empty rural highway

FedEx Approval Process

New buyers wishing to contract with FedEx will be required to complete a detailed approval process. This process will vary slightly depending upon whether the routes are P&D or Linehaul.

Getting Approved

There’s a lot of work that goes into selling a set of FedEx1  routes. But what happens once the deal is negotiated and the buyer is ready to start FedEx approval? What does the buyer need to have prepared for FedEx? What items do the buyer and seller need to address in order to ensure a smooth transition?

The approval process with FedEx is comprised of multiple steps, and involves multiple layers of management.

Assuming the buyer will be purchasing the routes in the form of an asset sale, the first step is to form a corporation. The corporation must either be a C-Corp or an S-Corp (LLCs are not permitted). This process will include:

  • Obtaining FEIN
  • Registration with the Secretary of State (Articles of Incorporation)
  • Obtaining State Tax Withholding ID from the department of revenue
  • Obtaining State Unemployment Insurance #
  • Identifying the corporation’s Registered Agent

Once the corporation has been established, there are a number of items that the buyer will need to compile and ultimately present to FedEx. These items will include:

  • Buying entity must designate an Authorized Officer and complete a W-9 (IRS form) for the Authorized officer.
  • Submission of form CR-030 to FedEx. This document must be completed by the Authorized Officers of both selling and buying entities.
  • Articles of Incorporation
  • Copy of entity’s of Good Standing Certificate. This is required from the buying entity’s state of incorporation, as well as all other states the entity will perform services for FedEx Ground.
  • Company Information page from its E-verify account
  • Contact Information for entity’s accountant
  • Initial compliance documents signed by entity’s accountant
  • A copy of the buying entity’s RFI (business plan). Information to be included in the RFI are outlined below.  A link to a sample RFI can be found here.

In addition to the steps involved in the FedEx approval, there are a number of operational and back-office items that should be addressed between buyer and seller. These include:

  • Setting up a business bank account
  • Obtaining workers comp and vehicle insurance
  • Completion of E-verify for all employees
  • Identify CPA/bookkeeper/payroll provider
  • Draft employee handbook and safety plan
  • Federal and State W-4 for each employee
  • Identify all relevant vendor accounts. These might include the maintenance facility, vehicle rental/leasing resources, etc.

The new buyer will ultimately schedule a meeting with the local terminal manager to discuss the transition. The buyer will be asked to bring 2 forms of ID, contact information for his/her accountant, the incorporation documents, and a summary of the last three years of employment history.

The approval will be processed at both the local and corporate levels.  Depending on the circumstances, this process typically takes 30-60 days from start to finish.

 

Meeting Contractual Obligations

The RFI (business plan) referenced above is intended to convey the new contractor’s understanding of the FedEx contractor model and his/her capability of meeting their contractual obligations with FedEx. The RFI should address a number of key topics, including:

Background / Financial Viability

  • Name and EIN or Business Number of the CSP that will be contract with FedEx Ground
  • First and last name, current occupation, addresses and telephone number of the individual that will represent the business in the future
  • Percent (%) of business currently with FedEx Ground (if any)
  • Net worth of the business
  • Information concerning established lines of credit
  • Dunn and Bradstreet rating or number
  • If assets are being assigned to a new CSP, the CSP authorized officer should provide:
    • At least three (3) references for whom work has been performed by the new business within the past three (3) years)
    • Business name(s) receiving services
    • Description of the services provided
    • Approximate current annual revenue of the new business
  • If ownership of the business is changing, the CSP authorized officer should provide:
    • Current and previous three (3) years business experience and/or transportation background

Customer Service Approach

  • Plans for meeting customer needs
  • Plans for avoiding customer issues, concerns, or challenges

CSP Employee Recruitment and Retention

  • Plan for recruiting, selecting and retaining employees, including drivers
  • Historical employee turnover rates:
    • Regarding services that have been provided to FedEx Ground, or
    • For other businesses owned or operated by the prospective new authorized officer and owners

Skills and Knowledge of the CSP Workforce

  • Plans for ensuring employee knowledge and skills with respect to the transportation industry and the FedEx Ground service offerings

Safety Commitment and History

  • Plan for eliminating roadside inspection violations as they relate to DOT Compliance Safety, Accountability initiative (U.S. only)
  • Injury and accident history:
    • Regarding services that have been provided to FedEx Ground, or
    • For other businesses owned or operated by the prospective new authorized officer and owners
  • Vehicle maintenance plan and history

Pickups

  • Plan for handling any increase in number of scheduled pickup stops over time, including increased package volume
  • Meet customer agreed-upon pickup windows despite increase in stops and volume

Security (Loss and Damage Avoidance)

  • Plans for minimizing package damage and loss
  • Historical damage and loss trends:
    • Regarding services that have been provided to FedEx Ground, or
    • For other businesses owned or operated by the prospective new authorized officer and/or owners

Contingency Situations

  • Ability to provide consistent customer service levels despite potential contingencies, including:
    • Employee absenteeism
    • Volume surge (including number of pickup stops and number of packages to be picked up for all pickup services offered)
    • Equipment failures
    • Weather disruptions

Compliance

  • Plans for ensuring compliance in accordance with the applicable agreement, including treating all personnel as employees of the CSP for all payroll, tax, withholding, insurance, and other purposes under applicable law (e.g., plans to share contracting standards with professional advisor(s), use of a payroll company, plans to ensure that business will treat casual labor drivers as employees of the business entity)
  • U.S. locations: Plans for employing only persons who are legally authorized to work in the United States
  • Canada locations: Plans for employing only persons who have the proper documentation required to work for the business entity in Canada locations
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