Lately, we’ve been seeing a trend that is honestly pretty concerning. We are talking
to more and more contractors who are selling parts of their business—or even the whole thing—by selling shares of their companies to unwitting buyers via the transfer of shares of company stock, without properly addressing the reassignment of their operating agreement.
There is a thought process, possibly being fueled by some unscrupulous brokers, that is leading some to think that, "The company name isn't changing, so why does it matter?" But in the eyes of the contract, it matters a lot. We’ve seen people put their entire business at risk because they didn't realize that changing who owns the company is just as big a deal as changing who drives the trucks.
Wait! Read This First: > Before we dive in, let’s get one thing straight: We are not attorneys. We don't work for FedEx, and we aren't here to give you legal advice or tell you exactly how FedEx will act. We are just a team that has spent years in the trenches with contractors like you. We’ve seen almost every situation you can imagine, and we want to share what we’ve learned so you don’t make a costly mistake.
We aren't here to scare you, but we do want to wake you up. Whether you’ve been a contractor for ten years or you are looking to buy your very first operation, you need to understand that you can’t just "hand off" this business like a relay baton. There is a specific process you have to follow, or you might find yourself owning a company that no longer has a contract to operate.
The Myth of the "Easy" Share Sale
Many people believe there is a "secret shortcut" to selling a FedEx-based business. They think that if they sell the stock of the company instead of the assets (like the trucks, equipment and rights to the contract), they can bypass the long, formal process of contract reassignment. The logic usually sounds like this: "The company name isn't changing, and the tax ID is staying the same, so why would FedEx even need to know?"
This is a dangerous myth. In reality, a stock sale is not an "easy button"—it is often a tripwire.
Why the "Entity" Matters
When you sign a contract with FedEx, they aren't just signing a deal with a piece of paper or a corporate name. They are signing a deal with a specific legal entity that is under specific control.
Think of it like a professional sports team. If a billionaire sells the team to a new owner, the team name might stay the same, but the league still has to approve the new owner before they can play a single game. FedEx views your business the same way. If you sell the shares of your company, you have changed the "who" behind the contract. Even if the trucks and the drivers stay exactly the same, the person or group in charge has shifted.
The "Invisible" Deal Breaker
Section 17 is essentially an "invisible" part of your business value. You might have the best trucks and the most profitable dispatches, but without a valid contract, those things are just expensive metal and lines on a map. If you sell your shares without going through the proper assignment process, you risk making that contract "void and of no effect."
For a buyer, this is even more critical. You might think you are buying a successful business, but if the assignment isn't approved, you are actually just buying a "shell" company with no right to do work for FedEx. You could spend hundreds of thousands of dollars only to find out that FedEx doesn't recognize you as the legal contractor.
The Bottom Line
There is no "backdoor" entry into the FedEx system. Whether you are selling one share or one thousand, or just changing who sits in the President's chair, you have to play by the rules laid out in Section 17. Ignoring these rules doesn't make the sale easier—it just makes it riskier.
Breaking Down The Contract Assignment Section: The 5 Red Flags
In the world of FedEx Service Providers, the word "Assignment" is a heavy-hitter. In simple terms, an assignment happens whenever you try to hand over the rights or responsibilities of your contract to another person or business.
FedEx is very picky about who they do business with. Because of that, Section 17 of your contract basically says: "If the person in charge changes, the contract is over—unless we agree to it first." If you try to move the contract without their written permission, it becomes "void," meaning it essentially disappears.
Based on our years of experience watching these deals go down, here are the five specific "Red Flags" that FedEx considers an assignment.
1. Changes Ordered by a Court
You might think that if a judge orders your company to merge or close down (liquidate) during a legal dispute, the contract just follows the business. That’s not the case. Even if a court creates a plan for your company, FedEx still views that change as an assignment that requires their "thumbs up."
2. Changing the Leaders or the Owners
This is the one that trips up most contractors. You have officially "assigned" your contract if you do either of these things without permission:
- Appoint new officers or directors: If you bring in a new President or a new board member to run the company, you’ve changed who is in control.
- Sell or transfer stock: Whether you sell the whole company or just a piece of it, FedEx sees this as a change in control. Even a "series of related transactions"—like selling 10% of your company every few months—will eventually trigger this flag.
3. Corporate "Shape-Shifting" (Mergers)
If your company merges with another business or becomes part of a brand-new entity, you have technically changed who the contract is with. Even if you are still one of the owners of the new company, the legal "person" FedEx signed the deal no longer exists in the same way.
4. Risky Subcontracting
We often talk about Section 7.1 because it’s vital. If you hire another company to handle your routes in a way that doesn't follow the rules, FedEx doesn't just see it as a minor mistake. They can view it as you trying to "assign" your work to someone else under the table.
5. The "Catch-All" Rule
FedEx added a final point to make sure no one tries to be too clever. This part of the contract says that any transaction or deal designed to get around these rules will be treated as an assignment. If it looks, walks, and talks like a transfer of power, FedEx is going to treat it like one.
The Takeaway: You aren't just running a delivery business; you are managing a specific legal agreement. If the "Control" of your company moves even an inch, you need to stop and make sure you are following the correct assignment process.
Conclusion: Do It Right, Not Fast
At the end of the day, your FedEx contract is the most valuable asset your business owns. Without it, your trucks are just parked metal and your routes are just lines on a map. Trying to "skip the line" by selling shares or bringing in partners under the table isn't just risky—it’s a gamble where the house (FedEx) always holds the cards.
We’ve seen too many contractors work for years to build a successful business, only to put it all in jeopardy because they didn't want to deal with the paperwork of a formal assignment. Transparency with FedEx is almost always the better path. If you are honest about your plans and follow the process, you protect your investment. If you try to be "clever," you might find yourself holding a pile of stock in a company that is no longer allowed to deliver a single package.
And most of all, please understand that there is a cottage industry of people looking to profit off of making these business sales happen, whether they are compliant or not. Remember that these "brokers" only make money when a transaction happens. That's why some will do anything to make these deals happen.
At eTruckBiz, we aren't here to sell you a route or broker a deal; we are here to help you evaluate the 'health' of your potential move so you can spot the red flags before you sign on the dotted line for both concerned parties.