Pros and Cons of Owning FedEx Routes

FedEx routes are an extremely attractive business model if managed effectively.  Our firm sells FedEx routes nationwide and thus we talk with lots of FedEx contractors on a daily basis.  Some of the more attractive components of business include:

1.) No sales and marketing efforts required by the contractor.  FedEx does all of the marketing for you.  You, as the contractor, are responsible for delivering the packages safely and on-time.

2.) FedEx pays you every week, direct deposit, for the prior week’s work.  No uncollected receivables, minimal working capital requirements, highly consistent revenue.

3.) High-growth industry.  FedEx has been growing very steadily over the past several years – many states growing by double digits.  We’ve also heard that FedEx expects to overtake UPS’s market share within the next 5-7 years.

Some of the challenges associated with the business include:

1.) Driver turnover.  With modest pay and often without benefits, FedEx driving positions are more prone to turnover.  Managing your drivers/employees properly and ensuring they are as happy as possible is perhaps the most important job a FedEx contractor can have.

2.)  FedEx oversight.  Although FedEx contractors technically own their own corporation, there are many aspects of the business that are directly evaluated (and sometimes dictated) by the FedEx corporation.  These include things like driver approval, package delivery metrics, safety performance, vehicle standards, etc.  FedEx monitors each of these items to ensure its independent contractors are in compliance with their standards.