Buying FedEx Routes? Do These 5 Things First
Like any important business decision, becoming a FedEx contractor requires a significant amount of analysis and planning to ensure you get the type of route business you want, in the location you want, and for the right price.
Currently, both pickup and delivery (P&D) and linehaul routes are in high demand, which means being unprepared to buy may cost you the perfect routes. Follow these simple steps to ensure you don’t miss out on a lucrative business opportunity.
- Do your research ahead of time.
As a potential buyer, it is important to show brokers that you are a serious investor. Begin with a quick internet search to learn about how the FedEx ISP model works and what is required of FedEx contractors. Browse articles and online forums, watch videos, and, if you can, reach out to existing contractors to ask questions and get a feel for the business.
Learn about the buying process, the cost of FedEx routes, and the different types of financing available. Just as critical is knowing how the FedEx approval process works, what steps are involved, and what forms you will need before entering into a purchase agreement.
Finally, research potential brokers just as diligently to ensure they understand the FedEx Ground business and are able to offer the best routes in terms of both quality and value.
- Establish your corporation.
FedEx requires its contractors to be incorporated as either a C corporation (C corp) or an S corporation (S corp). While the two have a lot in common, there are some differences you will need to take into account before you decide which path is right for you.
The team at KR Capital wrote a blog on this topic to guide you through establishing your corporation, and you may want to consider working with a qualified business attorney and/or CPA to help you choose your corporation type and assist with the setup process.
- Find out your credit score.
As with most financial investments, it is important that your credit is in good standing if you are considering buying delivery routes and becoming a FedEx ISP. This is especially important if you are applying for a loan, specifically as a small business owner. Do yourself a favor and get a free copy of your credit score ahead of time to help determine whether or not your loan is likely to get approved.
- Determine how you will pay for your routes.
Obviously, if you are thinking about buying FedEx routes, you have a pretty good idea of how you will pay for them. Still, it’s wise to have all your proverbial ducks in a row beforehand.
If you will be paying in cash, be sure to consolidate your funds ahead of time to ensure a smooth transaction. Be aware that the process of allocating funds from your 401K can take up to a month or more, so begin the process early to ensure the money is available come closing time.
If you will be working with a lender, research available loan types (and terms) to decide which best fits your needs and finances. Look into things such as the loan repayment period, what your monthly payments will be, and what interest rate(s) apply.
- Have your request for information (RFI) already prepared.
As part of the comprehensive FedEx approval process, you will need to provide a copy of your request for information, or RFI. Your RFI is essentially your business plan, and FedEx will use it to evaluate your ability to successfully fulfill your obligations as a Fedex contractor.
Your RFI should include information about your financial viability, along with your plans for employee recruitment and retention, customer service, safety and security, delivery fulfillment, contingency situations, and compliance. You can view a sample RFI here.
Partner with a brokerage firm who specializes in FedEx route sales.
They say anything worth doing is worth doing right. Now that you’ve decided to purchase FedEx routes and start your own business, why waste time with a brokerage firm who doesn’t understand the intricacies of the FedEx Ground enterprise?
KR Capital is a highly specialized brokerage firm focused exclusively on the sale of FedEx P&D and linehaul routes. In addition to helping you find quality routes in your area and within your price range, our expert team will assist with financing and help you navigate the FedEx approval process like a pro. We’ve even compiled a list of important resources for potential buyers that you can browse here.
When you’re ready to take the next step toward owning your own FedEx route business, call KR Capital at (503) 664-0753 or contact us online to learn more.
