Selling FedEx P&D Routes
FedEx Route Sales Process
Once a contractor has made the decision to put their routes up for sale, a common question that often comes up is “How long will it take to sell my routes?” One of the first ways to gauge this is to look at the complexity of your business. How many routes/trucks are you selling? Are you involved in multiple sectors: Ground, Home Delivery, Linehaul? Are there any pending requirements that need to be completed prior to the sale: negotiations, ISP transition, overlap? Is your contracted service area expanding or are you inheriting any new routes in the coming future? Are your financials readily available and ready to present to potential buyers?
Once we’ve answered these questions, it will be easier to estimate the timeline required to sell your routes. Another factor is financing. Are you planning on allowing the deal to be financed or will it need to be a cash sale? Even though accepting a bank financed deal can ultimately help you in selling your FedEx routes, it can increase the overall sales cycle duration. After a general understanding of all factors involved, we can create an accurate timeline to determine the estimated turnaround time. It should be noted that Premier Route Consulting partners with financial institutions that are experts with lending to our industry. We will provide the best loan options for potential buyers.
Best Time To Sell
Another common inquiry is when is the best time of year to sell FedEx routes. The simple answer is any time. There are always interested buyers that are willing and ready to take on a good opportunity no matter when that may be. Keep in mind that the average timeline to selling FedEx routes is between two and four months. Timing the closing of your sale will be key to a successful transition for both buyer and seller.
The obvious season to avoid with the close of your sale would be peak. This does not mean that it is impossible to carry out a sale during or leading up to the holidays, but it is more likely that it will add time to the total process. Plus when working with local terminal management, they will appreciate a sale that closes well before peak. This ensures that the new buyer will have ample time to get comfortable with the new operation before volume begins to increase. We typically recommend to buyers that they should start the process as early as possible in the calendar year. That said we’ve sold routes into late November, so there is really no restrictions to when you can sell your FedEx route business.
The ideal time to close a sale is sometime earlier in the calendar year. For example, if you sell your FedEx routes in March, the new buyer will have at least 6 months before they need to begin preparing for peak. Typically a seller will stay on after they’ve sold their routes for a average period of 30 to 60 days to assist with the new owner’s transition. Including this as a clause of the sale agreement is good for everyone involved including your drivers, terminal management, and new ownership.
Steps to a Successful Sales Presentation
When the time comes to put your routes in front of a buyer audience, you want your presentation to be clear and concise. You need a marketing package that will give buyers the knowledge and confidence to make an informative decision as to the routes you are selling. These are the keys to success when selling FedEx routes.
- Communicate a clear description of your operation. The more specific you can be when describing your business, the easier it will be for a buyer to want to move forward with a sale. Each FedEx entity has it’s own characteristics and details. You want buyers to fully understand the inter workings of your business. Whether you are an owner operator that drives a route or run your business semi-absentee, make sure you are up front about these details.
- Present a detailed description of the assets included in the sale, namely the vehicles. Accurately describing vehicles make, model, and condition will instill trust in a buyer and help to get the deal done. Offer a buyer the ability to perform a visual inspection of your fleet, allowing them to ask questions and get a better feel for how vehicles are used during day to day operations. This is a major factor contributing to helping to sell your FedEx routes.
- Include accurate financials for your business, making sure to include key metrics that will create buyer interest. If you plan on allowing financing with your deal, we typically like to include figures that estimate loan values, closing costs, and debt service. This will be imperative to selling FedEx routes successfully.
- You should always have a signed non-disclosure agreement (NDA) with each potential buyer. This protects both buyer and seller, ensuring information stays only between parties involved in the sale. Confidentiality while in the process of selling your FedEx routes should always be a focus.
- Have updated vehicle maintenance records and weekly settlement sheets available for interested buyers. Also, have your ISP/IC contract available for potential questions. FedEx provided documents such as settlement sheets and daily service worksheets are very effective in accurately showing buyers key metrics such as package volume and revenue.
- Be available to take part in phone and in person consultations with prospective buyers once the due diligence period has been completed and the sale process is moving towards a purchase agreement. We like to include our seller clients in this phase as it will promote a positive atmosphere and clear communication between parties. Once an agreement is signed, we will prepare the buyer for the FedEx approval process which will include grooming them for their meeting with the local terminal management to go over their RFP and general business plan. This meeting is key to putting the buyer on the right foot in regards to their future success with FedExs.
- Once a sale has been publicly announced, we will want to introduce your buyer to key employees such as managers and veteran drivers that will be resources during the transition period. A sale can be an anxious time for both buyers and existing employees. Cultivating a good working relationship early on in the process will help build trust and communication.
Putting It All Together
It takes experience and hard work to create a dynamic presentation that will grab the attention of a qualified buyer and help facilitate a successful sale. Let Premier Route Consulting guide you through this process so you can present your business accurately and professionally.
Buyer FAQ’s
Need help selling your FedEx routes? To help prepare your routes for sale, it is important to know the questions that will come up during the saleprocess. The following are common questions we receive from potential buyers and investors.
1.) Are FedEx Ground routes a good investment?
A ground business can be a very lucrative investment. Some of the major benefits to ownership include:
- Revenue generated from day one without investing $1 into marketing or advertising
- Flexibility to run your business as you choose. If you want to drive a routes, you can. If you want to place a manager to run daily operations and run the business absentee, you have that freedom.
- Your operation grows with FedEx. As the FedEx ground sector continues to see strong growth year over year, the value of your routes will increase as well.
2.) Do I need previous experience to be a successful ground routes owner?
We see buyers from a variety of backgrounds, surprisingly only a small number have FedEx route ownership experience. With good due diligence and guidance from an experienced broker, a buyer can gain a good understanding of the FedEx ground routes for sale in a relatively short period of time. Including seller training is also very helpful in starting the buyer off on the right foot.
3.) What does “overlap” mean?
Simply, route overlapping is FedEx’s plan to condense contracted service areas (CSA) within the Ground and Home Delivery sectors. So, if you own Ground routes in a certain territory, you will need to merge with the corresponding Home Delivery contractor in the same territory. An overlapped business will service all commercial and residential customers in a CSA.
4.) What are the benefits of “overlapping” service areas?
Stop density is the key benefit to overlapping service areas. It is a more efficient business model that can improve productivity, cut down on the number of drivers needed to service an area, and reduce wear and tear on vehicles. This can translate to higher margins and stronger contract negotiations. Selling overlapped ground routes also have the potential to yield a higher saleprice.
5.) How does FedEx pay contractors?
FedEx Ground business owners are paid weekly. Compensation is reported on weekly FedEx provided settlement statements that break down revenue per route and include bonuses and incentives.
6.) How long does it take to buy/sell a FedEx routes business?
The timeline of selling a FedEx ground route business depends on multiple factors but the average sale process typically takes anywhere from 4 to 8 months. A good broker can decrease this timeline by facilitating controllable factors related to the deal. This is how we help sell FedEx routes quickly to meet our clients expectations.
7.) Does FedEx need to approve a buyer?
Yes, FedEx will require certain documentation from a new buyer prior to taking over for an existing contractor. We can help walk you and your buyer through the process. The key is to come prepared with the required items when the time comes for FedEx to approve your sale and transfer of the contract.
8.) Is there typically a training period?
When selling FedEx ground routes, it is always a good idea to offer a reasonable training period to your new buyer. This will create a better transition for everyone including you and your existing staff. Our goal goes beyond just helping to sell FedEx routes, we want all parties involved to be satisfied with the transaction.
These are just a few of the many inquiries we receive on a daily basis from individuals looking for more information on the FedEx Ground industry. Let Premier Route Consulting be your partner in educating potential buyers, creating a trusting environment for all parties involved.
Contact Us to find out how we can help you sell your FedEx Ground routes