FedEx operates its delivery service through the independently-owned contracts with thousands of Independent Contractor business owners, across the US.
FedEx is NOT a franchised business, but rather operates through large terminals/hubs all across the country. These hubs receive packages destined for local delivery and are sorted by corporate FedEx employees before being handed off to the route drivers for final destination of delivery.
This work is provided to the FedEx contractor at no cost and is a huge cost savings to the operation. A more traditional franchise or corporation likely would incur the ongoing expense of a building, along with its associated lease and upkeep.
As opposed to a traditional franchise, FedEx does not collect franchise fees, provides no corporate training, or anything else, except pay their contractors by direct deposit every week for the prior week’s work - an extremely attractive component of the business model. Weekly payments dramatically reduce the need for working capital and effectively eliminate accounts receivable and, most importantly, uncollected accounts.
FedEx routes are not purchased from FedEx corporate, but are rather bought and sold amongst the independent contractors themselves. FedEx route business owners aren’t responsible for any sales and marketing efforts. FedEx corporate handles all the marketing and customer acquisition efforts/costs associated with the business.
In certain instances, when new service primary service areas arise or existing ones expand, FedEx corporate will award (essentially “give away”) new routes to its existing contractors.
FedEx contractors enjoy contractually protected service areas which eliminate any competition in the area. A FedEx route business owner has contractual rights to non-competition in his or her territory.