Frequently Asked Questions About FedEx Route Buying and Selling
Yes. Contractors may provide pick-up and delivery service exclusively to commercial or residential service areas or operate a combination of Ground and Home Delivery work areas.
The responsibilities of both the company and the contractor are detailed in the Operating Agreement, which is based on meeting customer requirements, applicable laws, and industry standards – not company control. All Ground customers expect predictable service with each transaction and many define their service expectations in their customer contracts. Exceeding these expectations is what drives customers to choose "The Company" Ground over other delivery options and is the key to growing a successful small business.
There is no limit to how many work areas an independent contractor may acquire. There are, however, station-specific guidelines in place to avoid excessive dependence for network service on any single contractor in a single station.
The independent contractor model provides a small business with an opportunity to expand its success in association with a powerful, globally-trusted brand.
Profits will vary based on where your routes are located, the density of the delivery area, the number of stops and packages delivered each day, and other factors like cost of workers compensation, fuel, and employee wages. Most ISP's report gross operating margins of 10-25 percent before owner salary and income taxes.
The least expensive source of financing for most people who buy a route will be an SBA loan, which can be for working capital and to buy equipment. To qualify for an SBA loan, you will typically need to meet the following requirements: - 660+ credit score - Existing route should be cash-flow positive - Collateral (e.g. personal real estate, vehicles, etc.) If you meet these requirements, we recommend SmartBiz for SBA loans. They excel at relatively quick turnarounds on SBA loans, and you can find out in minutes how much funding you’re eligible for. ROBS financing is another low-cost option. Through a ROBS, aka ‘Rollover as Business Startup’, you can finance a business using your retirement account. You can learn more in our Ultimate Guide to ROBS Financing, or apply via Guidant Financial, our recommended ROBS Provider.
The average contracted service area (CSA) or route sells between 2.5 –4.0 times free cash flow or earnings before interest, tax, depreciation, and amortization (EBITDA) which is a measure of Independent Service Provider.