Are you having trouble getting a response from a route broker? Or, are you finding that every listing that peaks your interest is under contract before you ever even make contact with the broker?
In this industry, there are 20 prospective buyers for every FedEx route for sale listing you see. As we noted previously, the market is hot!
As an investor, then, what can you do to be more competitive?
Follow These Tips to Have a Chance at the Best FedEx Routes for Sale
Do your research ahead of time. Hire a consultant, read online articles, and educate yourself on how FedEx works.
Just as you will evaluate a listing and a seller, a broker will be evaluating potential buyers. Does this investor understand what they want and how this investment works? Many investors are kicking the tires on FedEx investments these days and brokers are inundated with basic inquiries. Once you establish yourself as an educated and serious investor, brokers will be more likely to reach out to you when a strong opportunity becomes available.
Tip: test your broker on their knowledge of the FedEx. After doing your own research on FedEx, engage potential brokers in quality FedEx conversations. If a broker doesn’t know much about FedEx or has inaccurate information, this is an indicator that you should evaluate the listing cautiously. They may be misrepresenting information without even knowing it!
Create your corporation. FedEx requires an S Corp or C Corp; if you have an LLC it will not be useful in the purchase of a FedEx route. Establishing a corporation and holding a Federal Employer Identification Number (FEIN) will allow you to move forward with an application more quickly.
Prepare your Request for Information (RFI) ahead of time. FedEx requires that each prospective contractor submit a standard business plan that outlines their core competencies while addressing a variety of FedEx-related subject matter. Preparing one in advance of a potential purchase shows you understand FedEx and are ready to take action.
Have a Purchase Contract already reviewed by your attorney and ready to go. This will give you a significant timeline advantage when you are interested in the most appealing routes.
The most important thing you can do to distinguish yourself as a buyer is have your funding sourced and ready. If you are purchasing a route with cash, consolidate your purchase funds and be prepared to provide proof of funds.
If you are not paying with cash, you need to identify a lender. Ideally, you should find a lender who has FedEx experience. This lender experience will save you time and headaches in the process. Route Consultant clients receive access to a variety of qualified lenders based on their search criteria and eligibility.
As you evaluate listings, be sure to shop in the appropriate price range based on your funding source. Small Business Association (SBA) loans ask borrowers to have a down payment that is 10-20% of the route purchase price. The SBA does make exceptions to that figure, but borrowers chances of approval are significantly higher if they meet this criteria. If you plan to use conventional financing through a local or national bank, you will likely need to have a down payment that is 20-50% of the route purchase price.
As you evaluate listings, be sure to shop in the right location for your funding. Some loans will restrict buyers to their state of residence. If you are securing an SBA loan and wish to purchase a route that is out out of state, you must hire a manager with equity in the route or give an equity stake to the existing manager.
If you intend to purchase your route with a 401K rollover, please know that this process usually takes 30 days or more. Start the rollover early to avoid delays in a deposit or closing.
Need more help standing out?
If you need more help distinguishing yourself as a buyer, contact us for consulting.
We can help you get pieces of the puzzle in place so you can jump on the best opportunity as it arises. We can also help you with a full range of FedEx contractor pieces, such as:
IC vs. ISP Business Models
Understanding Contract Terms
Terminal Relationship Management