When you’re searching around for a business such as FedEx routes you’re bound to eventually wonder about the differences between route opportunities such as FedEx Ground and FedEx Home Delivery routes for sale compared with franchise opportunities that exist.
The thing about franchises for sale is that many of them take a huge amount of starting capital but to me it doesn’t make sense if you’re not sure what you’re going to be making at all in terms of income. Tons of capital outlay, some other companies rules, and no real control of your own store, but with no known amount of income potential. Granted FedEx routes have the same capital outlay, rules, and lack of complete control as well, but at least I know what I’m likely to get out of the business income wise. With franchises for sale, it almost begins to feel like a gamble.
If I wanted to gamble my money, I’d go to Vegas instead of being a FedEx contractor.
The good thing with the FedEx routes is that you can step into the business and start making an expected income. How to truly determine what that expected income is can be a bit tricky, especially if you’ve never done proper due diligence on FedEx routes before. For years I’ve been giving unbiased route consultations, meaning that I’m indifferent whether you purchase the routes are not. I do, however, like to see people get matched with awesome legitimate routes for sale.
Contrast this to franchises where owners of franchises can basically be pulled under the tide of insane competition from everywhere. A Quizno’s sandwich shop might have its revenues severely decreased if a competing locally owned (and therefore trendy and hip!) shop opens its doors across the street.
Trying to compete with a nationwide delivery service though? Not quite so easy.
The lack of barriers to entry for getting into a business should absolutely be a concern for you. If you’re looking at good franchises to buy, you need to contemplate carefully how easily anything could change on the competitive landscape and the ultimate results that will trickle down to you. The barriers to entry for FedEx aren’t impossible, but UPS doesn’t seem to be as big of a threat as you’d think.
The outside impression is that FedEx has team building activities slashing UPS truck tires.
This is obviously joking a bit, but still quite wrong. UPS drivers and FedEx contractors got along just great with one another and there didn’t seem to be that expected brooding competition at all. I wouldn’t be surprised if I sat in on a board meeting and found that UPS and FedEx aren’t really that truly competitive at all – I think they know there’s enough business for everyone since both companies are growing and making shareholders happy (UPS stock Price, FedEx Stock Price).
Consider how nice it is to be in a business that grows by having new demand and not by stealing customers from other companies.
In upcoming articles, I’ll be discussing the true success and failure rates of franchises as based on SBA loan failures.