Based on the questions we have received from prospective buyers, here are the key questions we answer the most.
Ground Vs. Home Delivery Routes: What’s The Difference?
This seems to trip everyone up initially. Currently, Ground routes operate a Monday – Friday schedule, have a higher mix of business stops vs. Home Delivery and typically have scheduled pick-ups. Home Delivery routes operate Monday – Saturday, have a higher mix of residential stops vs. Ground and essentially have no pick-ups. On average, Ground routes do fewer delivery stops, more packages per stop and return to the terminal with pick up packages. Home Delivery routes do more delivery stops, fewer packages per stop and return to the terminal empty.
As explained in our Overlap blog post, Ground and Home Delivery will be merged into one operation by summer 2020. With the merger, the difference between Ground and Home Delivery will also disappear.
Relationship between FedEx and FedEx route owner?
Being a FedEx route owner, you and your company are providing delivery services on behalf of FedEx Ground. FedEx Ground is essentially your client and pays you for providing delivery services within your contractually protected service area. It is you and your company’s responsibility to provide the employees, trucks, software, etc. to operate efficiently within the parameters of the contract.
Where Is the Business Based?
Typically, an ISP’s entire truck fleet will be based at the terminal. Your employees will start and end their day at the FedEx terminal. This makes life easier given that FedEx Ground loads and unloads trucks overnight. Because FedEx offers loading services, this eliminates the need for your employees to arrive earlier to work to load their truck.
Independent Contractor Vs. Independent Service Provider
Under the prior FedEx agreement, Independent Contractors owned and operated individual routes each with their own individual contract. Under the Independent Service Provider (“ISP”) model, the legal definition of a route goes away and replaced with a Contracted Service Area (“CSA”).
There are two significant points to make on CSAs. First, FedEx requires a CSA to be a minimum size (typically 500 stops/day/csa). The second point is FedEx now provides the ISP the flexibility to determine the number of “routes” within that CSA, not FedEx.
Is Financing Available To Purchase FedEx routes?
Yes, there are several banks that underwrite FedEx route purchases. Typically, this is done through various Small Business Association programs.