How Much Does It Cost to Buy a FedEx Route?
People will always need packages delivered, which is why buying FedEx routes is viewed as such an attractive investment in any economy. Not only does owning your own FedEx route business provide financial stability through a predictable revenue stream, but it also gives you the freedom and flexibility to grow and scale your business on your own terms.
Still, purchasing FedEx routes is a big investment, and one of the most common questions we hear is how much will it cost?
Under the new FedEx ISP agreement, all contractors are required to have a minimum of five routes, or 500 stops per day. Route prices can vary widely based on a number of factors, including the type of routes for sale (P&D or linehaul), the location of the routes, and the average number of packages and stops.
On average, P&D routes sell for 3-3.5x times annual (normalized) cash flow. In contrast, Linehaul runs typically sell for between 3.5-4x normalized cash flow.
As a FedEx contractor you will be responsible for a number of business-related costs, such as purchasing and maintaining a fleet of vehicles, employing a team of drivers (and administrative staff, if necessary), and purchasing employee uniforms as well as the required FedEx decals, scanners, and software.
For all of these reasons, making sure you do your research so that you understand everything that goes into purchasing FedEx routes can help you get the most out of your investment.
Are there financing options available for purchasing FedEx routes?
While a conventional bank loan may be difficult to acquire because of the lack of physical collateral with a FedEx route, there are a handful of other financing options available to individuals looking to buy FedEx routes. You can read more about those options here, but the following is a quick breakdown.
Using a home equity line of credit is one option, as is borrowing from your retirement savings to fund your FedEx route purchase. For some, a small business loan may be the way to go. Whichever path you choose, working with an experienced FedEx brokerage firm can help you navigate the purchase process and ensure everything goes smoothly.
KR Capital works with lenders nationwide who specialize in financing FedEx routes. These lenders often have far more flexibility when it comes to approving FedEx transactions because they have an intimate knowledge of the industry and are comfortable with the business model. As a KR Capital client, you will have access to our proprietary network of lenders, which can help make your dream of becoming a FedEx contractor a reality.
Want more information?
Reach out to KR Capital today.