FedEx Routes For Sale
Discovering the FedEx Business Model
You can buy FedEx routes? That was most likely the question you asked which motivated you to understand further how FedEx Ground, Home Delivery, and Linehaul businesses are bought and sold. Furthermore, this is probably what has you interested in searching current FedEx routes for sale in your area.
The reality is, there are thousands of independent contractors and service providers who have entered into agreements and own protected territories which service FedEx delivery and pick up customers. These independent companies are set up as corporations, hire and train personnel, own and maintain vehicles, and oversee general operations. Each company will choose an Authorized Officer (AO) and a number of Business Contacts (BC) to deal directly with FedEx corporate, working closely with local management to ensure customers are well serviced and businesses are run efficiently and safely. Companies contracting with FedEx have access to local terminals and hubs. These are facilities where packages are loaded and unloaded, trucks are housed, drivers and managers coordinate and plan, company AO’s and BC’s meet with FedEx corporate employees, and hiring & training of new employees takes place. These are the companies we partner with when listing FedEx routes for sale.
From the outside looking in, it would not appear that a truck driving down the street, branded with FedEx logos and being driven by a person in a FedEx uniform would be the product of a privately run small business. In fact, this is one of the most valuable benefits to owning FedEx routes, the appearance of operating under one of the largest, most well respected brands in the world. Which goes along with another huge benefit – no marketing or advertising costs. As a FedExcontractor you can take advantage of FedEx’s multi-million dollar advertising campaigns and sales teams that are constantly generating new business in your contracted service area, without spending one penny. Next time you watch a blockbuster movie or major sporting event, see how much free advertising FedEx is providing for their contractor partners.
Types of FedEx Routes for Sale
There are 2 main divisions of FedEx that are independently contracted.
* FedEx Ground & Home Delivery – These businesses service residential and/or commercial customers. For residential customers (Home Delivery) you focus the vast majority of time delivering packages to private residences. For commercial customers (Ground) you divide your time between delivering and picking up from business locations. Both Ground and Home Delivery routes are dedicated to a certain territory with set schedules. In the near future, Home Delivery will be a thing of the past as FedEx moves towards the consolidated branded name: FedEx Ground.
* Linehaul routes – You own and operate tractor trailers, driving long distances and cross state lines to deliver loads to and from designated FedEx hubs. Within the Linehaul sector, their are different business compositions. You will hear terms such as AM local, solos, team runs, and dedicated versus rotation. Our expert route brokers can explain all of these details to you.
Minimum Business Size Requirement
A transition FedEx is making within the ground sector is what is called “minimum transition scale”. FedEx is moving away from an Independent Contractor (IC) model and towards an Independent Service Provider (ISP) model. In order for businesses to enter into an ISP Agreement, minimum scale of 5 dedicated routes(PSA’s) or 500 daily stops in a single location must be met. This initiative requires smaller entities to either purchase more routes or merge with fellow contractors in their area in order to stay compliant. There are some exceptions as smaller terminals may have lower scale thresholds.
A related requirement which will be transitioning within the next few years is what is called “overlap”. Essentially this is combining Home Delivery routes with Ground routes to create an overlapping service area. All contracted entities will be responsible for all customers, commercial or residential, within their contracted service areas. This overlap model will create economies of scale by increasing volume density and eliminating the need for additional resources.
These are two essential factors to consider when searching business sale listings for FedEx Routes.
Qualifications Required to Purchase FedEx Routes
FedEx routes for sale are not just purchased by existing contractors or industry insiders. Granted, having some commercial driving and/or transportation and logistics experience is beneficial to entering into ownership of a FedEx route business but it is not a requirement. The primary requirements include:
- * Creating a corporation to run your FedEx business (no LLC)
- * Purchasing or leasing vehicles for service use
- * Setting up workers comp, vehicle, and liability insurance policies
- * Hiring and training drivers and managers, classified as employees of your corporation
By entering into an agreement with FedEx, you are signing a contract that gives you access to an exclusive territory called a Contracted Service Area (CSA). Terms are typically between 1-3 years in length. At term end, you will enter into a negotiation process with FedEx to renew your contract. In exchange for entering into this agreement, FedEx pays certain rates to the contracted entity including per stop, per package, and certain service charges. We can explain in detail the different rate “buckets” FedEx pays for services rendered. A major benefit of this business model is that you are paid the first week you are in business, no ramp up period required. Each week, FedEx provides a settlement statement that shows the total payment amount the business is due along with key metrics of the past week of service.
Bottom Line
FedEx route businesses can be a very exciting and profitable venture. There are many opportunities to enter the market within the Ground and Linehaul sectors. However, not all FedEx routes for sale are the same. There are many factors involved that will determine profitability and overall operational strength. Let Premier Route Consulting assist you in your search for FedEx route sales. We are experts on both the buyer and seller side of the transaction process, as well as former FedEx contractors that have operated routes first hand. We look forward to the opportunity to speak with you.
Contact Us to hear more details about FedEx Routes For Sale