Buying FedEx Routes for Sale – Use Caution!
If you are planning to acquire a FedEx route, you should know how the procurement process works and, most importantly, how to accurately estimate its value. As unfortunate as it is, many new entrepreneurs trade route assets on the secondary market for cash or assets that aren’t of much value, and this is where real potential pitfalls lie.
As you can guess, buying a reliable parcel route isn’t that easy. You need to look out for all the necessary factors before making a choice. In this article, we have identified a few factors to consider before buying a route:
So How to use caution when purchasing FedEx routes?
1. Work with Independent Route Specialists:
Before buying any FedEx route(s), it is crucial that you consult with an unbiased specialist in the field because of the following reasons:
- Dual Representation
- Unregulated Industry – No Consumer Protection Agencies
- FedEx is Not Responsible
The first reason; dual representation means that when you are purchasing from the broker who is selling the route himself and is supporting you to purchase their routes over others. Keep in mind that dual representation is illegal in real estate and other industries, but since the route for sale industry is unregulated, brokers get away with doing this.
Plus, FedEx doesn’t jump in to protect businesses when they are sold less profitable or incredibly challenging routes masked as golden nuggets of the route for sale industry. Since the broker has more to gain, typically $100,000 commission per route sold, they might tell you anything just to get you to buy from them. Therefore, you need an independent specialist, a 3rd party, to help you make the right decision.
2. How Well Reputed is the Broker?
1. This is not a given that the broker is well known in the community, but the best way to find out about their reputation is by contacting their previous customers and finding out how their routes are doing that they bought from this broker. In addition to this, consider the following:
- Do they have any broker licenses? Arizona, Colorado, California, Idaho, Georgia, Illinois, Florida, Nebraska, Minnesota, South Dakota, Wisconsin, Rhode Island, Wyoming, and Nevada require brokers to have licenses.
- Do they own the routes for sale?
- Have they been sued? If yes, when and how many times?
- Do they offer buyer consulting? If so, how will they avoid conflicts between the buyer and seller?
- Do they have broker insurance?
A broker who has been around for years, has a good reputation and meets the above criteria would be the best choice.
3. Do The Numbers Add Up?
Work with qualified accountants with experience in the route for sale industry to go over the numbers and ensure you will be profitable if the route continues to function the way it has been in the past few years.
Over to You:
Don’t forget to ride along with the drivers and managers of the route while you’re doing your due diligence, as shady brokers will not let you do this, which, if they do, consider it a red flag.
Furthermore, once you purchase the route, be sure to get FedEx parcel delivery insurance to protect your route business from the perils that come with this industry.