Selling Your FedEx Routes: How Does the Process Work?
When you own a FedEx route, you are running a business backed by one of the most trusted logistics companies in the world. However, there may come a time when you want to sell your route. And since the process of selling your FedEx route is far from simple, it’s important to work with a professional broker.
Enter KR Capital. As brokers who specialize in the sale of FedEx routes, we can ensure efficiency and confidentiality every step of the way.
But what does the process look like, anyway? Here’s a brief look at what you can expect from a typical sale.
1. Contractor Expresses Interest in Selling Routes
The process starts when the contractor (that’s you!) decides to sell a route and contacts KR Capital. This may be due to a variety of reasons, including overlap requirements, overwhelming rapid growth, or a career change. Of all the reasons for selling FedEx routes, retirement is the most common.
2. Materials are Gathered and Valuation Performed
KR Capital gathers all relevant documents (financial and otherwise) which will help us place a market valuation on your route business. During this process, we collect financial statements, vehicle and operational information, and identify any nuances and value components of the business. This information is then compiled into a route package that buyers will eventually evaluate.
3. Engagement Agreement is Signed
The seller signs an engagement agreement with KR Capital. This is the first step in formally listing and selling your route.
4. Buyers are Solicited
Now it’s time to obtain prospective buyers. We solicit buyer interest in 3 ways:
- We have an extensive, FedEx-specific buyer database with upwards of 10,000 buyers. For each buyer, we know what geographic locations they are interested in, how much capital they have to invest, as well as their contact information.
- Your opportunity gets posted on the KR Capital website which sees several hundred buyers each and every day.
- We post the business on several business-for-sale websites that we subscribe to (at no cost to our clients).
If a buyer is interested, they must sign a non-disclosure agreement (NDA). An NDA is a legal contract that ensures confidentiality. At this point, we also determine if the buyer is financially qualified.
5. Buyers Review the Route Package
Once the potential buyers have signed the appropriate forms, KR Capital will distribute the client-approved material on the business. This information will allow the buyer to review the route business in more detail.
6. Q&A Session Between Buyer and Seller
Once the information has been distributed, our firm coordinates a Q&A meeting between the seller and those buyers who are interested. This may be done over the phone or in person, depending on the situation and buyer/seller preferences.
7. Buyer Submits Letter of Intent
Interested buyers submit a letter of intent, which outlines the terms of their offer. The seller then selects their preferred buyer.
8. Buyer Completes Due Diligence
The buyer requests due diligence items from the seller. This allows the buyer to verify the information that they received in the earlier stages.
In most cases, the seller will be expected to provide this information over 3 to 4 weeks. But since every buyer is different, the list of necessary items will vary from buyer to buyer.
Examples of commonly requested due diligence items include:
- Tax returns
- FedEx settlement statements
- Vehicle maintenance records
- Payroll reports
- Vehicle inspections
Our firm will assist the seller in preparing the necessary documents.
9. Purchase Agreement is Signed
Once due diligence has concluded, the purchase agreement is drafted. Typically one of the parties (either buyer or seller) will draft the first iteration of this document with their attorney. The opposing counsel will subsequently review and redline any proposed edits. The purchase agreement is ultimately signed once both parties have agreed on the content and verbiage.
10. Buyer Makes a Deposit
An escrow account is opened, then the buyer makes a deposit.
11. Buyer Submits RFI to FedEx
To obtain approval from FedEx, the buyer drafts and submits a request for information (RFI) to FedEx. An RFI is essentially a business plan. It should display the buyer’s goals, objectives, and policies. The buyer must also meet with a FedEx representative and answer interview questions about safety and operational procedures.
Before the interview, we encourage the seller and buyer to meet in person and prepare for the meeting. Items to be discussed include operational aspects of the business, contingency planning, safety procedures, etc. This will improve the buyer’s chances of obtaining FedEx approval.
12. Closing Upon FedEx Approval
After the buyer is approved by FedEx, it’s time to close the sale. The designated closing agent will release funds to the seller once they receive confirmation that FedEx has transferred the routes to the buyer.
Ready to Sell Your FedEx Route?