led me here. What's your take on route consultants?
So, here's a fellow who used to run over 100 trucks for FedEx and they just cancelled all his contracts in one day. th-cam.com/video/c07pl27xcvU/w-d-xo.html
Where’s the video of him speaking on this travesty? Because the link you posted is not it
@@Nofacenocase1619 Then you need to watch it again because the conversation starts at 2:43 where he explains what happened to him.